Housing stocks plunged Monday after a media report said a Federal Reserve official expects home prices and construction spending to continue to fall well into 2009.
Thomson Financial reported Monday that San Francisco Fed President Janet Yellen said that the glut of homes on the market will continue to weigh on prices and curb construction activity. Yellen was speaking to the University of California San Diego Economics Roundtable, according to the report.
Last month, both the Standard & Poor's/Case-Shiller home price indices and the Office of Federal Housing Enterprise Oversight index reported record year-over-year declines in April, a sobering signal that the housing slump is deepening.
Homebuilder shares tumbled. Pulte Homes Inc.'s stock dropped 8 percent to $8.92 in early afternoon trading, while DR Horton Inc. shares lost 6.7 percent to $9.84. Lennar Corp. shed 8.5 percent to $10.50, and Centex Corp. fell 5.6 percent to $12.22.
Luxury builder Hovnanian Enterprises Inc. fell 35 cents, or 7 percent, to $4.63.
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