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6 plays on surging homebuilder stocks

Homebuilder stocks have surged ahead of the broader market this year, and CNBC "Fast Money" traders believe that run should continue.

"I think they can continue to go higher," said trader Tim Seymour on Monday.

The SPDR S&P Homebuilders ETF and the iShares U.S. Home Construction ETF have both risen about 13 percent this year. That easily tops a 2 percent gain for the S&P 500.

Construction workers building a new home in Miami, Florida.
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Construction workers building a new home in Miami, Florida.

Seymour contended that the outperformance will continue. He noted that he likes shares of Ryland Group, PulteGroup and D.R. Horton, in particular, because of their valuations.

Read MoreHomebuilder confidence rises 'slow but steady'

Trader Steve Grasso owns both Pultegroup and KB Home and remains bullish on their prospects because they are exposed to first-time home buyers. Home Depot, meanwhile, gathered momentum into its quarterly results Tuesday morning, added trader Guy Adami.

"The housing market seems to play to Home Depot's strengths," he said.

Shares look appealing if they drop after the report, Adami noted, but he doubts they will lose ground.

Trader Dan Nathan looked to the iShares ETF, contending that it looks primed to break out. He would buy it with a stop of $28 per share, about $1 lower than where it closed Monday.

Disclosures:

Tim Seymour

Tim Seymour is long AAPL, T, BAC, DIS, F, GE, GM, GOOGL, INTC, JPM, Tim's firm is long BABA, BIDU, MCD, NKE, NOK, SBUX, YHOO.

Dan Nathan

Dan is long QQQ sept put, JOY sept calls, TWTR, TWTR sept call spreads, BA sept put spread, COST aug put spread, TJX aug put, SLB aug 28th put spread, MSFT Aug / Nov put spread, GOOGL Sept put spread.

Guy Adami

Guy Adami is long CELG, EXAS, INTC, Guy Adami's wife, Linda Snow, works at Merck.

Steve Grasso

Grasso is long AAPL, BA, BAC, CC, DD, DECK, EVGN, FIT, KBH, MJNA, MU, PFE, PHM, T, TWTR, GDX. His kids are long EFA, EFG, EWJ, IJR, SPY. His firm and some of its partners are long DVN, AMZN, NE, NEM, OXY, RIG, TSE, VALE