Housing Stocks Look Cheap

“Don’t be shocked by the lousy housing numbers,” Cramer said Wednesday. “Be shocked by the economist who told people to expect better.”

New-home sales plummeted to 300,000 in May, the lowest number since the 1960s and a staggering decline of 33% for the month. But Cramer had been predicting this decline for weeks.

With BP’s spill in the Gulf of Mexico, nagging unemployment, the flash crash and the worst May in 40 years of stock-market history, the Mad Money host said, “The national psyche has simply just been trashed.”

“House purchases are deeply connected to wealth and the wealth effect,” Cramer said, “so these factors crushed consumer confidence.”

Plus, there was the expiration of the first-time homebuyer tax credit. Do you think someone who can buy a home for $200,000 in April will wait until May to pay $208,000?

Yet still these economists were shocked by today’s numbers. What shocked Cramer is that we even bother to listen to these people at all. They’ve been wrong month after month after month, first underestimating sales from the tax credit and then overestimating them once it expired.

“Instead of freaking out about this completely logical drop-off in new-home sales,” Cramer said, “we should be freaking out about how anyone listens to the so-called expert economists who are expecting the numbers to be much higher. Their projections have been so ridiculously wrong, why should we take them seriously?”

Cramer knows that the housing market is in tough shape, but he did take note of what looked like bullish inventory numbers: 213,000 new homes, a level not seen since 1970. Plus, he said, home prices are increasing. And he still thinks we could see a housing shortage come 2012, as the number of families outgrows US supply.

This forethought is exactly the reason the housing and housing-related stocks rallied today. But still, the doom and gloom that surrounds them has brought down share prices enough that Cramer sees some attractive valuations: Lowe’s down to $21 from $28; Fortune Brands to $42 from $54; and Toll Brothers to $17 from $23. And TOL hasn’t been this low since things were really bad in this market, so the improved and stronger company deserves to trade at a better price than that.

But many of the sector’s hardest-hit stocks started their recovery just this afternoon, Toll and Lowe’s included. And again, that’s because the market thinks forward, not back. Cramer likened today’s news to a “post-Cash for Clunkers situation like last fall, where I told you you had to buy Ford and soon you caught a double, as sales dipped and then came right back.”

Call Cramer: 1-800-743-CNBC

Questions for Cramer? madmoney@cnbc.com

Questions, comments, suggestions for the Mad Money website? madcap@cnbc.com