Friday, March 27, 2009

KB Home Narrows First-Quarter Loss as Orders Rise

March 27 (Bloomberg) -- KB Home, the Los Angeles-based homebuilder for first-time buyers, reported a narrower first- quarter loss and said orders rose even as the housing market deteriorated. The shares rose as much as 5.2 percent.

Housing starts are ridiculously low at 583,000 units annually. (And they were as low as 477,000 units in January!) Never in recent history have they been that low. Even in the recession of 1981-1982 they were almost double that level and they didn't stay down there for long.

With a population of 300m and growing and with family formations rising, the United States may experience a severe housing shortage once the economy gets back on track and credit begins to flow.

Homebuilder stocks are OUTRAGEOUSLY undervalued. Buy them! My favorites: Centex (CTX), Toll Bros (TOL) and pretty much all the rest. Or, you can just buy the S&P Homebuilder SPDR, which trades like a stock. Symbol: XHB.

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