Homebuilding Stocks Fluctuate on Interpretation of Housing Data

Although the week ain’t over yet, the stock market has put in a decent showing despite bleak headlines. The Nasdaq was up 3.6% through Thursday, and the broader market has advanced six of the last eight weeks. While some market pundits maintain we have not seen the ultimate lows for the year, it is hard to see what can take this tape down. Oil prices? Apparently not.

Housing? Maybe.  Although the interpretation of the today’s numbers vary, and homebuilding stocks initially rallied before falling back. Confusion reigns:

While building permits were up 4 percent in both areas, ground was broken on 1.7 percent fewer single-family homes in April, from a seasonally-adjusted annual rate of 704,000 to 692,000.

There were varied reactions to the new figures, with one analyst telling Reuters that “it’s a nice upside surprise” and another telling Bloomberg News that the trends remained “horrific.” NYT

Housing permits were apparently down 34.3% from the previous month, but up 4.9% year over year. Be sure to read the fine print; everyone has skin in this game, and impartiality seems to be scarce as pundits rush to judge the statistics.

XHB Housing ETF/ Two Day Chart

Although the days of the NINJA loans (no income, no job) are over, Fannie Mae is lowering the bar, buying mortgages with only 3%-5% down, as they try to prop up the American Dream. Of course, homeowners in Lansing, Michigan have seen median home values decline 27% in the last year, and might have a different name for home ownership.

Now that is a nightmare.

Housing Starts Rise Unexpectedly
New York Times

U.S. Builders Broke Ground on Fewest Houses Since ‘91
Bloomberg

Fannie Mae relaxing loan down payment requirements
Reuters
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