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."