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Traders pick top housing stocks

The Fast Money traders stepped into the homebuilding space to determine which stocks to move into after the homebuilders index jumped 3 percent Tuesday.

Trader Steve Grasso said he's a fan of KB Home and Pulte.

Grasso said Pulte is the better pick of the two because shareholders can expect a nearly 25 percent return. He said the whole space is doing well as "millennials move out of their parents' basements," and demand increases.

Trader Tim Seymour said DR Horton's impressive earnings release showing "deliveries up 15 percent and new sales up 17 percent" indicates strongth growth for the sector.

Seymour said he likes Pulte, as well. The stock is up 10 percent in the last month.

Disclosures:

GUY ADAMI

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

STEVE GRASSO

Steve Grasso's firm is long AGN, BIIB, CHK, COG, CUBA, DIA, FCX, GLD, ICE, KDUS, MFIN, MJNA,MSFT, NE, REGN, RIG, SPY, TITXF, VIRT,WDR, WLL, ZNGA. Grasso is long: CHK, EEM,EVGN, GDX, KBH, MJNA, MON, MU, OLN, PFE, PHM, SPY, T, TWTR. Grasso's children own :EFA, EFG, EWJ, IJR, SPY. No shorts.

Dan Nathan

Dan Nathan is MCD Feb put. XLI long Feb Put Spread, FXI long Feb Put Spread

Tim Seymour

Tim Seymour is long ABX, APC, AVP, BAC, BBRY, C, CLF, CVX, DO, DVYE, EDC, EWN, EWZ, F, FB, FCX,FXI, GM, GOOGL, GE, INTC, LQD,MCD, MUR, OIH, PG, RACE, RAI, RH, RL, SINA, SQ,T,TWTR, VALE, VZ, XOM. short: EEM, SPY, XRT;
Tim's firm is long ABX, BABA, BIDU, CBD, CLF, EEM, EWZ, F, KO, MCD, MPEL, NKE,PEP, PF, TCEHY, SAVE, SBUX, SINA, VALE, VIAB, WMT, WEN, X, YHOO, short EWG,HYG, IWM