Investors in homebuilder stocks responded to comments from President Donald Trump and federal housing head Bill Pulte with a selloff that set off a four-day losing streak.
The sector’s S&P index saw a downturn of nearly 9 percent this week, marking the worst performance for homebuilders since Trump’s tariff announcement in early April, according to Bloomberg.
Homebuilders have faced mounting challenges this year, from rising inventory levels to new tariffs on imports of timber, lumber and other wood goods essential to home construction. The administration has further intensified the situation by blaming builders for the ongoing housing affordability crisis.
The situation worsened after Trump’s post on social media, which criticized homebuilders for having millions of empty lots and urged them to begin constructing homes.
Pulte, grandson of PulteGroup’s founder William J. Pulte, echoed the sentiment, claiming major homebuilders now control 50 percent to 60 percent of the market and bear the bulk of the responsibility to contribute to housing supply.
Pulte also said Fannie Mae and Freddie Mac would require disclosures for “Big Builder” loans, potentially increasing scrutiny on their practices.
Urging builders to construct more homes could further harm the industry, given the existing unsold inventory and declining margins, Renaissance Macro Research economics head Neil Dutta told the outlet. He described Pulte’s comments as “bullying” builders.
The hardest-hit stocks in the sector this year include LGI Homes, Champion Homes and Century Communities, each down more than 20 percent, while Lennar has dropped more than 8 percent. PulteGroup, on the other hand, has seen a 17 percent increase in its stock price.
The sector has seen a 19 percent decline in the last 12 months, a significant underperformance compared to the S&P 500’s 16 percent rally.
Market analysts have pointed out the underlying issues for builders, such as rising margin pressures due to increasing inventory, which has led to price reductions in critical markets. According to Bloomberg Intelligence, new-home supply is at its highest level since 2007.
Rising tariffs on softwood lumber and kitchen cabinets could increase the cost of a new home by more than $10,000, Bloomberg Intelligence analyst Drew Reading warned last month, while the overall sentiment of homebuyers remains depressed.
– Joel Russell
