Housing Starts: Biggest Plunge In Four Years

Will the price of lumber be the tell-tale that they can’t hide?  Or do you want to believe the “it was the bad weather in New York, man” narrative?   Housing starts ripped lower in February, down 17% from January.  They were 14.4% lower than consensus estimate.   Here’s the data link:  Housing Starts.

Let’s think about that for moment:   housing starts missed Wall Street’s brain trust consensus estimate by 14.4%.   IF the weather was expected to play a factor in housing starts, wouldn’t Wall Street have revised its estimates for February lower to reflect that?  After all, every analyst has had nearly 3 weeks since the end of February to revise down their estimates knowing there was some snow in New York during February…

Single family starts dropped 17% and apartment builder starts dropped 21.6%.  I have been suggesting for several months that a glut in apartment building construction has developed.  Not only in Denver, which I can observe and experience (I was offered a discount to re-sign my lease in a luxury building that is less than 1-yr old, many newer buildings are offering 1-month free and there’s several big buildings still being built), but I have received reader emails from all over the country which describe apartment building gluts in their area.

Of course Wall Street will promote the “permits” report, which showed a slight increase.  But, believe it or not, a homebuilder can’t sell a permit.  Homebuilders have already amassed a level of inventory that is as high as it was in 2005/2006 at the peak of the bubble.  Some builders, like the ones featured in my research reports, now have inventory levels that exceed their inventory at  the bubble peak.   Note:  unit sales are 60-70% lower than at the peak.

You can read the rest of this article here:   INVESTMENT RESEARCH DYNAMICS