It's time to discuss a true staple on my investing and trading radar. The Los Angeles CA-based homebuilder KB Home (KBH) just reported its quarterly earnings. Even better than expected, the company benefited from strong housing sentiment in the first quarter as homebuilders were rushing to the market: benefiting both new orders and margins. Unfortunately, as the market is hit by unprecedented levels of uncertainty, KB Home's stock has been punished and giving a reliable outlook has turned into an impossible task. Nonetheless, the stock remains on my radar as I do not doubt the company will quickly recover and return to full strength.

As I have said in previous homebuilding articles, 2020 was shaping up to be a great year not only for homebuilders but for the entire economy as leading indicators started to accelerate in the first weeks of the calendar year.

The graph below offers some proof as it displays the year-on-year growth rate of domestic building permits (all regions). As filing for a permit is one of the first steps in the home building process, this indicator is able to deliver valuable insights into future new orders of homebuilders and general strength in the housing market. With regard to the growth rates, February showed a growth rate of 12.8%. This is slightly below the January level, but overall, one of the best growth rates since the start of the housing recovery in 2012. Note that this rebound is the result of a stronger global economy and lower rates after accelerating rates pushed down housing demand in H2 of 2018 and H1 of 2019.

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