(Story updated to add that the pace of U.S. homebuilding in February disappointed many in the industry, falling 1.1% from January.)
BOSTON (TheStreet) -- The much-anticipated rebound in the new-home market may be here with this spring's selling season. And that has investors diving into these highly cyclical stocks after years of decline.
Indicative of that, the S&P 1500 Homebuilder Index is up 35% this year, versus the S&P 500's 11.7% gain.
And that jump has come just months after the close of a year in which only 304,000 new homes were sold, the lowest on record that go back to 1963, according to the Commerce Department.But today it was reported that the pace of U.S. home building fell in February, by 1.1% from January, well below expectations, which called for an increase of 1.3%, according to the Commerce Department. But there are signs of growth ahead, as permits for new construction reached their highest levels since 2008. The tenuousness of a potential rebound came through in a report Monday from the National Association of Home Builders as its measure of confidence of new-home builders remained unchanged in March from February despite a number of economic positives in the past few weeks. But the current level is the highest since June 2007 and over 50 builders reported "good" market conditions, which hasn't been the case since April 2006. Still, buyers are skittish as any form of bad economic news is likely to scare them off. And many markets remain clogged with unprocessed foreclosures, and the new borrowing standards are tough, especially for first-time buyers. Those issues are somewhat offset by low interest rates. S&P Capital IQ analysts said in a recent research note that "most publicly traded builders are in a stable, competitive position after reducing costs, retiring debt and increasing cash positions. However, we think the housing market will improve slowly in the next year as it will take time before buyers' confidence and the job market progress enough to support a more favorable view of home ownership." Here are 10 stocks expected to benefit from the homebuilding industry's rebound in inverse order of analysts' "buy" ratings:
Select the service that is right for you!COMPARE ALL SERVICES
Jim Cramer and Stephanie Link actively manage a real portfolio and reveal their money management tactics while giving advanced notice before every trade.
- $2.5+ million portfolio
- Large-cap and dividend focus
- Intraday trade alerts from Cramer
- Weekly roundups
Access the tool that DOMINATES the Russell 2000 and the S&P 500.
- Buy, hold, or sell recommendations for over 4,300 stocks
- Unlimited research reports on your favorite stocks
- A custom stock screener
- Upgrade/downgrade alerts
Jim Cramer's protege, David Peltier, identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.
- Diversified model portfolio of dividend stocks
- Alerts when market news affect the portfolio
- Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
All of Real Money, plus 15 more of Wall Street's sharpest minds delivering actionable trading ideas, a comprehensive look at the market, and fundamental and technical analysis.
- Real Money + Doug Kass Plus 15 more Wall Street Pros
- Intraday commentary & news
- Ultra-actionable trading ideas
Our options trading pros provide daily market commentary and over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.
- 100+ monthly options trading ideas
- Actionable options commentary & news
- Real-time trading community
- Options TV