Low Housing Starts Number Is a Huge Plus

Alert -- housing shortage coming. We are building the same number of houses in this country that we were building in 1959. We had 179 million people in this country in 1959. We have 310 million people now.

The Fed has been given a green light, via the consumer price index, to take rates down to nothing. The banks should be eager to repossess and sell homes at these prices. Not that I want that: I want people kept in their homes. But it is too late for that.

What matters is that supply will not be able to keep up with demand given that build, even with foreclosures. There are just too many households being formed. Too many people who need homes. And too few new homes.

Don't forget the inventory of homes that are unsold is really going to come down when people realize that they are looking at what they can get and nothing more. At this pace, the homebuilding complex of Lennar (LEN - commentary - Cramer's Take), Horton (DHI - commentary - Cramer's Take), Pulte (PHM - commentary - Cramer's Take), KB Home (KBH - commentary - Cramer's Take), Centex (CTX - commentary - Cramer's Take), Standard Pacific (SPF - commentary - Cramer's Take), and Toll (TOL - commentary - Cramer's Take) cannot be maintained.

Why is it so low? Prudence? NO! FDIC Chairwoman Sheila Bair simply doesn't let defunct banks give more loans to builders. That's why it is shrinking, as the major homebuilders wouldn't know how to stop building to save their lives.

This housing starts number is thrillingly positive. It alone is enough to drive the market higher.

Random musings: Baltic Freight Index done going down. The Chinese mean business for the first quarter. Time to buy over there, and we have been nibbling for Action Alerts PLUS.

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

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.