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Cramer's Plays on a Potential Housing Rebound

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Cramer's Picks for Housing

The U.S. housing market has shown strong signs of bottoming and could soon turn around, “Mad Money” host Jim Cramer says, at least if recent housing data and bullish comments from prominent businessmen are any indicator.

Take pending home sales, for example, which recently hit a 19-month high. The National Association of Realtors’ existing home sales index rose by 7.3 percent from October to November, even though industry experts had expected an increase of just 1 percent.

Jack Welch, meanwhile, has joined the group of notable businessmen who think the housing market is looking up. Earlier this month, the former General Electric chairman said a combination of low prices and record-low interest rates have helped the battered real estate market hit bottom and get ready to rebound, perhaps even stronger than many economists expect.

"Housing has pretty well bottomed and rental prices are going up. Vacancies are almost nonexistent," Welch said. "So you've got a lot of forces driving toward the housing market. Prices are down, interest rates are down, the affordability index is good. ... We think it could be a blowout. Housing could be really good based on all the dynamics that are out there."

To play the potential housing turn around, though, Cramer doesn’t recommend buying homebuilder stocks because they have already had a huge run. Instead, he’s attracted to home improvement plays that pay you to wait for the rebound to kick into full gear. Read on for his preferred plays.

By Drew Sandholm
Posted 20 January 2012

When this story was published, Cramer’s charitable trust owned Weyerhaeuser; General Electric owns 49 percent of NBCUniversal, which operates CNBC.

Photo: CNBC