Despite ongoing optimism that the housing recovery can withstand fire, brimstone, rising rates, and collapsing confidence (in spite of the fact that indications from most top-down data are to the contrary), investors in US homebuilders may need to adjust this morning. If DR Horton is any indication of a broad trend (and empirical comparisons with its peers show that it is) then the firm's huge miss in its cancellation rate (31.0% vs an expectation of 25.5%) in Q3 should be food for thought. The surge in cancellation was the largest MoM since mid-2008 and jumped to its highest since December 2008.
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Does make one wonder if the lagged response to the surge in rates and collapse in applications is now catching up...
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Charts: Bloomberg