Making Money from a Housing Bottom

Playing a Housing Bottom

The plethora of housing numbers out the last 2 weeks have been a major improvement and they continue to back my call that the national housing market has been formed.

Signs of a Bottom

• New Home Sales jumped 11% from May to June
• Case-Shiller Index reported the slowest monthly depreciation in home prices since February 2007
• Pending Home Sales rose 3.6% in June; the fifth consecutive month of gains and for the first time since July  2003
• Construction Spending rose unexpectedly in June by 0.3% over a May number that was revised higher

Making Money from a Housing Bottom

• SPDR S&P Homebuilders ETF (XHB) - invests in a basket of stocks that include homebuilders, home improvement stores, and building material companies. Recently broke out to a fresh 10-month high; but remains 68% off the 2006 high.
• iShares REIT ETF (ICF) - invests in a basket of REITs, but is not concentrated solely on residential, the ETF will also have exposure to commercial and other niche areas. Sitting at a 7-month high.
• Lowe’s (LOW) - the home improvement store will see a pickup as homeowners either spruce up their homes to be sold or put money into new purchases. Also does well if the housing recovery is slow because consumers will remain in their home and improve it.