Home Building Stocks are Beginning to Cool

The long-term upside of Pulte Homes (PHM), D.R. Horton (DHI), Lennar (LEN), Centex (CTX) and KB Home (KBH), the top five home builders based on total revenue, shows signs of coming to an end.

The chart for KBH tells the story. Since 2001 the rate of increase in its stock price has steadily increased. But in mid July 2005, the rate of increase began to slow. As of August 26, 2005 the Price Direction Indicator (PDI), cumulative percent winners, cumulative returns and returns per day are on the downside indicating that prices have moved from the upside to the downside.