Beazer Shares Tumble, Pulling Down Homebuilder Stocks

[Guest]

Shares of Beazer Homes USA fell to a 52-week low amid widening concerns about fallout in the housing sector.

The selloff of Beazer shares, which fell as much as 40% to $8.10 at one point, sent ripples throughout the homebuilding sector. Among the stocks falling sharply were: WCI Communities, Hovnanian Enterprises, and WCI Communities.

Over the past few months, stocks in the sector have hit multiyear lows, hurt by poor results and a bleak outlook for the housing market.

With the downward pressure Wednesday, the Dow Jones U.S. Home Construction Index, a barometer of the sector's performance, fell to fresh lows not seen since 2003.

With home sales plunging, homebuilders have been writing down the value of their unsold homes and the land they have bought for future development. The lower value is reflected in each builder's tangible book value -- what a company could get if forced to hold a fire sale.

Before Wednesday's selloff, the bulk of the builders' stocks were trading below the value of tangible book value.

http://www.cnbc.com/id/20072508

[Guest]

to me today is the capitulation point for home builders. all homebuilders were down over 10% in morning and came back to positive at one point. on the other hand, NAR reported 5% increase of pending home saless month to month. the housing market seems start to recover but recent credit concerns will add more cloud to already clouded field.

[liquidity crunch]

Mortgage related credits are tightening causing fewer qualified buyers to purchase homes. That in turn causes for-sale homes to stay in the market longer, causing liquidity crunch for many sellers and buyers who are contingent on the sale of one home to buy another.