What's really going on in housing?

Masco's and Armstrong's dour numbers are at odds with those of every homebuilder we've heard from.

By Jim Cramer Jul 31, 2012 10:44AM

Is the housing boomlet turning into a housing bustlet overnight? It depends on whom you listen to.


Monday night, we saw a downbeat outlook from Masco (MAS), the kitchen-bath company, and a horrendous report from Armstrong (AWI), which makes floor and ceiling tiles. Both indicated the U.S. had taken a sudden turn for the worse. Armstrong's was right up there with the worst calls of the quarter.

 

On the other hand, USG (USG) and Whirlpool (WHR), while acknowledging that the world has been weak, didn't say all that much that was negative about the U.S. Instead they reiterated the party line -- that things are improving off a small base.

 

It is possible that Masco and Armstrong are right, but their book of business is dramatically at odds with that of every homebuilder we have heard from, as well as with that of Lumber Liquidators (LL), which boosted its outlook significantly. Plus, we just heard Weyerhaeuser (WY) say good things about home sales in the U.S., along with Pulte (PHM), D.R. Horton (DHI) and Meritage (MTH) last week.

 

Home Depot (HD) has signaled no weakness, as has Stanley Black & Decker (SWK), where the shortfall came almost entirely from Europe.

 

I'm sure Armstrong isn't deliberately sandbagging, and much of its downbeat commentary focused on commercial. For instance, there was this gem: It has seen a "fairly precipitous drop in the second quarter in almost every commercial subsegment, education, health care, retail."

 

Masco isn't putting out the white flag either. It is simply saying the economy is "losing momentum" and the second half will be "less robust."

 

Still, Masco and Armstrong sliced through the bull case pretty effectively, despite all the national data and individual housing company data we've seen.

 

Stocks are on hold ahead of the Federal Reserve decision. Otherwise, I think these two reports would be doing some real damage to the housing case Tuesday -- damage I actually would have wanted to buy. That's particularly so with stocks like USG, which is not seeing these kinds of declines in the U.S. while it simultaneously extricates itself from the European markets that continue to haunt both Armstrong and Masco.

 

 

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 is long WY.

 

 

 

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77Comments
Jul 31, 2012 4:18PM
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I am 65 and have just purchased a new home --- my first one was 8k in 1973 my 2nd one 51k in 1996 my 3rd on 110k two bedroom at the same time I purchased three new vehicles for a total of 125 k I will have the car and truck paid off in five years at a payment rate $1200. per month the ouse if I let go will cost me 300k for 30 years now how bright do you have to be to figure that the housing mortgage namely the feds are greedy and over bearing. GEE people just pay the principle off --- o by the way next year uncle sam dont care how much money I make --- to this i am glad ---just think I have paid for three home Clinton let you the tax payer pay for his ---
Jul 31, 2012 4:06PM
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The big lies still going on , no employment , bank and bills crowding people . and political rats promising and promising , our nation debt skyrocketing. And still asking what happen on housing please take out your glasses and see the real world.
Jul 31, 2012 4:04PM
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Bought and paid for elections with our home equities is what's going on. Corrupt Criminal governments who have incorporated WE THE PEOPLE into Them the government..Now our investments being taken in daily doses of silent bidding's.. You can count on this government buying their votes again by bailing out failures again...sick America and getting sicker by the day..

Jul 31, 2012 3:55PM
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What's really going on? Are you f-ing kidding me????? Watch this hand write a stupid article while I help the mainstream media lie to the citizens of the USA, divert attention away from the real issues and help criminals deal with the populace!

Try reporting something of value and what should have been national news for a long time now. Except it's not in the USA! Report on the LIBOR SCANDAL, the banking criminals that permeate our systems and the Federal Reserve lending $26 trillion to themselves, their compadres and their buddies overseas of OUR money while they blame us for the problems. Don't smile in your little photo and tell me you know what's going on, bud. If you did, you'd be outraged and on a bus to D.C. to ask real hard questions of our politicos--including OBama. The LIBOR is rigged and so is MSN. Not a word has been mentioned about the LIBOR on this site or any other that is mainstream. Talk about the whore of government/industry. If anything is mentioned, you can bet it will all be downplayed, laughed about and "alleged". I'm sick of you people. Sick.

Now, tell us you know what's going on with the housing market.
Jul 31, 2012 3:44PM
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I understand, but it's a little tiring to continue to hear about the jobs that have gone overseas.  Who do you think sent them there?  We did, fellow suckers.  Back in the 60's, American industry thought nobody else could make quality stuff and stopped innovating.  Look at the late 60's and 70's cars if you're in any doubt.  American labor thought that no other workers in the world could manufacture stuff like they did and repetitively struck US industry for more and more benefits and higher and higher wages.  Costs and prices up, quality down due to greed on both sides of the equation.  Then what happened?  Consumers discovered that other countries could make quality stuff at lower prices and started buying it.  And US industry found that they needed to cut labor costs to compete.  Cars, cameras, steel, autos, clothing, furniture -- all gone.  Jobs -- gone.  It ain't them, it's us.  Labor will come back when the cost of production becomes greater overseas than here.  Think about it on your next trip to Walmart.
Jul 31, 2012 3:39PM
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According to this morning's  20-city Case-Schiller Housing Price Index for May 2012, housing is up 0.9%  month over month, but, unfortunately, it is down 0.7% year over year.
Jul 31, 2012 3:20PM
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Another blog of BS about housing.  I see more and more empty houses and reduced prices than ever. There is some home renovation and improvements but no new housing starts. I guess cramer needs to report something to get a pay check.
Jul 31, 2012 3:16PM
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Real Estate Investment strategy...You buy a buildable piece of paying $75,000 ($75K) for the lot.
You pay $125,000 to build the house on this lot. Total Investment is now $200K
The bank would most prpbably appraise this completed project aroung $150K
You are already $50K in the hole and havent even finished decorating.
Housing is a BAD INVESTMENT by all standards...
Jul 31, 2012 3:14PM
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If you want a home at a rock bottom price, of course you want a forecloser and also a a black family living next door. You'll get it dirt cheap! You can get homes in Gary, In. all day long for $1K or less!
Jul 31, 2012 2:59PM
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one one you said the wrng thing you sign it an agreed to a price yes , but there is no way that any one of us could keep up the payments on a home with a good good if the payment s went up hundreds of dollars in a month an stay there until you was broke  an its not your falt that the price of the home went down  fast , an the rest of you said it too no money , no jobs, no sign of picking up a good job , so why would any body think of buying a home  if the out look is bad an you are losing any way even now  rent or buy  buy the prices are still droping an rent  is high too an you dont know if the land lord is being foreclosed on too , people buying home products for repair is flat  , an the people only buy what they have too not want too , some of them dont even have money for food at all  or a place to live  for what ever reason , so the home market is going to stay down or flat until jobs come back into this country  from a few articles i read here that wont happent until 2015  i guess  or they get that mess over seas cleared up ?????
Jul 31, 2012 2:50PM
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The only thing that is growing in this economy is Banks assets as they continue to foreclose on every home they can get their hands on. They then with hold putting those properties on the market waiting for equity to build to sell for a profit. All generated from our tax dollars, how thoughtful of them! They con us, steal from us, take our tax money, kick us out of our homes because there was no bail out for us but then want to turn a profit from our hardship. Am I the only one left saying hmmmmm???
Jul 31, 2012 2:47PM
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Theres a lot of talk, but Im not seeing any activity in my neck of the woods, even on dirt dog cheap houses.The property values have declined dramatically, the taxes and insurance need to drop with the value of the home. We will not see recovery anytime soon. If nothing changes nothing changes.
Jul 31, 2012 2:45PM
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futhermore CEO'S ARE MAKING 18 MILLION off the backs of workers who make poverty wages

the CEO'S screw up and get bonuses...the workers screw up , they get fired

 

NOT GOOD FOR HOUSING................but that's free market capitalism

Jul 31, 2012 2:40PM
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MY EXPERTISE IS IN STOCKS BUT I'LL TAKE A STAB AT HOUSING TO ACCEPT MTKABOATER'S CHALLENGE

but first i must state that i have issued what i call the cramer challenge .............despite issuing this

challenge MANY times i haven't gotten any takers..........you pick a cramer recommended stock

and i will make a pick and beat cramer..............MTKABOATER  might be my first taker

 

now for housing..........interest rates are low but people with excellent credit can't get loans to buy

or re-fi nicely underpriced homes...........banks SAY they won't loan because appraisers lowball the prices........in reality banks won't loan because they have too many bad loans on the books

 

SO MTKABOATER..........HOUSING IS NOWHERE UNTIL PEOPLE CAN GET FINANCING

 

Jul 31, 2012 2:40PM
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No Jobs, No home buying. No jobs. No buying much of anything. U.S. Companies are holding on to tons of money right now. They won't let go of it for hiring, improvements and upgrades on equipment till this election is over. They are worried about Obama because he is not laying out any future plans on taxes, etc. etc. etc.

We need Manufacturing back in this country. I'm tired of smoke and mirrors out of Washington.

Jul 31, 2012 2:39PM
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If I had to guess I would say there are allot of apartment buildings being put up as well as homes getting refurbished after the foreclosures had there guts taken out by would be owners for some sock cash before they left the house. This would mean appliances, flooring and possibly walls would be fixed thus the need for only certain products unlike the building of a new house. Just a thought
Jul 31, 2012 2:39PM
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Allen lemire

This is such a ridiculous statement that its hard to believe someone wrote it.  YOU SIGNED to buy at a certain price and at a certain rate.  There's no cussion if you made a bad decision.

Geez.  Go live in Greese.

Jul 31, 2012 2:31PM
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The problem with the housing market. Too much lying and deception. If the value of the property drops. So should your mortgage payment should drop. If the value of your property drops. Then the interest on your loan and mortgage payment should drop to
Jul 31, 2012 2:29PM
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Housing will not recover until America has JOBS! Those jobs are in other countries. Romney MUST stop all imports and get USA factories reopened. You want a mortgage? You gotta have a job that pays a living wage not $8.00/hour!
Jul 31, 2012 2:23PM
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The housing market could only stay down for so long. A recovery due to inventory shortage was inevitable. The banks just hurried up the process by not foreclosing on millions of properties. Instead, they're going to let appreciation take care of the problem. Jump on board while you can!
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