March 20, 2007
Yee-HA!!!! Adding fuel to the housing crash fire, housing starts supposedly jump 9% in February (vs. January)
Not if you're the barge-like US homebuilders. When they should be laying off and shutting down, they do the opposite. We already have record inventory sitting around gathering dust, we have over a million potential buyers unable to buy with the lending tightening, and we have a massive dropoff in demand. Yup, that's a great time for more inventory!
Everyone remember Cisco and Global Crossing in 2000? Well, now it's Toll Brothers and KB Home. Massive oversupply combined with a crippling drop in demand equals an upcoming fire sale unlike anything ever seen in US housing history.
WASHINGTON (Reuters) - The pace of U.S. home construction rose 9 percent in February, beating analysts' predictions and running against dismal news in the subprime home financing sector, a government report showed on Tuesday.
The report turned U.S. stock futures positive and was expected to firm the Federal Reserve Board's resolve to hold interest rates in place when policy-makers meet Tuesday and Wednesday.
"I don't think it changes things for the Fed at all, they are most likely going to leave rates unchanged and to maintain their bias toward tightening," said Mark Vitner, senior economist at Wachovia Securities
"The market will ultimately find demand data more interesting," said Alan Ruskin, chief international strategist, Greenwich Capital Markets in Greenwich, Connecticut, referring to Friday's existing home sales data.
"The home sales data will also be heavily distorted this month, and we will probably have to wait another month for a clear sign of demand trends and the beginnings of the fall-out from tighter lending standards. All in all, too many distortions here to get the market excited," Ruskin said.