GO
Loading...

Here's how to play housing: Cramer

The spring season will likely be strong for the U.S. housing market, at least if positive quarterly earnings results from home builders are any indication, Jim Cramer suggested Thursday on CNBC.

KB Home, the fifth-biggest home builder, posted a better-than-expected quarterly profit on Wednesday. Some market observers, however, thought its strong results were just an anomaly.

On Thursday, however, rival Lennar reported a 36 percent rise in quarterly profit. Its results are notable because Lennar is the U.S.'s third-biggest home builder.

"When I look at the Lennar numbers, I say, 'OK, KB Home, was it an outlier? No,'" Cramer said on "Squawk on the Street."

Though interest rates are likely to increase, Cramer thinks housing will be helped by strong demand and rising prices.

To play housing, though, Cramer would actually avoid home builder stocks.

"These stocks have already been on the move. I don't want to chase them. I don't mind being in the stuff that's in the home," Cramer said, listing Masco, Whirpool, Sherwin-Williams and Fortune Brands Home & Security as examples of housing second-derivative plays he can get behind. "These stocks are not expensive."

—By CNBC's Drew Sandholm. Follow him on Twitter @DrewSandholm.

Contact Housing

  • CNBC NEWSLETTERS

    Get the best of CNBC in your inbox

    › Learn More*

Latest Special Reports

  • File photo: Participants at a hacking conference in Germany

    A series of high profile cyber attacks has created huge economic opportunity as businesses look to fend off future attacks.

  • Whether you're young and just getting started investing or moving closer to retirement, factoring in age will keep you ahead of the game.

  • Advisor-centric content with guest columns covering practice management, investment strategies and marketing/social media.