CFRA’s Leon: stay away from the homebuilder stocks

“XHB” down roughly 35% for the year might be attractive for many, but CFRA’s Kenneth Leon continues to suggest keeping away from the homebuilder stocks.

Macro landscape is against homebuilder stocks

Leon agrees now isn’t as bad as the housing crisis of 2008, but expects these stocks to struggle over the next twelve to eighteen months. This afternoon on CNBC’s “The Exchange”, he said:

According to the CFRA expert, estimates have to come down for the homebuilder stocks to bottom. In contrast, majority of the analysts are still very bullish.

Homebuilders’ revenue growth to plunge sharply

Kenneth Leon disagrees with the idea of buying homebuilder stocks because there's a shortage of houses in the United States since that’s been the case for more than a decade. He added:

The only name that he’s constructive on in this space is Toll Brothers Inc (NYSE: TOL) that reported better-than-expected results for its fiscal Q2 last month. The stock is down 35% versus the start of 2022.