Here's Jim Cramer's thestreet.com on the prospects for home builder stocks in light of the spike in housing starts reported this week:
Housing starts jumped to a nine-year high of 1.32 million units in October. This shows three things. First, forecasts for an economic recession are premature. I don't know why anyone would even make that call right now with the stock market surging to new records and when you have a newly elected president promising to do some major fiscal stimulus in the form of higher spending and tax cuts. That's bullish.
Secondly, the drop in homebuilding activity that we saw in August and September was related to weather, not lack of demand. Hurricane Gaston and then Hurricane Matthew, along with other bouts of really inclement weather along the East Coast and through the South, caused builders to halt activity. That's over and we are seeing a welcome and normal snapback due to lots of pent-up demand.
Third, housing starts are still below where they should be, which means they will continue to go up. Activity will rise. I have been saying this (correctly) for a long time. We cannot even consider a peak in building activity until starts get over 1.5 million units annually and we probably need to get well above that number to ensure sufficient supply.