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Finance One of the biggest US homebuilders just sounded the alarm on a slowdown — here are the housing stocks traders are betting can sink further (PHM, LEN, DHI, TPH, TOL, LGIH, NVR, KBH, BLD, IBP)

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Homebuilder stocks are under pressure. Traders are building larger short positions in many of these names, according to an analysis by S3 Partners.

A man working on a Toll Brothers home this year in Florida. play

A man working on a Toll Brothers home this year in Florida.

(Joe Raedle/Getty Images)


Homebuilder stocks were under pressure this week after Toll Brothers issued a warning about a slowdown in the housing market, and an analysis of short interest in the sector suggests there is more pain ahead.

"There has been a recent upswing in short selling in the Homebuilding Sector after short interest in the sector fell by almost a third to $2.96 billion at the end of October," Ihor Dusaniwsky, managing director of predictive analytics at S3 Partners, a financial technology and analytics firm, wrote in a note on Tuesday.

Rising interest rates have weighed heavily on the group this year, as a jump in borrowing costs traditionally deters first-time home buyers. The Federal Reserve has announced three interest rate hikes so far this year, and eight hikes since late 2015, when the central bank set out to normalize monetary policy following the global financial crisis. As rates have jumped, the XHB, an exchange-traded fund tracking the S&P 500 homebuilders sector, has plunged 21% over the past year.

At the same time, new home sales are declining. The Commerce Department reported last week that new home sales in the US fell 8.9% in October to the lowest level since March of 2016.

Here are the most heavily shorted stocks in the homebuilders sector, according to S3 Partners data.

PulteGroup

PulteGroup play

PulteGroup

(Markets Insider)

Ticker: PHM

Short interest: $747 million

Short interest change in 2018: +$136.2 million

Year-to-date performance: -23%

Source: S3 Partners



Lennar

Lennar play

Lennar

(Markets Insider)

Ticker: LEN

Short interest: $717 million

Short interest change in 2018: +$368.9 million

Year-to-date performance: -37%

Source: S3 Partners



DR Horton

D.R. Horton stock price in 2018. play

D.R. Horton stock price in 2018.

(Markets Insider)

Ticker: DHI

Short interest: $347 million

Short interest change in 2018: +$144.3 million

Year-to-date performance: -29%

Source: S3 Partners



Tri Pointe Homes

TRI Pointe Homes stock price in 2018. play

TRI Pointe Homes stock price in 2018.

(Markets Insider)

Ticker: TPH

Short interest: $277 million

Short interest change in 2018: +$103.2 million

Year-to-date performance: -34%

Source: S3 Partners



Toll Brothers

Toll Brothers stock price in 2018. play

Toll Brothers stock price in 2018.

(Markets Insider)

Ticker: TOL

Short interest: $235 million

Short interest change in 2018: +$107.1 million

Year-to-date performance: -32%

Source: S3 Partners



LGI Homes

LGI Homes stock price in 2018. play

LGI Homes stock price in 2018.

(https://markets.businessinsider.com/stocks/lgih-stock)

Ticker: LGIH

Short interest: $190 million

Short interest change in 2018: +$127.4 million

Year-to-date performance: -46%

Source: S3 Partners



NVR

NVR stock price in 2018. play

NVR stock price in 2018.

(Markets Insider)

Ticker: NVR

Short interest: $143 million

Short interest change in 2018: +$85.9 million

Year-to-date performance: -28%

Source: S3 Partners



KB Home

KB Home stock price in 2018. play

KB Home stock price in 2018.

(Markets Insider)

Ticker: KBH

Short interest: $94 million

Short interest change in 2018: +$82.3 million

Year-to-date performance: -38%

Source: S3 Partners



TopBuild

TopBuild stock price in 2018. play

TopBuild stock price in 2018.

(https://markets.businessinsider.com/stocks/bld-stock)

Ticker: BLD

Short interest: $83 million

Short interest change in 2018: +$33.3 million

Year-to-date performance: -37%

Source: S3 Partners



Installed Building Products

Installed Building Products stock price in 2018. play

Installed Building Products stock price in 2018.

(https://markets.businessinsider.com/stocks/ibp-stock)

Ticker: IBP

Short interest: $77 million

Short interest change in 2018: +$8.2 million

Year-to-date performance: -54%

Source: S3 Partners



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