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How to play the scorching housing market

Despite a couple interest rate hikes over the last year, the housing market has remained very strong. A primary reason why the housing market has remained so strong is lack of inventory on the market.

With home inventories low, now is currently a sellers market, and demand remains high despite rising home prices. Even homeowners who have no intention of selling their current properties are feeling the positive impact of the strong housing market, as homes around them are selling for higher prices, and lifting the value of their homes as a result. These homeowners are increasingly willing to invest in their homes, which helps sectors that cater to home improvement and upgrades.

Rising interest rates will eventually start to put a lid on home prices, but it will take a few more increases since rates remain incredibly low on an historic basis.

The obvious winners of the strong housing market in recent years has been homebuilders, but they are not alone. There are plenty of other sectors that have benefited from strength in the overall housing market.

Among these are the financial sectors, construction-related sectors, the home improvement sector and consumer goods makers that focus on home-related products such as appliances and electronics.

Let’s take a look at five stocks that are great indirect plays on the scorching housing market at this time.

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Michael Fowlkes

Michael Fowlkes is a financial writer who has been with the Fresh Brewed Media family since 2004. Over the course of his tenure with Fresh Brewed Media, he has worn many hats, including portfolio manager, options analyst, and writer. Michael received his undergraduate degree from Virginia Tech in Accounting and got his start in finance working as a stock trader for six years at Chase Investment Counsel in Charlottesville, Va.