Shares of homebuilders, D.R. Horton (DHI) - Get Report , KBHome (KBH) - Get Report , Lennar (LEN) - Get Report , Pulte Group (PHM) - Get Report and Toll Brothers (TOL) - Get Report extended bull-market gains in April, setting post-election highs this week.

This strength provides an opportunity to reduce holdings as the National Association of Home Builders Housing Market Index slipped three points to 68 in April after surging six points to 71 in March. In addition, single-family housing starts, the NAHB benchmark, declined 6.2% in March to an annual pace of 821,000 units.

A longer-term concern is that the housing market index peaked at 72 in June 2005 and the PHLX Housing Index and the homebuilder stocks set their all-time intraday high one month later, in July 2005. The housing index set its post-election high of 271.77 on Wednesday and would have to rally another 8% to reach its all-time high of 293.66 set in July 2005.

The housing index also includes companies that provide construction and materials products. These components Armstrong World (AWI) - Get Report , Lennox International (LII) - Get Report , Masco (MAS) - Get Report , Owens Corning (OC) - Get Report and Vulcan Materials (VMC) - Get Report have lagged in April. This is a sign that the overall housing market, which includes new home construction, home resales and home improvement projects, may be slowing. Also, the delay in infrastructure programs across the country will make upcoming earnings reports in these names extremely important.

Armstrong World provides ceilings and cabinets. Lennox provides air conditioning and heating systems. Masco provides home improvement and building products. Owens Corning makes insulation, roofing and siding products. Vulcan Materials makes the ingredients for concrete and cement.

This article is commentary by an independent contributor. At the time of publication, the author held no positions in the stocks mentioned.