Thursday, July 23, 2009

Building with Housing Starts Data

Residential real estate has been at the heart of market movements since the subprime crash dating back to February 2007. Housing inventory has been skyrocketing with foreclosures getting to all time high levels. This has put significant pressure on the home building sector.

Home building has not ceased, but has significantly decreased. New housing starts in June 2009 were at a level 28% of where they were at the same time in 2005. These starts have ramifications outside of just homebuilders like DR Horton (NYSE:DHI), Pulte Homes (NYSE:PHM), and Lennar (NYSE:LEN). Suppliers for new home supplies are impacted as well.

Searches for key indications of interest in the housing sector fall very closely in line with where the true number falls. Going back to 2005, there is an R2 of 0.7667 with searches for these key indicators and the true housing starts number.

Markets with Search (tentative) prediction for July 2009 housing starts: flat. The numbers will be out in mid-August.

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