Housing: Red Alert, or a Wake-Up Call?

Business Week reports:

There's an old saying that nobody rings an alarm bell at the top of a market. But luxury homebuilder Toll Brothers (TOL ) came awfully close on Nov. 8, when it warned investors of "some softening of demand in a number of markets" and that "it appears we may be entering a period of more moderate home price increases, more typical of the past decade than the past two years."


Investors took the statements as a carefully worded clarion call -- boom times for the housing biz are finally coming to an end. Toll Brothers shares fell 12% on the New York Stock Exchange, closing at $33.91. And the fallout was sweeping. Not only did stocks drop for other homebuilders, including Pulte Homes (PHM ) and Centex (CTX ), but the reaction also reached deep into the housing market, hitting do-it-yourself remodeling centers such as Home Depot (HD ) and Lowe's (LOW ) and furnishings and appliance companies such as Ethan Allen (ETH ) and Whirlpool (WHR ).

The top could be in for the homebuilders.