Homebuilders Will Keep Sinking Into the Ground

Still they won't merge. Still they refuse to rationalize. Still their egos remain big. Still they pay off Washington for what they want.

The homebuilders. A relentless spiral down finally repeals all of the gains since the housing boom started. We are back to 2002. All of those wonderful wins for those buy-and-hold lovers are now gone. The stocks are in tatters. Every fund-raising and capital-raising and lender rollover has meant absolutely nothing.

But like the major banks, they are all still standing. People still have fresh capital to speculate on a bottom in Lennar (LEN - commentary - Cramer's Take) or Pulte (PHM - commentary - Cramer's Take) or D.R. Horton (DHI - commentary - Cramer's Take). I still see people believing that this is the right level to take a stab at Hovnanian (HOV - commentary - Cramer's Take).

It never ends.

I do believe there will be a bottom in these stocks when they consolidate or when the most overextended candidates at last go belly-up. I really can't believe that Hovnanian is still in existence, or that Standard Pacific (SPF - commentary - Cramer's Take) got a capital infusion. How can Lennar still be paying a dividend north of 5%? Where is that analyst who tried to call the bottom last week? What happened to him?

Yeah, this group is just awful, and the end of the personal mortgage industry -- signified by the incredible shrinking PMI Group (PMI - commentary - Cramer's Take)/MGIC Investment (MTG - commentary - Cramer's Take) and the immolation of Freddie Mac (FRE - commentary - Cramer's Take)/Fannie Mae (FNM - commentary - Cramer's Take) explains a ton.

Now I see the Senate is trying to get a housing bill done. I have no doubt, given the money the homebuilders have spent, that they will get their way and still be able to build homes instead of vanishing into the ether as we need them to.

It's a disgrace.

But it's the American way. Of housing death.

At the time of publication, Cramer had no positions in stocks mentioned.

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