"Despite an incredibly strong job market, we're seeing a decisive shift in how the consumer spends her money: houses are out, clothes and accessories are in," the "Mad Money" host said.
Tapestry — which owns Coach, Kate Spade and Stuart Weitzman — reported earnings that beat Wall Street analysts' expectations and also offered strong estimates for the future. Tapestry's peers in the retail sector, such as Michael Kors, Ralph Lauren and VF Corp, have also posted strong second-quarter numbers.
On the other hand, Home Depot beat expectations but reported conservative guidance that gave investors pause. Considering the company's solid performance, Cramer wondered, "if they're being cautious, what does that mean for everyone else?" Along with Home Depot, he pointed to online real-estate brokerage Redfin, whose CEO warned investors last week of a slowing housing market, as a sign that "the housing industry has hit a wall."
Increasing home values could be scaring away potential new homeowners, especially those in the millennial generation. "The millennials may be inheriting the earth, but they're not necessarily inheriting a lot of wealth right now. More and more they feel priced out of housing," Cramer said.
Instead, millennials are spending their money on apparel and electronics, a change from the spending habits of older generations. In today's booming economy, "money is still being spent, but it's being spent in a different way" Cramer said. "The homebuilders, traditional winners in a full employment environment, their stocks aren't working here at all."