Contact Us Disclosures Blog
Make an Appointment Contact Us Podcast Blog
Market Commentary Audio Archives Book Shelf InvestAbility Center

Returning to Norms

December 19, 2012 – 6:15 pm

Building Safety Week 006 (1)In November housing starts fell 3% to 861,000, weaker than expected, but on the other hand, permits for new construction rose 3.6% to 899,000. Year over year starts are up 22% and with that a clear trend is in place and the trend is up. Builder sentiment is at its highest since the recession in 2008, another indicator of improvement.

For investors it is always the trend change that is important but in absolute terms construction is still far below half of what it was at its peak of 2.3 million in 2006. There is little reason to expect it to return to that peak as it was an extreme but if we see household formations running at about 1 million per year then we should also see new construction running at 1 million per year.

It would be nice to see normal starts, normal sales of existing homes and normal interest rates, but we are still far from the norm. At least we are moving in the right direction for housing and that is a fundamental economic support for the U.S. economy.

Good Trading
Steve Peasley

Post a Comment