U.S. Homebuilders Plummet After Job Gains Miss Estimates

U.S. Homebuilders Plummet After Employment Gains Miss Estimates
Home construction in the San Elijo Hills community of San Diego. Photographer: Sam Hodgson/Bloomberg

U.S. homebuilders had their biggest decline in almost 10 months after the Labor Department reported job gains that missed analysts’ estimates.

The Standard & Poor’s 1500 Homebuilding Index dropped 7.8 percent today in New York trading, led by PulteGroup Inc., the nation’s largest builder by revenue, which fell 12 percent to $8.26. PulteGroup and the 11-member index last had a larger one-day decline on Aug. 8.

U.S. employers added 69,000 jobs in May, the fewest in a year, and the unemployment rate rose to 8.2 percent from 8.1 percent, according to Labor Department data released today. The gain was smaller than the most pessimistic forecast in a Bloomberg News survey. Shares of U.S. homebuilders had been helped this year by improved orders and sales as the jobless rate fell, consumer confidence grew and record-low mortgage rates made homes more affordable.

The jobs report “was a step backward for housing in every way,” Jed Kolko, chief economist at Trulia Inc., a San Francisco-based home-sales information service, said today in an e-mail. “Construction employment fell, job growth was especially slow in hard-hit housing markets, and the job picture slipped for 25-to-34-year-olds.”

Employment in construction fell by 28,000 jobs, according to the Labor Department.

Toll Brothers Inc., the largest U.S. luxury-home builder, had a profit of 10 cents a share, compared with a loss of 12 cents a year earlier, for its second quarter, and orders for new homes rose 47 percent from a year earlier, the Horsham, Pennsylvania-based company reported May 23. Its shares fell 7.5 percent today to $25.24, the biggest one-day decline since Dec. 3, 2009.

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