Housing Downturn: Optimism Races Ahead of the Data – Housing Market Review (April, 2020)

The iShares Dow Jones US Home Construction Index (ITB) gained 4.2% and closed at a 2-month high.

Housing Market Intro and Summary Something surprising is happening in the middle of the current downturn in the housing market: buyers keep coming and home builders are staying resilient and resolute. A series of earnings reports from publicly traded home builders do not reflect the historic plunge in builder sentiment from April (see below). The … Read more

Housing Downturn: Home Builder Sentiment Counters Freddie Mac Optimism

“…if not for the pandemic, the strong momentum going into the Spring may have actually sent confidence higher still. Instead, confidence will undoubtedly plunge in the next report. The consumer sentiment index plunged to a 4-year low as a leading indicator of where builder confidence will go.” Housing Downturn: Put Spring’s Momentum On the Shelf … Read more

Housing Downturn 2020: Redfin Transitions from Hopeful to Defensive

The change was swift and dramatic. In mid-February, Redfin (RDFN) delivered a very bullish earnings report proclaiming it’s on “like Donkey Kong.” In the face of nascent concerns about the coronavirus (covid-19) threat, on March 11th Redfin (RDFN) delivered a semi-reassuring press release titled “Housing Demand Holding Up Surprisingly Well, For Now.” Two weeks and … Read more

Culture of Collapse: More Wipe-outs in Housing-Related Stocks

The grinding bear market in financial markets has quickly created what I am calling “A Culture of Collapse.” The collapse is on vivid display in the stocks of home builders and other related housing and construction stocks. I cataloged the collapse in housing-related stocks that took on dramatic form two days ago. The iShares Dow … Read more

The Fresh Cracks In Housing-Related Stocks

First the good news. The iShares Dow Jones US Home Construction Index Fund ETF (ITB) lost 3.2% on Friday but bounced sharply from the lows of the day. That bounce preserved support at the uptrending 200-day moving average (DMA) and set the stage for a potential higher low that generates a lasting bottom. While, the … Read more

Animal Spirits in Housing Stocks Trampled by Virus Panic – Housing Market Review (February, 2020)

The iShares Dow Jones US Home Construction Index Fund ETF (ITB) dropped 13.4% in a week but managed to bounce off its 200DMA support.

Housing Market Intro/Summary The short-term outlook for the housing market is clouded by the current global turmoil generated by the coronavirus. The housing data discussed below were all collected before the virus came to the forefront of the minds of Americans. While demand for housing in the U.S. should remain strong (and certainly times like … Read more

Redfin 2020: “It’s On Like Donkey Kong”

“RedfinNow is buying homes aggressively. Our sellers’ agents are pushing hard to get more money for listing customers. And our buyers’ agents are making offers left and right, but still feel wary about how many will actually stick. It’s going to be a wild ride… RedfinNow is really scrambling to buy as many homes as … Read more

Housing Market Review (November, 2019) – Home Builders Still Knocking at the Moment of Truth

Housing Market Intro/Summary When I wrote the Housing Market Review for October, the stocks of home builders were failing their moment of truth. The iShares US Home Construction (ITB) soon rebounded, including a near picture-perfect test of support at its 50-day moving average (DMA). Last week, ITB actually printed a fresh 21-month high before pulling back. … Read more

Home Builder Trade: A Timely Exit or An Opportunity for A Refresh?

With just one day to go until expiration of the short side, my Aug/Oct $39 calendar call spread on the iShares Dow Jones US Home Construction ETF (ITB) hit its initial profit target. I was hoping the short side would expire worthless, and I could ride the long side expiring in October into the launch … Read more

Real Estate Pairs Trade Refresh: Long Redfin, Short Zillow Group

The ratio of Redfin (RDFN) vs Zillow Group (Z) (ZG) is bouncing off its well-supported historic lows.

My last pairs trade going long Redfin (RDFN) calls versus long Zillow Group (Z) (ZG) put options did not work out as I over-extended my stay on RDFN. A fresh opportunity for a pairs trade has arrived with RDFN neatly testing key support after reversing most of its post-earnings gains and with Zillow Group in … Read more