Housing Starts & Sentiment

There was a slue of housing data released this week and if you watch any of the headlines coming out you would become very bullish on the housing sector.  I've come across over a half dozen articles stating the the housing recovery is well under way and that the housing bottom has been formed.  We are not buying.

We still believe that as long as the job picture remains under pressure people will have second thoughts to making big purchases such as houses.  You also have the astigmatism that real estate doesn't hold the value that it used to given the bursting of the bubble a few years ago.  Millions of home owners are still under water making mobility very difficult and refinancing to lower mortgage rates nearly impossible.

Data sources can be found in these article from WSJ, Bloomberg, and Econoday

• Housing starts rose 6.9 percent to a 760,000 annual pace after a revised 711,000 rate in May that was faster than initially estimated
• June pace was the fastest since October 2008, and estimates in the Bloomberg survey ranged from 710,000 to 800,000. Ground-breaking on new homes in May was revised from a previously reported 708,000. 
• Building permits fell in June, reflecting a drop in applications for apartment construction. 

Full disclosure we have a short position in the following home builders MHO, PHM, RYL, LEN, DHI, KBH