But if I knew how to manage my portfolio safer and smarter than most hedge fund managers, I could realistically grow my wealth.
New Home Sales Leap In December
New home sales increased to an annualized pace of 481,000—up 12% from November, which was revised down from an initial estimate of 438,000, to 431,000.
A homebuilder sentiment index level of 50 is considered neutral. The index peaked at 71 during the height of the housing bubble in late 2005.
At the end of December, there were 1.85 million existing homes for sale. This represents a 4.4-month supply, a worryingly low level.
Building permits are used as a predictor of future housing volumes. Last month, single-family permits totaled 638,000, more than multi-family permits.
Single-family housing starts increased from 679,000 to 728,000. Single-family starts have been much more stable than multi-family starts of late.
This climate is obviously a recipe for mergers and acquisitions activity. The smaller builders will be driven into the arms of the bigger builders.
Through its Main Street Stars program, D.R. Horton offers special incentives or options on new homes to people who operate in a public-service capacity.
The first-time homebuyer accounts for 40% of D.R. Horton’s sales, which is in line with historical norms. Starter homes have lower margins than McMansions.
Beating Wall Street expectations, D.R. Horton reported 1Q15 revenues of $2.3 billion—a 35% year-over-year increase and a sequential decrease of about 7%.
We have underbuilt for a long time, and even in lousy economies people still get married, have kids, and ditch the roommates.
Most people didn’t believe the declines early in the bear market, so we shouldn’t be surprised that people don’t believe we’re in a bull market for homes.
Most economists are forecasting housing starts to be around 1.1–1.2 million, an increase from last year, but still below the normalcy of 1.5 million.
States like California dealt with the pipeline years ago. This explains why prices are rising in California real estate but are stagnant in the Northeast.
In November, home prices grew 0.8% month-over-month. They’re up 5.3% year-over-year. Prices are now within 4.5% of their April 2007 peak.
Investors, realtors, and homebuilders watch foreclosure starts closely. Foreclosure starts forecast future housing supply.
Industrial production decreased 0.1% in December, compared to a 1.3% increase in November. Materials and construction supplies increased by a lot.
Sales fell 0.2% in November. Inventories increased 0.2%. Interestingly, the inventory build was with the retailers, not the manufacturers.
Construction supplies increased 1.4% in December, a standout number. This might portend a more vibrant building season in 2015.
The General Business Conditions Index shows that Empire state manufacturing has rebounded. Of those surveyed, 33% reported better conditions.
Mortgage rates have lagged the ten-year bond lately, as mortgage bankers have been reluctant to believe these lower rates are permanent.