The housing rebound looks like it can last last... Here's how to invest in it

Key Points
  • Housing has come back sharply from its pandemic slump, with sales surging and prices rising.
  • One big trend favoring the industry, and its stocks, is the exodus from big cities to suburbs.
  • Low interest rates are keeping mortgage rates low, though credit demands are higher.
  • Headwinds for the sector include tumbling inventory that is at its lowest point in nearly 16 years.
A home for sale is seen in Santa Monica, California.
Lucy Nicholson | Reuters

Housing's powerful rebound from the thrashing it took during the early days of the pandemic looks likely to continue so long as it doesn't become a victim of its own success.

Home sales have formed an almost perfect V-shaped comeback after the industry was one of the hardest hit, along with retail and restaurants, when the economy went into lockdown in March.

Since those dark days, a powerful combination of historically low mortgage rates, pent-up demand — and a persistent exodus from America's largest cities to quieter, safer and more accommodating suburbs has fueled a market surge that Wall Street experts see continuing as the economy recovers.

If so, it will be a recovery investors can get behind, with housing-related plays poised to take leadership from a technology sector that suddenly looks overvalued and tired. Investors are eyeing homebuilders, home-improvement retailers and even so-called leisure communities as ways to play the trend.