US Home Construction Review $ITB #HomeBuilders Cracks in the Facade Are Growing

US Home Cons Review

Short-term price fluctuations do not influence long-term trends, cycles, and profitability. The majority, guided by price trends and emotions, concentrate on short-term trading noise rather than cyclical trends of price, time, and energy. This focus creates confusion, frustration, missed chances, and typically leaves them holding the bag during trend shifts. Investors can sidestep this pattern by embracing the Evolution of the Trade and aligning with the minority.

The US Home Construction's overall trend, revealed by trends of price, leverage, and time, are defined in The Matrix for subscribers.

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The Economy & Stocks (E&S) and US Bond Reports, series of updating videos throughout 2024, extend and expand this discussion for subscribers. Please watch them to better understand the discussion below.

The Economic Activity Composite (EAC), our real-time measure of marginal economic activity in the United States, is falling fast, while the President, Treasury Secretary, and Federal Reserve Chairman point out the economy is strong and on target for a soft landing. Economic soft landings, easily sold concepts to the public, are highly unlikely when the invisible hand generates significant and long duration distortions in the bond market. The message is clear, the US and global economy is extremely vulnerable within a well-defined economic cycle (See E&S Report).

Economically sensitive sectors, like residential housing and real estate, confirm trouble. Trends in housing stocks, building permits, and new housing starts paint a different picture than the soft landing sales pitch.

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Cracks in the Facade Are Growing

US home construction stocks ($ITB), the leading group for changes in the housing market, have yet to break their bullish formation. $ITB's primary trend has been up for 21 months and 80% gross profit. It's one of the better performing sectors in the PREV Matrix. The majority sees this, and thinks, “hey, everything is ok.” Please do not be complacent.

US Home Construction Stocks

Cracks in the facade, however, are growing fast. The computer, a tool that studies thousands of pieces of data, reveals the sizes of the cracks. Noticeable cracks are beginning to emerge in the housing market through interest rates, building permits, months supply of new homes, and new housing starts for single family homes trends. These economic time series, unlike Nonfarm payrolls, the darling of mainstream media mindless discussions and spin, are timely and do not get revised.

Building permits for single family homes, for instance, have been trending lower since July 2022. The Building Permits Oscillator crossed below the zero line years ago. The longer it holds below zero, the less likely the highly publicized soft landing will fail to materialize (See Building Permits Chart). The Building Permits Oscillator is just one of many economic trends painting a picture of growing economic distress.

Building Permits

We've committed number E&S and Bond Report updates toward growing signs of economic deterioration within the core economy. The majority will not listen as long as the stock market rallies. We are not permabears growling about a stock market crash since 2020, thus, destroying our reputations. Our subscribers know better. The next correction/crash percentage spike in the trends tab of the Matrix is our concern. It should be significant. The invisible hand will teach this lesson with the 2×4 of knowledge eventually.

No one will remember our warnings, or the spike in the correction/crash %. This is how the game is played.

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