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


    Get the best of CNBC in your inbox

    Please choose a subscription

    Please enter a valid email address
    To learn more about how we use your information,
    please read our Privacy Policy.

Latest Special Reports

  • Trading Nation

    Trader Nation is not simply about finding that next trade -- it is a place where traders trade better together.

  • Inside the market's biggest sectors with a look at the trends, companies and trades netting profits for investors.

  • CNBC 'Explains' the complicated economics of our world—from stocks and balance sheets, to trade and public policy.