Some Wall Street remarks on the housing sector. "After a pullback in the U.S. housing market sent home-building stocks into a tailspin, some observers believe that the sell-off is overdone and say the shares represent a value opportunity. Yet many bearish analysts caution that the picture is likely to get worse before it gets better."

"Wall Street analysts covering the sector are divided over whether builder stocks offer bargains or are a value trap for unsuspecting investors. Much of the debate centers on whether the housing market is experiencing a 'hard' or 'soft' landing."

"Many analysts have been surprised by the magnitude of the downturn and are cutting their earnings estimates for the home builders, after the hoped-for rebound during the spring-selling season failed to materialize. 'Unfortunately as we feared, the soft-landing scenario does not appear to be unfolding as many had hoped,' wrote analyst Alex Barron in a recent note. 'It may not be until next year that the housing market finds a bottom.'"

"With orders falling from last year and an ugly spring largely in the books, many analysts have issued across-the-board downgrades on the sector. With the traditional spring-selling season a 'much bigger flop than virtually anybody had imaged,' he commented, the speed of the cooling process 'surprised even the more bearish industry watchers.'"

"Even company managements are growing more cautious, as evidenced by a builder-confidence index in June hitting its lowest mark in more than a decade."

"Higher interest rates, which increase borrowing costs for the companies as well as mortgage rates for home buyers, are a primary driver behind the pessimism. After 16 straight rate hikes, the Federal Reserve is widely expected to raise its short-term target rate to 5.25% next week with another quarter-percentage point increase."

"A stumbling housing market 'coupled with higher mortgage rates (especially on the shorter-term ARM products) prompted significant levels of inventory to enter the market, which in turn, overwhelmed demand,' wrote Robert Stevenson at Morgan Stanley."

"With mortgages moving up, housing affordability stretched and an uncertain outlook, many buyers are simply waiting on the sidelines for the housing market to stabilize."