BUZZ - Morgan Stanley holds a "cautious" outlook on US homebuilders, warns of affordability concerns

October 1 - ** Morgan Stanley initiates coverage of U.S. homebuilders, holds a "cautious" view on the sector

** Housing affordability, incentives, and margin pressures are the main challenges—the brokerage noted

** Morgan Stanley stated that affordability issues have kept existing home sales range-bound, limiting the supply of second-hand homes and continuing to pressure the new home market; lower mortgage rates have improved housing affordability

** Initiates coverage of Toll Brothers (TOL.N) with an "overweight" rating due to its affluent customer base, lower sensitivity to interest rates, and strong pricing power

** Analysts stated that D.R. Horton DHI.N remains exposed to affordability pressures faced by first-time homebuyers; PulteGroup PHM.N benefits from a favorable buyer mix, but has not translated this into stronger earnings per share (EPS) growth

** Ratings and Target Prices:

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