November housing starts beat expectations by almost 8% (685K vs. 635K). Not only that, but they are up 30% so far this year, and up 43% from their all-time low, April 2009. They say that housing cycles typically last 5 years, but this one has been the worst ever and has lasted almost 6 years. Thus, there is every reason to believe that we have indeed seen the bottom in housing and that a recovery is now underway. They also say that an upturn in residential construction is an essential part of a larger economic recovery; if so, then maybe the recovery skeptics will finally have to change their tune.
Unvarnished good news, and the harbinger of much more good news to come. The collapse in housing starts has allowed a huge reduction in the excess inventory of homes, bringing supply back in line with demand. As the economy slowly improves, new family formations advance, and more people working want new and better homes, the nation could find itself with a shortage of housing before too long and much higher prices and interest rates to boot. This is a recovery that can feed on itself, and it's still in its infancy.
This index of homebuilders' stocks has almost doubled from its late-2008 lows, and has the potential to double and even triple from here if housing starts regain their former altitude.