Lennar's earnings will define this week

The homebuilder performance this week should tell us what we need to know about the sector.

By Jim Cramer Sep 23, 2013 9:31AM

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Two way traffic sign © Guy Crittenden, PhotographerIf there could be one quarter that might define this week, it will be Lennar's (LEN) on Tuesday. Here's a high-quality national homebuilder that had a very good quarter last time out.


Lennar jumped up a couple of bucks on the big move in U.S. Treasury interest rates as money rotated right back into homebuilders when the Federal Reserve whamma jamma'd the bears.


Now, Lennar was the most bullish of all homebuilders going in to the last quarter, when it had improving gross margins, low cancellations and a huge backlog. All three, if you listen to the bears, are in jeopardy, particularly since this is a quarter that has taken place entirely amid the elevated new mortgage rates.


There are two components to this quarter. First, is this possibly the last good quarter because the mortgage lock-ins are now over? Or, second, have rates stabilized or gone lower now, meaning that buyers are coming back into the market?


We had a hideous market Friday almost entirely because of Washington fecklessness. I think at a certain point that will be built in, but not yet.


Still, Lennar is the tell. If it rallies, we'll know there is a new place to go. If it doesn't, I think the homebuilders may not be a place to be for a very long time.



Cramer

 

 

Jim Cramer is a co-founder of TheStreet and contributes daily market commentary to the financial news network's sites. Follow his trades for Action Alerts PLUS, which Cramer co-manages as a charitable trust and has no positions in stocks mentioned.  

 

 

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37Comments
Sep 23, 2013 10:33AM
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So, what is being built? What I see are rows of town homes, condo's and apartments.  
Sep 23, 2013 10:10AM
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Something's wrong with a Society that goes out and spends, hundreds of dollars a year to have a phone and stay connected 24/7 with friends and acquaintances..

 

Then lives in a basement at home with Parents, that are living on Food stamps and about to be evicted from a house in Foreclosure... 

Sep 23, 2013 10:46AM
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It was either Brutus or Mirage that brought up the issue of less Millionaires. Fact is, we would have a Record number of Millionaires if they had stayed in the Stock Markets. Yet in spite of more staying out of stocks, we are fast approaching a new Record.

In spite of less being in the Stock Market but Cash instead, the SuperRich still set a new all time Record for total Wealth in 2013, and it's growing by leaps and bounds. By the way, America reclaimed it's top spot of most millionaires from Asia. Not bad for them, how's it working out for the rest of us.

They buy Mega-Mansions, while we are stuck with overpriced Homes with the newer ones suffering greatly in quality. They don't build too many things like they use to, you know the pride that meant it would last. Not so much for most things you put in your home.
Sep 23, 2013 9:46AM
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It seems like there are still a ton of vacant single-family homes.  I'd like to see someone give the number of homes that are currently in existence, and compare that to the number of households who either already live in a home, or are actively looking to buy.
Sep 23, 2013 10:33AM
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There is nothing wrong with having a Phone to stay connected. Especially since today's smart phones can give you all the benefits of a phone and or a computer. You must have a phone if you want to have a job and or find one, then keep it. Now if you are on government assistance and you have time to wait in line just for the latest version, you would be better off spending that time looking for a job if you are able. There is little sense in owning a phone just for the cool factor. Apple makes ton of money from that. Good for them, not so much for you.

Folks harping on those on Food Stamps tend to forget the larger problem of Subsidized Corporations living off the Government Dime. Current count, Uncle Ben printing a Trillion a year in subsidized aid.

 And it all comes back to homes and the Money Changers that built a fortune off of misleading the Public by creating farce triple AAA investments while at the same time giving out loans to folks that they knew could never pay them back. All without any arm twisting from the Government. This was pure and simple GREED. Corporations controlled the Government, that's why nobody went to jail. Just more hush money.

Sep 23, 2013 11:35AM
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Dave I'm going to say right up front....You don't read well, understand or seem to get a point...

 

NOBODY said you "don't need" a phone for occasional conversation, we have several..

WE also probably have about 5 different methods of "contacting" ourselves or household.

Not counting a "snail mail" mailbox or driving up our driveway...WE CAN AFFORD IT.

 

The Points:

Was someone spending hundreds of dollars, staying connected, with a pretty phone.

While living in their Parents basement...

Parents and them on FOOD STAMPS..

Living in a house about to be FORECLOSED ON.....kapish.??

 

Sep 23, 2013 10:56AM
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Globalization is the cause.

Nationalism is the solution.

For most of America, the next few years and decades will wax worse. 

As manufacturing and assembly is moving overseas, eventually every industry will shed workers.

The American wage, benefits, pensions and government cost structure cannot compete in a global economy.

Stop immigration and tighten trade borders or welcome additional lowering of the standard of living in America. Even Obama's socialist dream cannot subsidize this to make everything look peachy.

 

Sep 23, 2013 10:53AM
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Last week the Dow was up 200 points on Bernanke's comments  ... Fed officials have since been responsible for erasing the gain ... do we believe Bernanke or not?
Sep 23, 2013 11:09AM
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DLH2448:Your problem isn`t near as bad as Larry Ellison`s problem.As CEO of Oracle,

his compensation went down 18.5%.In 2012 he made $96,200,000.Now he`s down to

only $78,400,000 for this year.I`m going to send him some TV dinners or hamburger

helper.If only we could cut the minimum wage from $7.25 an hour to something more

reasonable,like $2.00 maybe he could get a raise.

Sep 23, 2013 9:56AM
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With chaos in DC and the FED attempting to bolster sentiment through QE now might not be the best time for a long range reading on anything.  Remember chaos is the side effect of socialism and bureaucratic justification for its existence. Much chaos will be needed to confuse these markets to seemingly give up the ghost of predictablity to keep folks confused and in the dark, and then of course the FED and the Politicos will be necessary to tell us what we need to know.  Sitting on one cheek waiting on the FED every day just somehow seems stupid to me.  Like being on the smart phone 24/7, or addicted to crack.  JMHO
Sep 23, 2013 10:59AM
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No doubt there are pockets of building out again of Residential units...

Although I read about Multi-family, apartment buildings and such, we are more or less becoming a rental or lease society...

 

Back a couple months ago, I was on a 2000 mile road trip...Round trip, but took part of it on two different routes, covering roughly parts of 7 different States.

Although there was bustling activity in some centers of population; It still looked as if people were struggling to get by...Some working two jobs; Others after retiring from one, working again at another job full or part-time, because of young age or having extra cash for other expenses.

 

The Housing situation seemed a little off balanced, because of noticing between 10-20% of them being empty...Some recently,others had been abandoned for a few years and falling into disrepair.

That was on outskirts of some cities or towns, smaller towns had similar numbers with a lot of for sale signs maybe even bank owned for sale...

 

Rural areas seemed worst, especially in depressed States or areas, somewhere between 25-40% of homes were empty...As if people got stressed and just moved away or had lost everything.

Most were not even for sale or listed...A few had been empty for years..

For Sale signs were only on higher priced properties, many with REDUCED signs attached.

 

Businesses fared just as bad, with some places having 30% or more of empty spaces; In many cases business that would have been supported by other Larger operations that had closed...

As far as a big City, Detroit would be a prime example of trickle down despair...

Other small towns that had a robust employer with a niche business, seem to be doing much better and the Community displayed a much better attitude about the recent Recession.

The road trip was an eye opener for me of what was/is really going on in Mid-America.

Sep 23, 2013 11:02AM
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Apple - the sales figures they have posted do not show how many units were the 5S model or the cheap model, will make a difference going forward as the 5S has greater potential to make more money over the years with it's greater capability.  Either way, while I hate Apple products, a large number of people still like them.
Government Shutdown - more grandstanding, they always punt the issue down field with a smaller agreement.
Home builders - they are building in my neck of the woods, but mostly side by side/ town home style houses that cater to retirees.  They are advertising Windsor huge in the Province of Ontario as a retirement city, seems to be working.  Sell your home in Toronto for 800 grand, by a larger one in Windsor for 250, or a retirement row home for 160-200 and live the good life in your golden years.  Some single family homes being built as well, so few were built in the last 5 years there some pent up demand, still not any where close to normal amount, buy getting slowly better.

Sep 23, 2013 2:21PM
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Blackberry agrees to be bought out for 4.7 billion....... how the mighty have fallen.

Sep 23, 2013 9:43AM
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there's a ton of new building here in so cal again.  complexes for 200 people here, 500 people there; several thousand just down the road 5 minutes.  serious building.  it was delayed several years and now going at it in full steam. 

 

the population is still growing.  albeit slowly with delayed marriage and births, but it is still growing.  the people will need to live somewhere. 

Sep 23, 2013 11:50AM
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Why do people complain about being upside down on their house.You canlive in your

house.You can`t live in a stock that`s down from where you bought it.

Sep 23, 2013 10:23AM
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Something is seriously wrong with a Society that tells everyone there's wasn't a recovery when we have experienced 42 straight months of private Sector Growth. Job Growth would be far more robust if State and Federal Entities weren't cutting jobs. The S&P 500 has shown 15th straight quarters of profit growth. Auto sale has gone from nearly nothing, 10mil annually to now approaching 16mil annually. Are all the jobs the very best, of course not, but that's mostly due to automation and outsourcing to slave labor overseas. Yet most companies are saying that can't fill their Jobs requiring complex degrees.

The Housing Market has been a FARCE since the Big Banks have corrupted the system and created this mass Bubble which by the way, some are trying to re-inflate. These day, you don't know if real folks are buying homes are just some investment group.

Fact is, we are a Fiat Based system that's been living off Printing Money for decades. Yet that wasn't enough, Big Banks Greed created faker money called Derivatives. Aka the Reason for Global FEDS printing to infinity. The Global FEDS will eventually lose control and then it's game over.

Sep 23, 2013 2:37PM
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Dave.... Glad you will only ADDRESS IT ONCE....I'm about as upfront as they come..

Not only on stupid posting boards, but in real life also...

I do NOT need anyone to re-explain my post; If they don't understand, they can ask for clarification.

I do NOT need any credibility from YOU....Get off your high horse.

I shidt bigger turds then YOU.

And I inject or misdirect when I feel the need to, or sometimes when someone is blowing bullshidt..

That may not be the case with you...But if thy shoe fits, que sera, sera .

 

I do not know about the purpose of scrutiny, concerning many of the posts; Because many of them are written from opinions...If outright lies, they should be called on...Otherwise it makes no difference.

As far as  "my type" on these boards ??? I don't even know what that means.??

 

Sep 23, 2013 2:04PM
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TOG, I will address this only once, you are hardly a upfront kind of guy. You might have fooled others but what you do is crystal clear to me. I have seen your type many times on these types of boards. You love to inject whatever BS to misdirect and or misinformed to what's actually stated in any given post at times. That gives you zero Credibility in my book concerning anything.

I hardly mind real honest scrutiny because that's how we learn, from others. Therefore we can agree to really not give a darn about directly responding to each other. However, any and all post including mine are subject to scrutiny. That's the nature of the beast.
Sep 23, 2013 1:03PM
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Although seeing little building going on around us...

Other places fairly noticeable are Multi-Family units...When and if, anything is being built.

 

Occasionally a high end house built for someone with lots of dough or damn good jobs.?

 

I think retiring boomers are adding to the building, but believe many are mostly remodeling.

Unless they are downsizing or going Condo...?

Sep 23, 2013 12:52PM
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One item of good news about being upside down in your home or mortgage..

 

Not to make light of it; But you are still in a home...And best of luck in staying put.

Better days are coming..

 

Our first home bought in the early-mid-60s was a 2 bdrm./ sing. bath/attchd. garage/basement.

Decent suburb plat..4 years later we sold it for 50% more in appreciation..

We sold the home ourselves(no realtor) and signed a buyer/s in less then 1 week.

Had to fix a couple minor items, for FHA or VA ? About $250-300 out of pocket and moved in 30 days to the country...25 miles away.

As we know today, that scenario has reversed itself, for the most part. 

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