(Bloomberg) -- While mortgage rates of more than 7% continue to pressure homebuilding stocks, the recent slump in the group’s performance is largely driven by normal seasonality, according to Citi.

Lennar Corp.’s third-quarter results last Thursday provided investors a first formal read on builder performance in August and early September. Despite reporting strong quarterly metrics, the company’s forward guidance disappointed, prompting a selloff among peers and pointing to moderating pricing and slowing sales volume.

Homebuilder shares underperformed the broader market last week for a second week in a row, plunging 4.3% versus the S&P 500 Index’s 0.2% dip. 

“Recent softness in housing activity and seasonality in share prices (the end of the ‘spring selling season trade’) suggests some investors may tune out until the end of the year,” analysts led by Anthony Pettinari wrote in a note to clients Monday. “We estimate half or more of the recent softness in volumes and pricing is driven by normal seasonality.”

Historically, housing activity in terms of sales tend to peak in June, flatten out in the summer and decline more sharply in the fall. Home price appreciation follows a similar pattern. On average since 1970, new home sales volumes decline 7% month-over-month in September and 13% quarter-over-quarter in the final months of the year, according to the analysts. 

Over the past 25 years, homebuilding stock returns are the highest leading up to the spring quarters, outperforming the S&P 500 in 16 of the past 25 years, followed by a decline in June through the end of the year.

Up until recently shares of builders have been on a tear, rallying 55% through its mid-July peak as the group benefited from slowing sales and high mortgage rates that kept many homeowners from selling, therefore limiting supply amid strong demand.

Read more: Homebuilders Flash Caution After Near Correction: Taking Stock

But as summer comes to an end this week things are starting to turn. Homebuilder sentiment unexpectedly dropped to a five-month low in September as higher rates push prospective buyers out of the market and lead more builders to offer buyers incentives.

“In the absence of other positive catalysts, the group may see more muted investor interest in later months (September - December), with some profit-taking and reassessment of positions ahead of 2024,” wrote Pettinari.

Nonetheless, investors will have the opportunity to further assess how homebuilders are faring as KB Home reports its third-quarter results after the closing bell on Wednesday.

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