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Wednesday, December 17, 2008

Housing Starts Down... Housing Stocks Up

Bloomberg reports:

U.S. builders broke ground in November on the fewest new homes since record-keeping began, signaling the housing slump will extend into a fourth year.

Construction starts on housing fell 18.9 percent last month to an annual rate of 625,000 that was the lowest since the government started compiling statistics in 1959, the Commerce Department said today in Washington. The annual rate was lower than all 70 estimates in a Bloomberg survey of economists.
Looking at data from the Census we see that new starts are now down ~50% since last November.

Ignore that jump in the Northeast last June. As Forbes reported:
Multi-family housing starts in New York City fueled a spike in June of the number of building permits and overall housing starts, according to a report published by the United States Commerce Department on Thursday.

The government said the number was deceptively buoyed by a zoning rule change in New York. If you exclude multi-family data in the Northeast, starts actually fell by 4.0%.
So with all this gloom, housing stocks must have been hit... WRONG. Not when the Government is handing out money!!!! Lets go to Marketwatch:
U.S. housing starts plunged to record lows in November as the residential real estate bust persists.

However, builder stocks jumped Tuesday along with the broad market after the Federal Reserve said it will use every tool at its disposal to get the economy back on its feet.

While I don't necessarily understand a rally on the same day as these reported stats (unless investors think this is the bottom... again), I do at least see one bright spot for homebuilders. When these huge "stimulus" infrastructure projects begin, who do you think will be more prepared to help... bankers or homebuilders?