Cramer's 'Mad Money' Recap: Aug. 26

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Jim Cramer told viewers of his "Mad Money" TV show Tuesday that he believes the housing market will bottom in the third quarter of 2009.

Cramer based his conclusion on an analysis of the charts of the seven largest home builders, including Toll Brothers (TOL Quote), Centex (CTX Quote), D.R. Horton (DHI Quote), Pulte Homes (PHM Quote), Lennar (LEN Quote), MDC Holdings (MDC Quote) and KB Homes (KBH Quote).

He said the charts clearly show the top of the market in July, 2005, one year before the "beginning of the end" in July 2006.

Given that 12-month lead, Cramer identified the bottom for the homebuilders on July 17 of this year. Normally, he said he would go with a 6- to 12-month leading indicator for this bottom, but in this case, he's giving some more leeway and is predicting it will take 309 days before the housing market bottoms.

Cramer also listed 10 reasons why he feels the market will be ready to rebound in the third quarter of 2009:

1. There are far fewer homes being built now than in 2005.

2. The $300 billion Federal Housing Bill is helping homeowners avoid foreclosure.

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