NEW YORK (Real Money) -- Are the homebuilders about to break out?
The group, as represented by the XHB, the homebuilder ETF, has been one of the most poorly performing sectors in the economy. We build about as many homes in this country these days as we did when we had half the population we have now.
Stuart Miller, the CEO of Lennar (LEN) , one of the few homebuilders that has outperformed, says we are muddling along at recession levels five years after the crisis peaked.
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It's been pretty pathetic.
But I am seeing signs that this group is about to join the party; specifically two signs: a thaw in lending and lower gasoline prices.
There's a little story in The New York Times about Fannie Mae (FNMA) , and in it is the following paragraph: "Even as the government is moving ahead with the changes, some housing analysts had concerns, contending that the program could lead to higher defaults."
I know some of you might think this strange, but frankly that's a good thing. We have, in the country, been headed toward a policy of zero defaults, meaning no one should be able to get a loan who can't pay it back, and if they can't, there has to be enough collateral that a bank won't take a loss. In fact, it might have a gain.
And that's one of the chief reasons why we have recession levels of homebuilding even as we are still a growth nation and a nation that is creating jobs. Now the article goes on to create a bizarre contrast between two different views: those who want to lower the down payment for a home from 20% to 3% and those who want to ease credit ratings for homebuyers.