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Sept 9 (Reuters) - Credit Suisse lowered its rating on the U.S. homebuilding sector to “market weight” from “overweight,” citing weaker traffic and higher valuations, and downgraded four homebuilders, including D.R. Horton Inc (DHI.N).
The brokerage said it has seen further declines in traffic throughout late summer, and markets that had shown signs of life in recent months slipped in August.
“Traffic continues to slip and will likely lead to further price cuts and impairments this fall,” the brokerage said.
On D.R. Horton, the brokerage lowered its rating on the stock, which has risen 47 percent since July, to “neutral” from “outperform.”
The brokerage said the company is well positioned based on its strong cash flow, modest leverage, and lean cost structure, but the stock is fairly valued.
The brokerage said Pulte’s stock price has surged 78 percent since July and is fairly valued.
Shares of D.R. Horton fell more than 7 percent, while those of KB Home, Pulte and Toll Brothers were down more than 5 percent in noon trade on the New York Stock Exchange. (Reporting by Mary Meyase in Bangalore; Editing by Deepak Kannan)