{"id":828,"date":"2016-12-16T10:30:08","date_gmt":"2016-12-16T15:30:08","guid":{"rendered":"http:\/\/1db-blog.1db.com\/?p=828"},"modified":"2020-06-08T23:37:35","modified_gmt":"2020-06-08T23:37:35","slug":"housing-starts","status":"publish","type":"post","link":"https:\/\/beta.1db.com\/?p=828","title":{"rendered":"Housing Starts"},"content":{"rendered":"
Economic reports to be released this week should help clarify the recession\/expansion question.<\/span><\/div>\n
S&P Economics sees several key reports pointing to further growth, including a 0.5% gain in April<\/span><\/div>\n
Retail Sales, a 0.3% climb in Industrial Production for April, along with an increase in Capacity<\/span><\/div>\n
Utilization to 79.4%, and a rise in the University of Michigan\u2019s Consumer Sentiment Survey to a<\/span><\/div>\n
preliminary reading of 84.3 in May from 84.1 in April.<\/span><\/div>\n
Probably the most important of this week\u2019s reports on offering clues to the proximity of recession,<\/span><\/div>\n
in our opinion, is Housing Starts for April, which is projected to rise to 975,000 annualized units.<\/span><\/div>\n
Housing starts have been a very helpful gauge of an impending recession in the U.S. over the<\/span><\/div>\n
past 55 years. Since 1959, seven of eight recessions were preceded by year-over-year declines<\/span><\/div>\n
in housing starts of 30% or more. Only the recession that accompanied the popping of the Tech &<\/span><\/div>\n
Telecom Bubble of the late 1990s was not foreseen by a significant drop in housing starts. Taken<\/span><\/div>\n
from a reverse scenario, the U.S. economy slipped into recession seven of eight times after the<\/span><\/div>\n
year-over-year decline in housing starts exceeded 30%. Only in 1966 \u2013 a bear-market year in<\/span><\/div>\n
which the S&P 500 declined 22.2% \u2013 did housing starts fall by 42%, yet no recession ensued.<\/span><\/div>\n
The U.S. economy remained in expansion mode until 1968, when the year-over-year change in<\/span><\/div>\n
housing starts once again had declined by more than 30%.<\/span><\/div>\n
The recent trend in housing starts has not been encouraging. The annualized rate of starts had<\/span><\/div>\n
fallen by 6% on a year-over-year basis through March 2014, after peaking at +42% in March<\/span><\/div>\n
2013. However, should Friday\u2019s data for April equal our estimate of 975,000 units, the y\/y change<\/span><\/div>\n
will jump to +14% from the current -6%, defusing the ominous hint from this accurate indicator.<\/span><\/div>\n
So there you have it. Housing is an area of the economy that is causing many economists and<\/span><\/div>\n
strategists to experience sleepless nights. And while the year-over-year change in Housing Starts<\/span><\/div>\n
was negative in March, it is expected to see a positive pop in April. And while some on Wall<\/span><\/div>\n
Street believe homebuilding stocks should be avoided, S&P Capital IQ believes several are<\/span><\/div>\n
beginning to look attractive. Indeed, the rolling 52-week relative strength chart for the S&P 1500<\/span><\/div>\n
Homebuilding Index, which peaked in September 2012 and broke below its 39-week moving<\/span><\/div>\n
average in February 2013, looks to us to be closer to a bottom than a top, as it hovers slightly<\/span><\/div>\n
above one standard deviation below its mean since 1995. So investors interested in doing some<\/span><\/div>\n
bottom fishing may want to consider the seven homebuilding stocks followed by S&P Capital IQ<\/span><\/div>\n
equity analysts that carry 4-STARS (Buy) recommendations: KB Homes (KBH $15.85), Lennar<\/span><\/div>\n
Corp. (LEN $38.40), MDC Holdings (MDC $28.16), Meritage Homes (MTH $39.17), Pulte Group<\/span><\/div>\n
\n
(PHM $18.32), Ryland Group (RYL $37.97) and Toll Brothers (TOL $34.10).<\/span><\/div>\n<\/div>\n","protected":false},"excerpt":{"rendered":"

Economic reports to be released this week should help clarify the recession\/expansion question. S&P Economics sees several key reports pointing to further growth, including a 0.5% gain in April Retail Sales, a 0.3% climb in Industrial Production for April, along with an increase in Capacity Utilization to 79.4%, and a rise in the University of…
Continue Housing Starts<\/span><\/a><\/p>\n","protected":false},"author":4,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[1],"tags":[],"class_list":["post-828","post","type-post","status-publish","format-standard","hentry","category-blog"],"acf":[],"yoast_head":"\nHousing Starts - Financial Advisors<\/title>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/beta.1db.com\/?p=828\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"Housing Starts - Financial Advisors\" \/>\n<meta property=\"og:description\" content=\"Economic reports to be released this week should help clarify the recession\/expansion question. 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