Most of the leading home-builder stocks came under selling pressure on Monday. Builders like Lennar (NYSE:LEN), Toll Brothers (NYSE:TOL), DR Horton (NYSE:DHI) and others traded lower by more than 3 percent. Many investors are blaming the recent Redfin (NASDAQ:RDFN) guidance for the decline in the home-building sector, but the industry group has been slumping since the start of 2018.
Have Patience
Lennar is one home builder that has caught my eye. This stock topped out on January 22, 2018 at $72.17 a share. Since that high pivot, the stock has steadily declined lower throughout the year. On Monday, LEN traded down by $2.43 to $50.94 a share. Traders should note that the stock has been trading in a sideways range since mid May. This pattern tells me that there is one more move lower to go before LEN finds a defined bottom. Traders and investors must now watch the $45 area as the next major support level for the home builder. This is where the stock broke out in February 2017. Very often, prior break-out levels will serve as major support when retested.
