Housing Starts Are a Step in the Right Direction

The crosscurrents in banking and homebuilding are so difficult that it feels like a riptide.

But perhaps the good news is that there are crosscurrents. In other words, until this week we only had bad news: a run on IndyMac, the near-collapse of Fannie (FNM - commentary - Cramer's Take) and Freddie (FRE - commentary - Cramer's Take), the precarious nature of Washington Mutual (WM - commentary - Cramer's Take), the possibility that we could have many regional banks shuttered. The end of the monolines.

All of those could still happen! But what we have seen this week is a chance for the companies to issue equity, the "positives" that Wells Fargo (WFC - commentary - Cramer's Take) and JPMorgan (JPM - commentary - Cramer's Take) and Northern Trust (NTRS - commentary - Cramer's Take) and State Street (STT - commentary - Cramer's Take) and Schwab (SCHW - commentary - Cramer's Take) and Ameritrade (AMTD - commentary - Cramer's Take) are better.

JPMorgan had some positives to say about HELOC, but that's just dross. The company said that prime mortgages are breaking down. Badly. Dimon said it is a dramatic increase in prime mortgage foreclosures. That's just plain awful and would make me sell all of these banks. I am not kidding. That's horrible news.

OK, so let's put all of that away for a moment. The central issue from the beginning, the one that matters more than anything else, is house price depreciation. Can it be stopped?

And there, at last, I have a positive: The huge decline at work on single-family homes. We all know that if foreclosures and defaults are up, it is almost impossible to cure the housing glut UNLESS the homebuilders stop building homes. And along those lines, we have something really special: the housing starts. Now, not the big surge -- that was all multifamily.

The work on single-family homes. It decreased 5.3% to a 647,000 pace. That's the lowest since 1991, when we had about 30 million fewer people in this country.

That's what we need. Remember, in the heyday we were building at a 2-million-home pace.

We can't cut the foreclosures without help from Congress. But the supply decline is most welcome.

That could be the only real piece of info other than the banks not going out of business that I see in this bizarre day.

Not as bad as we thought. That matters.

Random musings: Totally focused on the commodity costs associated with Yum! Brands (YUM - commentary - Cramer's Take). It just hit them like a ton of bricks. ... I think Wal-Mart (WMT - commentary - Cramer's Take) is down because of expiration pressure to close at $55. ... The Goldman piece on rig rates momentarily lifted things, but without global tension, I think these will go down. ... It would not surprise me to see natural gas go through to $9 and oil to be at $120 rather soon -- too much supply of both. But the stocks, like Cabot (COG - commentary - Cramer's Take), are reflecting $8!

At the time of publication, Cramer was long Cabot Oil & Gas, Goldman Sachs and Wal-Mart.

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