In the context of the absurdly misinterpreted and highly manipulated housing data released so far this week, the Dow Jones Home Construction Index is down nearly 3% from its high print earlier this week, despite the fact that the S&P 500 and the Dow are up close to 2% this week. The nation’s third largest new homebuilder, PulteGroup, is down 9% from its high-tick earlier this week, after reporting at 6% year over year decline in unit home closings (deliveries).
While I’ll have a complete dissection of yesterday’s existing home sales statistical abortion released by the National Association of Realtors and gleefully delivered by its cross-eyed, dim-witted chief “economist,” Larry Yun, I wrote an article for Seeking Alpha in which explained why the housing starts report is completely useless as an indicator of activity – healthy or otherwise – in the housing market: The Housing Starts Metric Is Useless
In fact, despite the ebulliently presented headlines, single-family housing starts showed a definitive, statistically significant decline for September from August. This is the metric that, if it even had any relevance, would pertain to the extreme overvaluation of the homebuilder sector.
While it’s extremely difficult to short anything in this market, the homebuilder sector is going to hit a wall of reality that will trigger a big sell-off in the sector. I believe we are seeing the start of that this week. My latest report delivered 9% to those who purchased it when I published it earlier this week – more if anyone played the near-money, October puts. There’s still significant room for this stock to go well below $10 eventually. You can access my report here: Homebuilder Research Reports.
[Please note: Five of my homebuilder stock reports have not been updated with recent earnings for quite some time. The date listed above each report is the date of the last update. I am offering these reports at a discount if you purchase multiple reports. Anyone who buys my reports can receive updates as part of the price of my reports. Please contact me at this EMAIL address if you are interested in all of my reports. Once I update them with current financials. they will only be available at full price]