A particular housing portfolio told CNBC Jim Cramer on Tuesday that the group could pile after several weeks of pain, which was linked to the Federal Reserve interest rates.
Pult's income statement sheds light on Fed's impact on housing," he said. The construction giant's earnings increase came mainly from active adult homes, the business speaks for older homes. Meanwhile, the rest of the business was pushed when people resisted selling homes with lower mortgage rates just for to enter a market with much higher prices.
"If you look at what led to this market being down, it was housing and housing. Fed's lockstep rate hikes stopped quite a bit of this industry in the slots, as higher prices make home less affordable, "explains Cramer." With 5 per cent mortgage, homes are now prohibitive for big country wings. "
Now it's just two ways to get the real estate market back on their feet, said the "Mad Money" host. 1
Secondly, home users must start cutting prices and giving incentives," another victory for the Fed, "Cramer said.
" Of course, because there is a shortage of land on many areas, you do not see the kind of imbalance between supply and demand that would cause a real housing crash that we had in 2008, "he added." But if the Fed tightens four times as they have told us, they will do it well just say it's going to be very bad for homeowners. "
And even after its rally on Tuesday, Pulte's stock was still losing over 32 percent in 2018. Cramer made it a relief rally "that contributed to the housing sector, but not completely changing the prospects.
" The ultimate takeaway here is that the first group will roll over in this entire market, being home builders, and they have finally become so successful that a 1 percent gain in order is enough to satiate the sellers and suddenly take buyers, " he said. "I did not want to buy home builders here – house prices still have to go lower nationally and it will take months – but it's a very encouraging sign that Pulte could gather."