5 Stocks to Sell as Homebuilder Slump Deepens

Benzinga_recent_news2025-12-25

The housing market continues to limp toward the finish in 2025, as high rates have stymied potential buyers and sellers are pulling back rather than lowering asking prices. The freeze is exacerbated ...

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The company reported its Q4 2025 results on December 16, and investors hoping for an earnings-based momentum reversal were swiftly disappointed. Lennar reported a nearly 6% year-over-year (YOY) revenue decline, and margins continued to shrink.\nThe pivot to high-volume, low-margin homes was expected to create some drag, but Q4 gross margins came in at 17% and the company expects further declines to 15-16% in Q1. Sales growth remains slow despite a recent drop in mortgage rates, and Lennar projects full-year 2026 deliveries of roughly 85,000, well below market expectations.\nPoor results have been the norm lately (hence the 22% short interest), but these were worse than even the most pessimistic analysts were expecting.\nLEN shares are already down more than 20% year-to-date (YTD), and more pain could be on the horizon if the chart is any indication. After clinging to life along the 200-day simple moving average (SMA) for several months, the price shattered this support level following the disappointing earnings release. The stock is now trading back at levels not seen since June, and the bearish MACD crossover points to even more downside ahead.\nMeritage Homes (NYSE:MTH) is a $4.6 billion market-cap regional homebuilder with operations in 10 states, mainly in the western and southern U.S. The company builds starter-level and larger move-up homes, but it runs on relatively thin margins with these builds and doesn't have the deep financial resources that Lennar does.\nWhich is why Meritage's Q3 2025 earnings report also raised eyebrows: the company missed EPS estimates by nearly 20%, and quarterly revenue of $1.4 billion was more than 6% below expectations. Margins also fell again to 20.1% from 21.4% in Q3.\nBecause the company uses a spec business model in which homes are built before they're sold, the backlog can quickly become a liability in a slowing market, putting even more pressure on margins as the builder is forced to offer more incentives.\nDespite a Death Cross forming across the 50-day and 200-day SMAs, MTH shares unexpectedly jumped 12% over just a few days at the end of November. The gain was a mirage, though, and shares quickly plummeted back under both moving averages during a 7-out-of-8-day losing streak. The MACD and RSI highlight the collapsing momentum, and regional homebuyers like MTH simply face too many headwinds to recommend starting 2026.\nMatt Maley's Plan for the Last Trades of 2025\nAs institutions step back into year-end, only the cleanest setups tend to work. Now, Matt Maley is sharing how he navigates the final week of the year, drawing on recent trades in QQQ and SLV that produced gains through active management. Watch the Breakdown\nNow we turn our attention back to national builders. D.R. Horton (NYSE:DHI) is 10 times Meritage Homes’ size, with a $42.5 billion market cap and annual sales exceeding $32 billion. The company is the largest entry-level-focused homebuilder on the market, specializing in townhomes, condos, and single-family detached homes. Single-family detached homes account for about 87% of the company's total revenue, and it builds in 36 states.\nUnlike many of its contemporaries, D.R. Horton didn't lay an egg during its most recent earnings report, with revenue coming in above expectations and shrinking only 3% YOY. \nHowever, the entry-level housing market remains at a standstill, and many of D.R. Horton's prospective clients either don't have a down payment available or are locked into a low-rate mortgage and don't feel the impetus to move. Incentives caused the company's fiscal Q4 2025 margin to drop to 20%, and the stock is down 15% since the start of December.\nThe price is once again barreling down on the 200-day SMA, and a bearish crossover appears imminent on the MACD. D.R. Horton likely needs mortgage rates closer to 5% to shake free of its downward momentum.\nNVR (NYSE:NVR) is another homebuilding giant with a lagging stock and headwinds on the horizon. Like most stocks on this list, NVR generates the bulk of its revenue from entry-level homes under the Ryan Homes and NVHomes brands. But NVR operates a little differently than Lennar or D.R. Horton. Third-party developers hold land for NVR, which allows it to operate an ‘asset-light' business model and trade at a higher premium than traditional builders.\nHowever, if growth is tepid, third-party developers will demand larger margins to hold the land for NVR. And while the company posted a top- and bottom-line earnings beat in the last two quarters, revenue growth is indeed slowing (down 4.5% YOY in Q3 2025).\nNVR shares are only down 10% YTD, which isn't great but a far cry from the 20% drawdowns other large caps have faced. However, the stock is at a crucial point, and bearish momentum is brewing.\nA Death Cross hints that the stock's next move will be a dip under the 50-day SMA, and the MACD and RSI also show the trend trying to reverse downward. With technical and fundamental headwinds in place, NVR is a risky bet to hold right now.\nTri Pointe Homes (NYSE:TPH) is a small-cap company with a luxury business model, focused on high-net-worth areas in California, Washington, Arizona, and Colorado. Higher-end consumers have been insulated from high rates and inflation more than lower and middle-income ones, which in theory should give Tri Pointe fundamental tailwinds that other homebuilders on our list can't match.\nHowever, the company needs people to sell their current starter homes and ‘move up' into larger houses. With mortgage rates still above 6%, even wealthy homeowners are sitting tight, posing a problem for companies that operate in volatile markets like Tri Pointe.\nTri Pointe has beaten recent earnings projections, but revenue is steadily declining YOY, and management lowered Q4 margin guidance during the October 23 conference call for Q3 results. TPH shares are now trading back under the 50-day and 200-day SMAs, with the MACD showing another momentum-killing bearish crossover.","kind":"highlight","is_publish_news":true,"is_publish_highlight":false,"is_publish_live":false,"is_publish_wemedia":null,"editions":null,"column":"","sentiment":"-1","news_tag":"","news_rank":0,"symbols":[],"gpt_button":0,"need_auth":false,"code":"91000000","status":"200"},"commentList":[],"isCommentEnd":true,"newsSizeData":{"likeSize":0,"commentSize":0,"repostSize":0,"favoriteSize":0,"likeStatus":false,"favoriteStatus":false},"APP":{"userAgent":"Mozilla/5.0 AppleWebKit/537.36 (KHTML, like Gecko; compatible; ClaudeBot/1.0; +claudebot@anthropic.com)","isDev":false,"isTTM":true,"deviceId":"web-server-community-laohu8-v3","version":"4.35.13","shortVersion":"4.35.13","platform":"web","vendor":"web","appName":"ttm","isIOS":false,"isAndroid":false,"isTiger":false,"isTHS":false,"isWeiXin":false,"isWeiXinMini":false,"isWeiBo":false,"isQQ":false,"isBaiduSwan":false,"isBaiduBox":false,"isDingTalk":false,"isToutiao":false,"isOnePlus":false,"isHuaWei":false,"isXiaomi":false,"isXiaomiWebView":false,"isOppo":false,"isVivo":false,"isSamsung":false,"isMobile":false},"href":"/m/news/2594406992","isCrawlerRequest":true}