The rate of home construction in the United States has reached numbers not seen in more than a dozen years, and CNBC’s Jim Cramer thinks it’s an indication that the market has fully recovered.
“I don’t know a soul who noted that it was good news because housing punches above its weight. The strength will benefit not just the homebuilders and the banks, but also the retailers … [and] the housing-related service economy,” the “Mad Money” host said. “It’s not a sign that we’re headed for another recession, for heaven’s sake. It’s a sign that we’re finally, finally, finally recovered from the last one.”
Housing starts and permits for future construction in November rose to more than a 12-year high, according to the Commerce Department. The figure came in at 1.365 million units, which was above the 1.345 million units that economists had predicted for the month. Building permits came in at 1.482 million units, its highest level since May 2007.
During the nearly 13-month period, Cramer noted, the U.S. population grew by about 28 million to 329 million people.
“[You’d] expect more homebuilding, but the housing permit numbers are merely back to where they were” in 2007,” he said, “after a prolonged period of relatively little new building. I mean, that’s pathetic considering our population growth.”
New homes under construction in California.
George Rose | Getty Images
He argued that the housing market would not revisit the 2008 crisis because the same mistakes won’t be repeated.
The comments come on another day where the major U.S. stock averages rose modestly to new highs. The Dow Jones Industrial Average finished the day at 28,267.16, the S&P 500 at 3,192.52 and the Nasdaq Composite at 8,823.36.
Earlier this year, Cramer promoted a counterintuitive idea that bad data would translate into good news for Wall Street, where investors were hoping the information would encourage the Federal Reserve to cut interest rates. The central bank issued three cuts this year after a rate increase last year sparked a fourth-quarter sell-off.
Now, just as the market often does, the host has changed his tune to a more positive one.
“Don’t try to overthink this economy, people,” the host said. “Good news is actually good news, not a sign that things have gotten overheated and the end is nigh.”