Keystone's Housing Starts Indicator

The housing bubble in the U.S. peaked, and popped, in July 2005. Here we are almost seven years later with housing remaining in a funk.  Interestingly, however, yesterday, housing starts data shows that the housing sector has come up and out of the double-dip scenario again, certainly encouraging for the U.S. economy. The following time frames show the status of the housing market as per Keystone's indicator;

July 2005 -- Housing Bubble pops
July 2005 thru September 2010 -- Housing sector maintains overall weakness
September 2010 thru April 2011 -- Housing sector shows signs of recovery
April 2011 thru February 2012 -- Housing sector falls back into a double-dip scenario
February 2012 to ? -- Housing sector shows signs of recovery

Before the music plays and the party hat's are donned, however, the positive move is only by a hair and at least a month or two more of positive numbers are needed to comfortably say that housing is finally out of its funk. The change surprised Keystone who continues to expect another leg lower for housing this year. The stimulus provided by Chairman Bernanke by keeping rates low thru 2014, along with the LTRO program from the ECB, provided the go juice for the markets over the last three months. The second LTRO program is needed, since all junkies need more and more crack, and this decision comes in the days ahead which will greatly impact global equities markets. In addition, the BOE is adding stimulus, Japan has now jumped on the easing band wagon, and Chairman Bernanke is ready with QE 3 as well.

The question is can the stimulus measures finally bring housing out of its slump and kick the sector into a self-sustaining high gear again, or, will this short term pop fade away since people without jobs do not buy houses? The Housing Starts data will provide further insight moving forward so mark those data releases on your calendar; 3/20/12, 4/17/12, 5/16/12. Until the next couple months verifies this shift to a happier housing market, Keystone maintains his negative outlook on the sector due to high unemployment, consumer deleveraging continuing, potential copper weakness indicating lack of housing demand, high housing inventory and high foreclosure rates continuing.