The true pure play housing stocks have been on a tear lately, as new home construction picks up and industry insiders believe the market could get even hotter as another rate hike is likely in the fall.
In April data indicated that new homes sales grew at the fastest rate in eight years. Furthermore, during the earnings conference call for homebuilder Toll Brothers' (TOL), the companies Chairman Robert Toll said that a rate increase could actually help continue spurring demand.
“What you have with a price increase is an increase in demand created because the price has gone up, which by the way may come to us in the summer months this year,” he said. “If the Fed goes up and the mortgage rates go up an eighth or a quarter, it probably means price increases are coming soon, which spurs demand and spurs action. So it's too early yet to tell, but we could be onto something good.”
If higher rates or just the threat of higher rates is going to help the housing industry than now is the time to buy. Over the last few weeks, the Federal Reserve's meeting minutes and a number of Fed members have hinted that rates will likely increase in the fall. To me, that sounds like at least a threat, if not a clear sign that higher rates are coming soon.
So, what should you buy to profit from a strong housing industry? Continue reading "3 ETF's To Play The Housing Boom"