One of the biggest US homebuilders just sounded the alarm on a slowdown — here are the housing stocks traders are betting can sink further

Joe Raedle/Getty ImagesDiego Perez works on a Toll Brothers home this year in Florida.

Homebuilder stocks were under pressure this week after Toll Brothers issued a warning about a slowdown in the housing market, and an analysis of short interest in the sector suggests there is more pain ahead.

“There has been a recent upswing in short selling in the Homebuilding Sector after short interest in the sector fell by almost a third to $US2.96 billion at the end of October,” Ihor Dusaniwsky, managing director of predictive analytics at S3 Partners, a financial technology and analytics firm, wrote in a note on Tuesday.

Rising interest rates have weighed heavily on the group this year, as a jump in borrowing costs traditionally deters first-time home buyers. The Federal Reserve has announced three interest rate hikes so far this year, and eight hikes since late 2015, when the central bank set out to normalize monetary policy following the global financial crisis. As rates have jumped, the XHB, an exchange-traded fund tracking the S&P 500 homebuilders sector, has plunged 21% over the past year.

At the same time, new home sales are declining. The Commerce Department reported last week that new home sales in the US fell 8.9% in October to the lowest level since March of 2016.

Here are the most heavily shorted stocks in the homebuilders sector, according to S3 Partners data.


PulteGroup

Ticker: PHM

Short interest: $US747 million

Short interest change in 2018: +$US136.2 million

Year-to-date performance: -23%

Source: S3 Partners


Lennar

Markets Insider

Ticker: LEN

Short interest: $US717 million

Short interest change in 2018: +$US368.9 million

Year-to-date performance: -37%

Source: S3 Partners


DR Horton

Markets InsiderD.R. Horton stock price in 2018.

Ticker: DHI

Short interest: $US347 million

Short interest change in 2018: +$US144.3 million

Year-to-date performance: -29%

Source: S3 Partners


Tri Pointe Homes

Markets InsiderTRI Pointe Homes stock price in 2018.

Ticker: TPH

Short interest: $US277 million

Short interest change in 2018: +$US103.2 million

Year-to-date performance: -34%

Source: S3 Partners


Toll Brothers

Markets InsiderToll Brothers stock price in 2018.

Ticker: TOL

Short interest: $US235 million

Short interest change in 2018: +$US107.1 million

Year-to-date performance: -32%

Source: S3 Partners


LGI Homes

https://markets.businessinsider.com/stocks/lgih-stockLGI Homes stock price in 2018.

Ticker: LGIH

Short interest: $US190 million

Short interest change in 2018: +$US127.4 million

Year-to-date performance: -46%

Source: S3 Partners


NVR

Markets InsiderNVR stock price in 2018.

Ticker: NVR

Short interest: $US143 million

Short interest change in 2018: +$US85.9 million

Year-to-date performance: -28%

Source: S3 Partners


KB Home

Markets InsiderKB Home stock price in 2018.

Ticker: KBH

Short interest: $US94 million

Short interest change in 2018: +$US82.3 million

Year-to-date performance: -38%

Source: S3 Partners


TopBuild

https://markets.businessinsider.com/stocks/bld-stockTopBuild stock price in 2018.

Ticker: BLD

Short interest: $US83 million

Short interest change in 2018: +$US33.3 million

Year-to-date performance: -37%

Source: S3 Partners


Installed Building Products

https://markets.businessinsider.com/stocks/ibp-stockInstalled Building Products stock price in 2018.

Ticker: IBP

Short interest: $US77 million

Short interest change in 2018: +$US8.2 million

Year-to-date performance: -54%

Source: S3 Partners

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