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It appears the news we've long awaited may have arrived Tuesday - the start to some spring housing activity, if not recovery. Just a day after the NAHB's Housing Market Index indicated that builder sentiment was extremely negative in April, March Housing Starts and permitting activity told another story.

Housing Starts ran at an annual pace of 549K, 7.2% higher than February's revised pace of 512K (from 479K). March's Starts also caught economists by surprise, exceeding the consensus estimate of 525K compiled by Bloomberg. While the pace was certainly short of awesome, sitting 13.4% below the prior year period pace, it offered a glimpse of hope, if not a sign of something more. Single family starts improved by 7.7%, while multi-family property starts of five or more units increased by 14.7%. This is an understandable difference, given the increased tension against home ownership today.

There was even better news to be found in permitting activity, which is the forerunner of Starts. The pace of building permit authorizations jumped by 11.2% in March, to 594K. Bloomberg does not compile consensus estimates for permitting, but it would appear this result would also have beaten expectations. Still, this year's March compared poorly to the prior year level of activity, down 13.3% against last year. Permits for single family properties rose by 5.7%, while those for the construction of five units or more increased by 28%.

As we've indicated in the past, securities markets prefer change in direction and pace over absolute levels of activity, and so change in housing activity should be enough to drive real estate and construction related shares higher should a trend materialize.

The regional details of the report offered prospective information as well. The faster developing markets of the West and South saw solidly improving permitting activity, with the South rising 6.3% and West gaining 37.1% over February, after seasonal adjustment. The Midwest rose 6.9%, and the Northeast saw no change. As far as Starts went in March, the Midwest led all comers, with activity rising 32.3%. The Western portion of the nation marked strong starts up 27.6%. Starts were up 5.4% in the Northeast, but down 3.3% in the South. We again remind that permitting activity justly gets more attention from securities markets due to its prospective value.

In conclusion, I believe that builder confidence is not matching with real activity within the broader real estate market. There are signs of life. While demand for new construction is still burdened by the overhang of lender owned distressed property and foreclosures generally, as a seasoned equity analyst, I reiterate my recurring theme to you that the market will notice recovery early and begin rewarding homebuilder and housing related shares despite a new construction lag.

That said, the broader economy remains vulnerable to the slightest of shocks, and is not without burdens, given the pressures of the budget deficit and also rising prices. So there is no clear buy signal free of risk, but a faint buy signal for risk takers.

Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.