Raymond James downgrades homebuilder stocks as 7% mortgage rates ‘cripple’ housing affordability

Raymond James analysts Buck Horne and Tousley Hyde on Friday downgraded shares of KB Home
KBH,
+3.25%,
Lennar Corp.
LEN,
+2.87%,
M.D.C. Holdings Inc.
MDC,
+2.33%,
PulteGroup Inc.
PHM,
+2.46%
and Toll Brothers Inc.
TOL,
+3.67%
to market perform and cut their rating on D.R. Horton Inc.
DHI,
+3.89%
to outperform from strong buy. Pulte Group, KB Home and M.D.C. saw their ratings drop by two notches from strong buy. Lennar and Toll Brothers were previously rated outperform, one step lower than strong buy. Analysts noted that housing affordability has been crippled by mortgage rates spiking to 7% and more and that the industry is bracing for a housing recession. Shares of KB Home fell 1.4% in premarket trades, Lennar dropped 1.9%, M.D.C. subtracted 1.4%, Pulte fell 1.9% and Toll Brothers slid 1.8%.