Analysts Downgrade Homebuilding Sector

New York, NY, July 15, 2010--Goldman Sachs has downgraded the homebuilding sector on concern about the effect of a slowing U.S. economic recovery.

Joshua Pollard and Anto Savarirajan, analysts at Goldman, lowered their view on the builders to neutral from attractive.

"A looming slowdown in U.S. growth and correspondingly sluggish home sales is not a backdrop for outperformance," the analysts wrote.

"Although our universe has underperformed the market by 1,500 basis points since April, muted new-home sales since the tax credit expired bode poorly for outperformance even at below-normal valuations."

The Goldman analysts are concerned that a post-stimulus softening that they thought would last one to two months is going to last longer, based on recent channel checks and slow job growth.

They expect that new-home sales will grow 25% rebound in 2011 as the U.S. economy continues to recover and home prices remain stable.