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The rally among UK housebuilders, which has carried them 33% higher since hitting a low point in March, appears to be over.
Two City brokers made the claim today, sending shares in the sector sharply lower.
Taylor Wimpey fell 2¼p to 29¼p while Persimmon dropped 21½p to 338p, Barratt Developments 9¾p to 159¼p, Bellway 30½p to 628p and Bovis Homes 15p to 384p.
American broker Citigroup points out that prices have fallen by between 20% and 25% since their peak in 2007 and are expected to drop by a further 15% this year while remaining flat in 2010.
The recovery will be slow with the lack of mortgage availability and the growing number of job losses holding the market back.
Cenkos Securities also reckons the rally is “running out of steam”, having got through the spring selling season.
Citigroup says UK housebuilders are not suffering from a pile of unsold homes but some of them, such as Barratt and Redrow, still need to raise cash as a matter of urgency.
Bellway, Bovis and Persimmon may also need to turn to shareholders in order to take advantage of weak land prices.
Citigroup has dropped Bellway back to a hold and Redrow to sell.
It has repeated its buys on Berkeley and Persimmon, with a sell on Barratt.
Sentiment was also damped in the sector by another profits alert from Wolseley, the world's biggest supplier of plumbing equipment.
Its shares tumbled 201p to 1027p after it warned of an 88% slump in profits because of worsening trading conditions.
Panmure has cut its rating on Wolseley, which has big interests in the US, from buy to sell. A bear squeeze has carried Wolseley up from a low of 585p since March.
But with a stock-market price tag over £3 billion, the shares are expected to make it back into the top flight in next month's index review.
The bear squeeze that has brought so much pain to hedge funds in recent months is showing signs of easing amid growing evidence that the US economic recovery had stalled.
Leading shares were marked sharply lower, leaving the FTSE 100 index nursing a loss of 65.92 at 4350.31.
This afternoon Wall Street frittered away an early lead despite news of better-than-expected durable goods and a drop of 13,000 in the number of unemployed people claiming benefit last week. The Dow fell 28.27 to 8271.75 after briefly touching 8388.6.
As General Motors staggers towards bankruptcy, Wall Street investors have been left counting the cost of the US Treasury's trillion-dollar spending spree. US bonds rallied this afternoon, but yields remain high while the dollar has come under increased selling pressure.
In the meantime, President Obama's regime is saddled with resolving the worsening situation over North Korea's nuclear programme. The outlook bodes badly for those investors who have been pinning their hopes on a global economic recovery.
But it may turn out to be a winner for the bears and hedge funds in London who have been steadily squeezed, having seen the Footsie 100 index climb more than 25% since its low point in March.
Gains among blue-chip stocks were hard to find and were made up mostly of natural resources providers and technology stocks. Cairn Energy rose 62p to 2435p with Fresnillo up 26½p at 705½p and Intertek 18p to 1064p.
Liberty International also put on ¼p at 351¼p. The developer of retail outlets is fighting an uphill battle to retain its position as a constituent of the Footsie in next month's review.
ITV rose 4¾p to 36¼p after Bank of America Merrill Lynch raised its rating from underperform to buy. JJB Sports gave up ¼p at 37p after it emerged Newcastle United's owner Mike Ashley had sold his 4.8% stake held in the name of Sports Direct.
The sale of 11.94 million shares had raised £4.4 million which compares with the £3.4 million he is reckoned to have paid last October.
JD Sports, unmoved on 475p, continues to hold 10% of JJB with activist hedge fund Crystal Amber raising its stake to 13% last week.
Buses and trains operator Stagecoach reversed 4½p to 123½p as Morgan Stanley removed the shares from its Best Ideas list and cut its rating from overweight to underweight along with rival Go-Ahead, up 3p at 1260p.
But it has lifted FirstGroup, 7½p higher at 376p, from underweight to equalweight and National Express, 9p better at 307¾p, from equalweight to overweight.
