Wall Street foresees housing gains in 2013

There was so much excitement over Wednesday's huge rally that it's understandable that people missed the market's renewed bet on housing.

Homebuilding shares were higher. So were Home Depot (HD), Lowe's (LOW), Whirlpool (WHR) and Stanley Black & Decker (SWK).

The gains might have surprised investors figuring anything housing related might be ready for a fall.

The Philadelphia Housing Sector Index ($HGX) climbed 5.82 to 177.11 on Wednesday. The index, which tracks homebuilders, building materials companies and the like, soared 66.4% in 2012 and is up 218% from its bottom in March 2009. 

Pushing the stocks higher was some good news Wednesday, although the stocks were flat on Thursday.Part of the good news was buried deep in the Commerce Department's report on November construction spending, released Wednesday. The report showed a small overall decline from October, mostly attributed to the effects of Superstorm Sandy on the East Coast.

But the residential components showed small gains -- maybe not as much as analysts had hoped, but gains nonetheless. It appears that single-family construction will hit about $132 billion this year, up 19% or so, with multifamily construction reaching $21 billion, up 43%.

Admittedly, those numbers are still only 30% of the $468 billion invested in single-and multi-family housing in the peak year of 2006. But gains are gains -- and the first real gains since the housing market crash began in 2007.

The other good news came from CoreLogic, which tracks and analyzes real estate trends. The company estimated that the shadow inventory of homes -- basically homes in foreclosure, owned by lenders or with seriously delinquent mortgages -- was about 2.3 million units in October, the latest available data. That was down 12.3% from October 2011. 

About half the properties involved consist of homes with delinquent loans. Moreover, they're not coming onto the market any time soon. Bottom line, according to CoreLogic CEO Mark Fleming: the shadow inventory represents "little immediate threat" to dumping a lot of property on the housing market.

Housing was a big and welcome surprise in 2012. Building permits through November were up nearly 33% from a year ago; housing starts are up 27%.

New-home sales in 2012 through November were up 20% from a year earlier. Existing-home sales through November were up 15% from a year ago.

If there are no major economic disruptions, the housing market looks as though it will continue to be strong in 2013. But the "if" question is a big one. Looming over the markets, at least in the short term, is whether an expected battle over raising the nation's debt limit and federal spending will be really ugly.

An ugly battle could stall out the economy.

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