Photo: Goldman Sachs
A note out from Goldman’s Joshua Pollard tells investors to fade the rally in homebuilders.While homebuilder stocks have outperformed the market by 1.5% in the past three months, Pollard says stocks are getting ahead of the recovery. Actually housing data has been lackluster this winter, and indicators like new mortgage applications point to a low sales in the spring.
Goldman has reduced its target for 2012 new home sales to 425k from 485k.
The bank predicts 10-15% new home sales growth in 2011 and 2012, well below consensus estimates for 20% growth in 2012.
Low mortgage applications in January predict low mortgage applications in April (and last year's jump was based on housing stimulus)
Now look at the large existing homes inventory -- not even counting the delinquent mortgages that could flood the market
BIG PICTURE: Goldman expects 10-15% new home growth in 2011 and 2012 -- i.e. no significant recovery
Recently this correlation is weakening. New home sales are not keeping up with even a lackluster jobs recovery.
Good sales data in December was skewed by a record increase 71% in the West -- and Goldman blames this on statistical error!
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