A "Do-or-Die" Moment for Housing

Real estate thrives-- while homebuilders slide July 15, 2014     A "Do-or-Die" Moment for Housing   Real estate thrives-- while homebuilders slide Can we survive another slump? Plus: Busting the ghosts of 2008   Greg Guenthner coming to you from Baltimore, MD... Greg Guenthner As the real estate market slowly begins to show signs of life, homebuilders continue to slide. The iShares Dow Jones U.S. Home Construction ETF is down almost 4% year-to-date. Over the past 16 months, the builders have been stuck in neutral, while the S&P has risen more than 26% over the same period. Something has to give... "The new-home market is about the only part of the U.S. domestic economy that still remains in recession territory," Marketfield Asset Management chief executive Michael Shaoul tells MarketWatch. "I don't think that normality for the U.S. economy and the abnormality of the U.S. housing market can coexist for too much longer." In case you think the housing market is getting overheated and is due for another slump, allow me to point out some interesting statistics: Sales of new single-family homes just hit an annual rate of 504,000. But the average annual pace clocked in at 940,000 over the decade leading up to the 2005 peak, according to MarketWatch. Then, there's new construction on single-family homes, which is up 5% over last year. But this metric remains well below the average pace of almost 1.4 million starts during the boom days... However, housing might finally gain its footing this year. In May, home purchases jumped by almost 5% to a 4.89 million annualized rate-- the biggest increase since August 2011. But what we're seeing right now is a do-or-die moment for homebuilding stocks. It's important to note that the iShares Dow Jones US Home Construction ETF (NYSE:ITB) and the retail-heavy SPDR Homebuilders Index ETF (NYSE:XHB) underperformed the S&P in 2013, while home prices actually increased 10.9%. This year, we've been waiting for the snap-back rally... ITB and many of its homebuilder components are trading near long-term support. This marks a perfect opportunity for a low-risk buy. If prices can't hold these levels, you can sell with little to no harm to your portfolio. But I think they'll hold and eventually shoot higher. Improving housing data is too good to ignore. Investors are set to rotate into this unloved sector soon...         Breaking: Family Drives From Texas to New Hampshire Without Spending Dollars A young family from San Marcos, Texas successfully made a cross-country trip to New Hampshire without spending dollars. They used funds from a new kind of "account" that is gaining acceptance around the country. This is no ordinary bank account… there are no dollars in it. In fact, it's not part of the U.S. banking system at all. I call it the "underground banking system." Click here now to learn how to take advantage of this incredible new banking system.           Rude Numbers Targets, Predictions and Wild Guesses   $900 million will help build a new Volkswagen plant at the company's Tennessee. According to Reuters, the new plant will double the factory's workforce... $500 million per year is the potential economic impact of LeBron James' return to Cleveland. Local politicians are expecting ticket sales and other spending to boost economic activity in the region... $1,309 is where you'll find gold futures this morning. The yellow metal has gained about $2 in early morning trading... $99.99 buys a barrel of crude today. Oil just slipped below $100 for the first time since early May... 1,973 marks the spot for S&P futures just before the morning bell. Stocks are set to open in the green again this morning...     Rude Trends When to Buy... When to Sell   We're diving headfirst into the mailbag today. After just a few minutes sifting through your messages, it's clear that the 2008 financial crisis remains an unshakable concern... "In 2008, I decided I would never buy another bank stock," writes a shell-shocked reader. Yeah, I can understand your worry. But as a trader, I try to disconnect the business from the stock. It's amazing what you can find in the dark corners of the market when you remove some of your biases. A trader friend I follow actually redacts the tickers on his charts before he begins his analysis. That's a great way to take away any preconceived notion you might have about a company or industry. If you're going to let price guide your trading decisions, you might as well strip away everything else... Regardless, I'm not thrilled about banks right now. So you don't have to worry about missing out on a hot trade. Next... "The elections and the end of QE worry me when it comes to holding any stock long term," writes another cautious reader. "Folks still worry about another 2008." There isn't some magical all-clear signal that tells you when it's safe to get into stocks. In fact, the market needs a laundry list of worries to help push it higher. If you've been sitting at home waiting for the market spirits to move you to buy over the past five years, you've missed out on quite a rally. The day "folks" stop worrying about another market crash is the day you should be selling with both hands. [Ed. Note: Send your feedback here: rude@agorafinancial.com - and follow me on Twitter: @GregGuenthner]     Ignore At Your Own Peril Today's Must Read Links   How to Quickly Become an Oil Millionaire without Owning Land World's Most Valuable Tech Companies for 21-Cents? What's the ultimate revenge on the IRS?     BE SURE TO ADD dr@dailyreckoning.com to your address book.       Additional Articles & Commentary: Join the conversation! 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