How Do You Invest For The Housing Recovery? - Real Time Insight

By Zacks.com,  October 24, 2012, 01:27:01 PM EDT

The housing recovery continued in September as new home sales came in better than expected.

New home sales rose to 389,000 from a revised 368,000 in August. Sales were up 27.1% compared to last year.

This was the highest level since April 2010, which was artificially boosted by the first time home buyers tax credit.

Inventory also declined to 4.5 months from 4.6 months in August. Inventory under 6 months is considered a normal market. Supply hit a high of 12.1 months in January 2009.

There can be no doubt of the direction of new home sales now. We've had multiple months of better year over year numbers. New home sales have hit a bottom.

Warren Buffett was on CNBC this morning and he said people should be buying a house right now.

"I think they're making a terrible mistake if they don't buy a single family home now and get mortgages at these rates, and they should get a 30-year mortgage. It's really a golden opportunity. It was a little bit better six months ago, but it's still wonderful now."

"You're not going to see a chance like this five years from now. I'll guarantee you that."

Buffett also said that Berkshire companies were selling more furniture and carpet.

Housing is really revving up.

How should investors play the recovery?

  1. Buy homebuilder stocks (many of which have already soared)
  2. Buy furniture and flooring companies
  3. Buy the big box retailers like Home Depot and Lowe's
  4. Buy the materials companies such as those making copper piping systems and cement
  5. Buy all of the above


HOME DEPOT (HD): Free Stock Analysis Report

LOWES COS (LOW): Free Stock Analysis Report

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of The NASDAQ OMX Group, Inc.


This article appears in: Investing, Stocks

Referenced Stocks: HD, LOW



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