US housing

The US housing data continues to look, to our mind, very, very weak. Homebuilder surveys are a touch off their lows (meaning slightly higher), but overall a lot of volume coming to market (homes under construction) at a time of very weak sales.

US homebuilders don’t seem to care at all, with strong YTD and 1yr total returns.

Now, I think it very difficult to have a housing crash when there’s no existing home inventory. Whatever is happening to demand, there’s also no supply.

So, given modest household debt levels, and, no supply, I don’t see an economy wide threat from US housing, ala 2006 (which I absolutely do see here in Australia).

But I also think that the homebuilder share prices are overdone, and I think that the forward order books for RWC and JHX surely can’t look that good.

So, muddled thoughts, perhaps, but, then again, the macroeconomic crystal ball is covered in mud, at the moment, so I am relaxed about this.

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