Starts rose 3.6 percent to a 894,000 annual rate, the fastest since July 2008 and exceeding all estimates in a Bloomberg survey, Commerce Department figures showed today inWashington. The median estimate of 82 economists called for starts to fall to a 840,000 pace. Building permits, a proxy for future construction, eased after surging the previous month.
Okay? Let there be no more debate: the housing market is back. It doesn’t necessarily mean the economy is back, at least not yet. There is a demand for alternative investments in this country, as people with money hate the dollar, scared of bonds and suffer from nightmares over the stock market. It makes sense that the ocean of disposable incomes in this country be put to work in housing.
Who benefits?
From my experience, being a very big participant in the last housing boom: HOMEBUILDERS! (duh). You can mess around with derivative plays, like LPX, USG, OC and MAS. But let’s be clear, the companies who stand to benefit the most are the ones with the most skin in the game. That means PHM, HOV, BZH, SPF, TOL, MHO, LEN and DHI are all going higher.
Truth be told, we need the housing market to recover, in order to get unemployment down. Building big stupid homes is what we do best, similar to what the Chinese do with ghost cities and the ancient Egyptians did with pyramids.
HPQ is a disgrace. I can’t believe they got duped with Autonomy. Chanos nailed it the whole time, as he was short HPQ because of Autonomy. What a call.
BBY is tanking because the CD/DVD is obsolete. Look at all of the wasted floor space that is dedicated to CDs and DVDs. The company used to be the best–now they suck like all the rest.
This early sell off is child’s play. The market wants higher.
Wait for it.
If you enjoy the content at iBankCoin, please follow us on Twitter
Fuck the fiscal $CLF.
good one
Just put accountants on the career scale below circus clowns and just one notch above dentists.
“Building big stupid homes is what we do best, similar to what the Chinese do with ghost cities and the ancient Egyptians did with pyramids.” Yet another classic !
It is true. Holding down sales is lack of supply, down from 5.6 months in September to 5.4 months for the lowest rate in 6-1/2 years. The number of homes on the market, at 2.14 million, is the lowest in 10 years. Prices are up about 10% y/y and growth rates in the homebuilders are being increased, expanding their multiples and hence their price. I’d target builders who construct in the West and Midwest now (where starts are greatest) and look for evidence of rebuilding post-Sandy cleanup in the northeast.
RYL has been a good play these past few months, and the future looks even better.
this morning: slow grinding up, or teetering for a pullback?
I think its teetering. nothing too deep, but my tell is volume too light for its own good.
lol big stupid homes
EGY new discovery in Africa with Total that must be kept ‘close’ for now. Several drilling programs getting cranked up for 2013.
The housing industry is driven by three major forces:
1. rising GDP
2. increasing population
3. rising wages (aka disposable income)
With these drivers in play, the housing industry has done well historically; even in an atmosphere of rising interest rates.
Currently, these drivers do not have the juice to power much more than barely sustainable modest growth. Of course, that’s better than the painful unwinding of the past 5 years.
The fly in the ointment is the onrushing “Boomer Tsunami”… As a gross generalization, boomers have next to no savings, few liquid assets, and are mostly depending on selling off their homes to finance their miserable retirement.
With glacial GDP growth, stagnant wages, and modest population growth on the one hand and a coming avalanche of existing home listings, I wouldn’t count on the housing industry to lift this market!
Yep! “Big stupid Homes” is a gem!