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Thanks so much time -- case Shiller price index recording a gain of one point 3% in April -- sales of newly built homes in May climb to the highest level in two years.
Are we really bouncing off the bottom in the housing market joining us now to weigh in is Robert -- -- -- -- an analyst at RBC capital markets thank you so much for joining us Robert.
Great to be here thanks so much.
I -- -- right -- analysis of housing starts because you are really optimistic for housing starts going through 2015 we have a chart illustrating.
Tell -- why are so positive.
You know we've -- like to back up.
Inventory overhang -- foreclosure is starting to recede gradually.
We're coming off for really in -- -- Of 600000 starts last year remember in the peak years that.
-- was 2.5 million starts the average is one point five million.
So we're still 50% below the long term average so the growth we're seeing -- -- extremely depressed base.
We got enough demand starting to resurface we hope that this recovery continues its -- job that's the key thing to remember.
Eat eat away a lot of people are feeling positive about the case Shiller home price index today but that still.
Even though it ticked up we'd solve RD go to ever get back where we were which may not ever happen.
It's still if you look at the -- -- to say that that bit is positive it just doesn't seem like it.
The key point here is direction -- how -- you trending and on a year over year basis the key thing to remember it.
Is -- hired only down 2%.
-- every year so we are seeing stability from a pricing side we're trending toward cereal that's great news for homeownership.
We're still bullish on new residential construction it's a bright spot in an otherwise gloomy outlook for the economy we do you like the housing market.
It's a tiny bright sparks when I'm looking at that chart you try and look at how overall -- -- it seems like overall it's trending down but.
Let me ask you about the stocks that come because home builders.
In spite of everything that's gone on I was surprised when I looked and isolated than they've actually had a great year -- up 36% year to date.
Does does that mean the kind of spent the upside and -- group.
Think for now you don't wanna be -- the homebuilders the good played again -- was to buy the stocks during the first quarter here to this actors fully valued at this point is he can tell by the substantial rise and to terrific outperformance relative to the broader market so if you're gonna look for the homebuilders and we do like -- the group for the next two to five years.
If the recovery continues then you probably want to try to get -- -- -- -- -- on a dip that's supposed to going in -- first at this point.
Yes like who who are your favorite -- in the grip.
Best of breed -- got to go equality front page of the Wall Street Journal today.
We love Lennar if you're looking for -- beaten down home builder -- -- couple missteps we like KBH which is trading at a big discount to the peer group.
Our general thesis says you really want to figure out if we're gonna own home builders you -- on for a long time to capture the upside to participate in the recovery.
There's last distinction and homebuilders and -- -- in other groups that are related like building products companies which -- a lot more diverse yeah like a product skirt I think it would.
Products are really interesting area we really like Fortune Brands home and security it's -- spin out stock.
Terrific collection of classic great management we like Owens Corning -- have beaten down stock facing low expectations right now.
Armstrong the worldwide leader in ceiling -- another great company with attractive international growth prospects.
And finally USTs have tremendous company benefiting from much better.
Wallboard pricing so there's four -- years Armstrong US -- In particular Owens Corning.
Which actually have a lot of -- good long term upside if you can hold these stocks for two to five years okay interesting ideas thanks for coming on today Robert.
Our pleasure thanks for.
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