Investors sold off shares of major homebuilding companies after comments from President Donald Trump and federal housing head Bill Pulte, resulting in a four-day decline for the sector. The S&P index tracking homebuilders dropped nearly 9 percent this week, which Bloomberg reports is the steepest loss since Trump’s tariff announcement earlier in April.
Homebuilders have faced several difficulties this year, including increased inventory levels and new tariffs on imported timber, lumber, and other wood products used in construction. The administration has also placed blame on builders for the ongoing issues with housing affordability.
The market reaction intensified after Trump posted on social media criticizing homebuilders for holding millions of empty lots and urging them to start building homes. Bill Pulte, who is the grandson of PulteGroup’s founder William J. Pulte, agreed with Trump’s assessment. He stated that major homebuilders now control between 50 percent and 60 percent of the market, saying they have a primary responsibility to help address housing supply.
Pulte also mentioned that Fannie Mae and Freddie Mac would require disclosures for loans made to large builders, which could lead to greater scrutiny of their business practices.
Neil Dutta, head of economics at Renaissance Macro Research, told Bloomberg that pressuring builders to increase construction could worsen their situation, given current unsold inventory and falling profit margins. Dutta described Pulte’s comments as “bullying” builders.
Among publicly traded builders, LGI Homes, Champion Homes, and Century Communities have each seen their stock prices fall by more than 20 percent this year. Lennar’s shares are down over 8 percent, while PulteGroup’s stock has risen by 17 percent.
Over the past year, the sector has declined by 19 percent, which contrasts with a 16 percent gain in the S&P 500 index.
Analysts note that rising inventory has led to price cuts in key markets, putting pressure on profit margins. Bloomberg Intelligence data shows that new-home supply is at its highest point since 2007.
Bloomberg Intelligence analyst Drew Reading warned last month that tariffs on softwood lumber and kitchen cabinets could add more than $10,000 to the cost of a new home. At the same time, buyer sentiment remains weak.
– Joel Russell
