Why Homebuilders Sank Today


Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.

What: Shares of PulteGroup (NYS: PHM) and D.R. Horton (NYS: DHI) were among homebuilders that got crushed on the market today, falling at least 10%.

So what: Look no further than this morning's jobs report for the reason these stocks are falling today. Employers added just 69,000 jobs in May and the unemployment rate rose to 8.2%, a sign that the recovery has slowed considerably.

Now what: Homebuilders are directly tied to our economic recovery, so any bad news is doubly bad for them. Just as operating conditions were starting to improve, the economic mess had to rear its ugly head. I don't see a lot of bright news ahead for homebuilders. Employment is still weak, there are plenty of foreclosures to pick from in a lot of markets, and when the economy does pick up so will interest rates, putting another damper on the housing picture.

Add PulteGroup to you watchlist byclicking hereand add DR Horton by clicking here.

At the time thisarticle was published Fool contributor Travis Hoium does not have a position in any company mentioned. You can follow Travis on Twitter at @FlushDrawFool, check out his personal stock holdings or follow his CAPS picks at TMFFlushDraw.Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

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Originally published