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It may be time to buy the homebuilders, according to these traders

The "Fast Money" traders debated whether it's time to buy the homebuilders, after both Lennar and KB Home reported earnings that beat analyst expectations on Tuesday.

Trader Steve Grasso, who has positions in both KB Home and PulteGroup, said that positive first-time home buying data has provided a lift to the homebuilders. He added that these companies have seen their valuations depressed and that the risk is likely to the upside for these names.

Trader Brian Kelly pointed out that despite Lennar's earnings beat, the stock later reversed and closed down near its lows of the day. He said traders should be "very careful" if they want to trade KB Home on Wednesday.

Trader Tim Seymour said that "household formation is a tailwind that, right now, really should be supporting this sector in a much greater way."

Disclosures:

Karen Finerman

Karen is long BAC, C, DRII, DRII calls, FB, FL, GOOG, GOOGL, JPM, LYV, KORS, KORS, KORS puts, WIFI long call spreads, M, MA, SEDG, SPY puts, URI. Her firm is long ANTM, AAPL, BAC, C, C calls, DRII, DRII calls, FB, GOOG, GOOGL, JPM, JPM calls, KORS, LYV, M, MOH, PLCE, SPY puts, URI, WIFI. Her firm is short IWM, MDY. Karen Finerman is on the board of GrafTech International.

Steve Grasso

BA CC EVGN KBH MJNA MU OLN PFE PHM T TWTR UA GDX KIDS own EFA EFG EWJ IJR SPY NO SHORTS Stuart Frankel & Co Inc. and some of its Partners: DAL LUV AAPL UAL LDP WDR AVP CVX FCX IBM ICE KDUS KO MAT MCD MJNA NE NEM OLN OXY RIG STAG TAXI TEX TITXF URI VALE WDR WYNN ZNGA CUBA HSPO ICE AMZN MJNA TITXF NXTD

Brian Kelly

Brian Kelly is long Bitcoin, GLD, SFK, SLV, TLT, US Dollar UUP. He is short CS, DB, UBS

Tim Seymour

Tim Seymour is long APC, AVP, BAC, BBRY, CLF, DO, EDC, EWZ, F, FCX, FXI, GM, GOOGL, GRMN, GE, INTC, LQD, M, MCD, MPEL, NKE, RACE, RAI, RH, RL, SINA, T, TWTR, UA, VALE, VZ, XOM. short: SPY, WYNN, XRT. Tim's firm is long ABX, BABA, BIDU, CLF, EWZ, F, HD, KO, MCD, MPEL, NKE, PEP, PF, SAVE, SBUX, SINA, VALE, VIAB, WMT, WEN, YHOO, short HYG, IWM