The Sound You Hear Is Housing Hitting Bottom

The housing bottom is here. With the explosion in starts in the South and West, the two areas hardest hit, we now know that the inventories have gotten too low, and the homebuilders sense that we have come to an end of the long national housing nightmare.

When you see that large a build as in these two areas and you see that housing permits are up for three straight months, you can't wait to sound the all-clear. The homebuilders certainly won't do it, as they are holding out for a bigger tax credit for homebuyers -- $15,000, and not just limited to first-time homebuyers. I can't tell you definitely that you won't get this, but I know that the president and the Treasury secretary don't want it, and they feel it is an unfair giveaway.

I would not buy a single homebuilder on this news -- not Lennar (LEN - commentary - Trade Now), not Toll Brothers (TOL - commentary - Trade Now), not Hovnanian (HOV - commentary - Trade Now), not KB Home (KBH - commentary - Trade Now) and not Pulte (PHM - commentary - Trade Now) or D.R. Horton (DHI - commentary - Trade Now). They won't make any money unless there is house-price appreciation, and that's years away.

No matter, you could tell this bottom was coming simply by the sales -- in many areas 10 times the number of last year -- 10 times! That eats through a lot of areas.

Also, it puts to rest the ridiculous canard that rates have moved up too far to keep housing. That's an odious lie, as anyone trying to get these precise rates last year at this time would have been totally unable to do so. Affordability and the one-time tax credit mean much more than rates anyway in terms of spurring buying. And they are at incredibly advantageous levels.

Remember the cycle. At the bottom there's an explosion in sales, as no new supply comes on and demand overwhelms. It is the same as in stocks: Every bottom, there's no new supply, and demand overwhelms. We are there. Don't over-think it. No one will call it. But the data are now so crystal clear that it would be ridiculous to not say it.

ALL JIM CRAMER BLOG ENTRIES | POST A COMMENT | READ COMMENTS  

---

Jim Cramer is co-founder and chairman of TheStreet.com. He contributes daily market commentary for TheStreet.com's sites and serves as an adviser to the company's CEO. Outside contributing columnists for TheStreet.com and RealMoney.com, including Cramer, may, from time to time, write about stocks in which they have a position. In such cases, appropriate disclosure is made. To see his personal portfolio and find out what trades Cramer will make before he makes them, sign up for Action Alerts PLUS. Watch Cramer on "Mad Money" weeknights on CNBC. To order Cramer's newest book -- "Jim Cramer's Stay Mad for Life: Get Rich, Stay Rich (Make Your Kids Even Richer)," click here. Click here to order "Mad Money: Watch TV, Get Rich," click here to order "Real Money: Sane Investing in an Insane World," click here to get "You Got Screwed!" and click here for Cramer's autobiography, "Confessions of a Street Addict." While he cannot provide personalized investment advice or recommendations, he appreciates your feedback and invites you to send comments by clicking here.

TheStreet.com has a revenue-sharing relationship with Amazon.com under which it receives a portion of the revenue from Amazon.com purchases by customers directed there from TheStreet.com.