D.R. Horton, Inc. (DHI), Lennar Corporation (LEN), The Home Depot, Inc. (HD): Markets Move Higher Despite Weak Housing Data

Although we don’t believe in timing the market or panicking over daily movements, we do like to keep an eye on market changes — just in case they’re material to our investing thesis.

This morning, the data on new home sales was released, and while many economists expected the rate of sales to fall slightly from June’s 497,000 mark, they were still estimating the number to come in around 485,000 for July. But, the actual result has more than shocked a number of market participants today as the U.S. government reported that the seasonally adjusted rate for July was only 394,000. The result was well under the estimates and a 13.4% decline below June’s revised figure of 455,000.

Despite the poor economic data, the major indexes are all moving higher today. As of 12:45 p.m. EDT the Dow Jones Industrial Average is higher by 11 points, or 0.08%, while the S&P 500 is up 0.16% and the NASDAQ is higher by 0.33%. But, although the major indexes are shaking off the poor housing data, a number of stocks throughout the market are tanking because of it.

The Home Depot, Inc. (NYSE:HD)

Shares of both D.R. Horton, Inc. (NYSE:DHI) and Lennar Corporation (NYSE:LEN) are moving lower as a result of the report. D.R. Horton, Inc. (NYSE:DHI) is currently down 3.42% while Lennar Corporation (NYSE:LEN) is off by 2.74%. The housing data reported today will certainly show up in the home builder’s quarterly results, but as housing sentiment has increased over the past few months as it looked like we were turning the corner, investors began pouring into these stocks. Since the market is a forward-looking entity, future sales and profit expectations for what a company will post play a large role in determining the share price. Today’s report indicates that the homebuilder’s sales and profits may not be as good as many investors previously expected, and that’s causing the stock to fall.

The Home Depot, Inc. (NYSE:HD) is also losing ground today, likely the result of the housing report. Shares are down 0.7% as it seems the housing market may be cooling off. Most economists consider a monthly housing sales number of 700,000 to be a healthy market. Today’s report came in well below that number as rising interest rates have likely kept some possible buyers out of the market, meaning less new home owners which could be spending money at The Home Depot, Inc. (NYSE:HD). Additionally, rising interest rates will not only keep home sales low, but raise the monthly payments of those individuals who are buying a new home. This lowers the amount of extra cash they have sitting around every month and therefore reducing there disposable income. Along with other retailers, that’s another area in which The Home Depot, Inc. (NYSE:HD) may be hurt by rising rates in the long run.

The article Markets Move Higher Despite Weak Housing Data originally appeared on Fool.com and is written by Matt Thalman.

Fool contributor Matt Thalman has no position in any stocks mentioned. Check back Monday through Friday as Matt explains what caused the Dow’s winners and losers of the day, and every Saturday for a weekly recap. Follow Matt on Twitter @mthalman5513The Motley Fool recommends Home Depot.

Copyright © 1995 – 2013 The Motley Fool, LLC. All rights reserved. The Motley Fool has a disclosure policy.

Comments
Insider Monkey Small Cap Strategy
Insider Monkey Small Cap Strategy

Insider Monkey beat the market by 52 percentage points in 24 months. Our beta is only 1.2 (don't click this link if beating the market isn't important to you).

Lists

The 10 Largest Pharmaceutical Companies In the World

The 10 Most Expensive Android Apps

The 9 Most Expensive Designer Bags in the World

The 7 Most Expensive Real Estate in the World

The 10 Most Expensive eBay Items Ever Sold

The 10 Most Expensive iPhone Apps

The 9 Most Expensive Designer Shoes in the World

The 10 Most Expensive Cigarette Brands

The 10 Most Expensive Law Schools in the US

The 10 Best Wall Street Movies

The 10 Most Expensive Golf Clubs Ever Sold

The 10 Most Expensive Golf Memberships

The 10 Best Disney Characters Ever Created

The 8 Best Foods for Gaining Weight

The 10 Most Expensive Colleges in the World

The 7 Most Memorable Ad Campaigns of All Time

The 7 Most Expensive High Schools in the World

The 10 Electric Vehicles with the Longest Range

The 10 Cities with the Worst Drivers in the World

The 10 Most Expensive Dresses Ever Created

10 Islands to Visit Before You Die

10 Famous Celebrities Who Needed Rehab

The 15 Countries with the Largest Oil Reserves

The 10 Most Overused Excuses in the World

The 5 Best iOS Apps You Can’t Get on Android

5 Companies Damaged By Social Media Blunders

The 10 Most Legendary Blues Songs

The 10 Most Lawless Places in the World

4 Reasons China is a Threat to the US

The 17 Most Sugary Drinks in the World

The 10 Most Ruthless Rulers in History

The 10 Greatest Generals in History

Top 8 Travel Destinations for 2015

The 10 Safest Dog Breeds for Children

The 10 Most Stolen Vehicles in the US

The 7 Most Expensive Celebrity Weddings

The 10 Best LoL Teams in the World

Top 10 Worst Marketing Campaigns Ever Produced

Top 5 Diets that Help You Lose Weight

The 10 Best Ways to Stay Awake

7 Artists That Switched Musical Genres

The 10 Most Expensive Cities to Live in New Jersey

The 10 Best High Schools in New York

The 10 Countries With the Least Gender Inequality

The 6 Biggest Musician-Manager Feuds

The 10 Countries with the Cheapest Gas Prices

The 7 Most Theatrical Bands of All Time

The 8 Worst Band Breakups of All Time

The 10 Most Important South American Leaders

The 7 Most Successful Casting Show Winners

Subscribe

Enter your email:

Delivered by FeedBurner

X

Thanks! An email with instructions is sent to !

Your email already exists in our database. Click here to go to your subscriptions

Insider Monkey returned 47.6% in its first year! Wondering How?

Download a complete edition of our newsletter for free!