Home Life the High Life
Homebuilding stocks reached their tallest heights in more than fifteen years on Friday, all in lockstep with blow-out housing start figures. Those represent the number of houses that have started bottom-up construction work across the States!
Property developers had firm ground to build on in 2019. Interest rates sunk even lower as the Federal Reserve cracked under the weight of Trump’s trade wars. That cheapened the cost of borrowing money around the United States, and made signing a mortgage a tad less daunting decision.
On top of that, consumer confidence is flying amid super-low unemployment and a stock market that doesn’t know when it’s time is up. Things have never been better. So should investors in D R Horton and the Pulte Group sell out now while the going is good? Or is it wiser to continue riding this running horse?
Thinking a step ahead, government building permits issued to eager homebuilders are an obvious leading indicator for housing starts. Those, in turn, tease our place in the housing cycle and greater economic cycle.
Building permits swan dived 3.9% on Friday, so take that as you will.
It’s worth remembering that house prices are astronomical in many cities, so building from scratch is becoming a viable solution and might explain this jump. Housing data has also been a mediocre guide to predicting recessions at best in the past, with around an 80/20 ratio of successful to false-positive signals. Recession canceled?
