Positive aspects to housing data – Gartmore Sub-Adviser Marsico

The recent set of economic indicators about the US housing market conveys a mixed picture about the sector’s health, according to Colorado-based Marsico Capital Management, sub-adviser to Gartmore’s US Opportunities, Gartmore’s SICAV US Opportunities and Gartmore’s US Growth Funds. Damage from the housing slump, combined with the credit crunch, has prompted the Federal Reserve to revise downwards its forecast for Gross Domestic Product to grow between 1.3-2% this year, compared with its earlier prediction of 1.8-2.5%.

The decrease in permits for privately owned housing units in January (a measure of building activity), to their lowest level in 16 years, suggests to Marsico that “home builders are acting in a rational manner, as they seek to avoid oversupply, helping the market to bottom out,” says Cory Gilchrist, manager of the Gartmore US Opportunities Fund and the Gartmore SICAV US Opportunities Fund. Building permits fell 3% below the December tally to an annual rate of 1,048,000 in January, compared with the revised January 2007 estimate of 1,566,000, according to the US Census Bureau.

For now, Marsico has no exposure in the Gartmore Funds to US home builders, whose share-prices falls over a year are steep, notes Cory.

The influential Conference Board, a business research organisation, believes that, while the correction in the financial sector is just beginning, the correction in the housing sector is nearly over. It also contends a recession is not imminent.