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.




More from TheStreet.com

Jul 31, 2012 2:40PM

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 2:50PM
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 1:50PM
With perhaps a few exceptions, the housing market both new construction and existing home sales still suck and that is the truth!  You have special interests groups such as The National Association of Realtors and the Home Builders Association who will continue to try to put a postive spin including using false data to give the public the appearance that all is well and everyone who is sitting on the sidelines waiting to buy a home should rush out and do so.  I also find it amusing how the media driven headlines try to put a positive spin on things as well.  "Housing Starts Rebound"....yeah well guess what, when you sales are in the "toilet" anything is an improvement!  I just wish we stopped with the constant barrage of reports and just had one monthly accurate report that showed by state the new homes built and an occupancy permit granted along with existing homes sold and a deed transferred and stop listenting to all the other nonsense.
Jul 31, 2012 2:18PM
What's going on in the housing market is big bank deception. They want to treat us like mushrooms and keep us in the dark and feed us shiz. The number of homes in the shadow inventory and those that should have been run through the foreclosure pipeline is grossly under estimated. If the banks were forced to reconcile all the bad mortgages and put them up on the market, real estate would totally tank and we could get this problem over and done with. In stead the deals were made and regulations were drafted to draw this thing out and keep the insolvent big banks from collapsing. It is in the best interest of the banks to do everything possible to keep Obama in office so the zero percent credit line will stay intact.
Jul 31, 2012 3:55PM
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
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 2:47PM
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 2:21PM

The price of homes in SWF has risen soley due to investors gobbling up the shrinking supply of homes the banks are releasing onto the market.There is still plenty of homes in the shadow inventory locked up;vacant and not yet for sale. You can call the bank and they will not be intested in selling that house yet;after all the upkeep (taxes &ins)is cheap in SWF so it pays for the banks to hold back the real supply and in fact thats manipulating the price higher what pople are willing to pay for a house.In other words if the main supply of homes for sale is the banks forclosure inventory and the slowdown the supply to a trickle ;up goes the price.Didnt they get bailed out for their losses already and now they want to squeeze  just a little more money from the consumer. Aprox change from last summer to winter 2011 of 55-65 70 sq ft to 80-90-100 and better a sq ft; and I'm not a proffessional just an observer.

Jul 31, 2012 2:29PM
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 4:04PM
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 2:45PM

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 3:20PM
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 4:06PM
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 4:18PM

It's true the housing market will not come back until jobs come back. Jobs are not going to come back until we can compete with China and India or we move on to something else. It looks like we are moving on to something else as we are becoming more of a services work force then a manufacturing work force.


People need to stop complaining and adapt to the new economy.


If you are still in manufacturing you need to take it upon yourself to be as profitable as you can for the company. If you are in a union like I am that is going to be extremely unpopular with your coworkers but don't give in and take pride in doing the best you can everyday.


What are you doing to make this country better?

Jul 31, 2012 5:20PM
Obama reports every month that the economy is rebounding and things are looking better.  After a year and a half of this we have barely moved any numbers up.  Every time that Obama made his statements about the improved economy, the housing industry, retail and so on would report dismal numbers.  During the Bush years, unemployment always included those that were no longer seeking unemployment because they were unemployed longer than the benefits held out.  Now during Obama's term we no longer hear those numbers.  All we hear and see are the numbers for those still getting their benefits.  The numbers that you are seeing are not telling the whole story.

Right now the news(entertainment) industry is creating news that makes the economy look better than it truly is.  After the election it won't matter who is in office, the entertainment industry(news) will report the true numbers.  Then you will see how bad it really is.  If these numbers of unemployed Americans were to be included in the stat's of the day, you would see how ineffective Obama's plan has been.  Now we get to  include the returning vets and the numbers really soar. 

There should have been some plan for the vets to get help before bringing them home.  There has been a high rate of foreclosed homes in the military and yet we have no plan of giving them support after they did their duty and put their lives on the line.  I'm glad they are home, but we need to find a way to help them out until they can get back on their feet.  Many are injured and unable to return to work so their numbers will not be counted either.  We need to send a message to Washington, we have to change the way policy is created there and motivate them to implement change.  Quit pouring money down the drain, and cut spending so the economy will have a chance to grow.  America wake up, the economic policies in place now have not been working.  Stand up and be counted and show Obama that his plan is not making any headway.

Jul 31, 2012 2:39PM
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 4:29PM


Jul 31, 2012 3:16PM
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 12:36PM
    The housing market may be improving or maybe not? Thanks for clearing that up for me Bobo.
Jul 31, 2012 6:20PM

I see homes being built in stagnant subdivisions all over the place. It doesn't mean anything but that banks are forcing builders to put something on the vacant land they lent credit on. First, we still look at housing starts but we have the lowest number of working people since WWII. That's the idea of sprawl driving off the cliff. Second, we have seen the Dow lift on housing purchase contracts, but we know a contract is not a closing. Third... no one with commonsense looks at today's economic conditions and makes a long-term investment in a money pit, when there are so many good homes to be had for a lot less.


Big builders were given $25 billion by Dubya while he was telling us about the 'robust' economy. They used that cash to settle out of liens on parcels they are now building in again. The expectation is one from the 20th Century... if we build, they will come on Sunday drives and bury themselves in big mortgages and play keep up with the Joneses. Those folks Short Sold and live in trailer parks now, paying cash and eking out on a fraction of their former incomes. We are--- way off track. If Bernanke gives banks new capital, it will be very short-lived, dig us deeper and reveal more of the truth- that financial corruption has destroyed us and we cannot begin again until after we destroy it. I believe the suppliers, I think the builders are liars, I know the banks are crooks. I don't think I'm alone in those positions.

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