This Day On The Street
Continue to site
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here

Housing Rally: Room to Run

A dramatic slide in housing starts last month and a fifth interest rate hike by the Federal Reserve on Tuesday have left Wall Street bears in no doubt that homebuilders' best days are over.

But the pessimists have been wrong for a long time.

Indeed, the Philadelphia Housing Index has doubled over the past two years as calls for a sharp slowdown proved to be unfounded. The group has climbed 27% this year and is up 18% since wrote a bullish article on the sector in March .

"Somehow, [the bears] continue to miss the point that this is a consolidating industry, that the big guys continue to get market share from the little guy," said Ron Muhlenkamp, founder and president of the Muhlenkamp fund.

Large builders now control more than 20% of the market, up from just 5% in 1991, and analysts say that could rise to 50% going forward.

Muhlenkamp said the strength of the housing market has actually surprised him this year and he has been calling for starts to flatten out. Still, he thinks sales will continue to grow at a healthy pace over the next few years.

Shares of homebuilders fell Thursday after the Commerce Department said housing starts plunged 13.1% in November to an annualized rate of 1.77 million units. That was the steepest decline in 10 years and the lowest level since May 2003. Building permits, a gauge of future activity, also declined to 1.99 million units.

"While we have noted the potential for a housing slowdown for some time ... the magnitude of the November decline is surprising," said Goldman Sachs economist Bill Dudley.

Both single and multifamily starts were down, and all four major regions of the country posted similarly steep declines, he said.
1 of 3

Check Out Our Best Services for Investors

Action Alerts PLUS

Portfolio Manager Jim Cramer and Director of Research Jack Mohr reveal their investment tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
Quant Ratings

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
Stocks Under $10

David Peltier uncovers low dollar stocks with serious upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
14-Days Free
Only $9.95
14-Days Free
Dividend Stock Advisor

David Peltier identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Updates with exact steps to take - BUY, HOLD, SELL
Trifecta Stocks

Every recommendation goes through 3 layers of intense scrutiny—quantitative, fundamental and technical analysis—to maximize profit potential and minimize risk.

Product Features:
  • Model Portfolio
  • Intra Day Trade alerts
  • Access to Quant Ratings
Real Money

More than 30 investing pros with skin in the game give you actionable insight and investment ideas.

Product Features:
  • Access to Jim Cramer's daily blog
  • Intraday commentary and news
  • Real-time trading forums
Only $49.95
14-Days Free
14-Days Free
CTX $25.68 0.20%
HOV $1.65 -2.37%
LEN $44.72 -2.38%
NVR $1,651.01 -1.73%
MTH $33.45 -1.50%


Chart of I:DJI
DOW 17,750.91 -140.25 -0.78%
S&P 500 2,063.37 -18.06 -0.87%
NASDAQ 4,763.2240 -54.37 -1.13%

Free Reports

Top Rated Stocks Top Rated Funds Top Rated ETFs