After a long-term slump in housing stocks, the real estate sector is showing signs of life.
With the U.S. economy currently in Quad 4 (growth and inflation slowing), falling interest rates actually mean that housing stocks – and homebuilder stocks in particular – could be one of the few sectors that could outperform the rest of the market.
“I think housing has got the most value of any cyclical sector in the U.S. economy. As bond yields have gone down the last three weeks, what have you noticed? Housing does better,” Hedgeye CEO Keith McCullough explains in the clip above.
"The two worst places to be in your portfolio before Quad 4 hit were housing (exposures like the S15 Home Index and ITB). Why? Because interest rates went up all the way through Quad 1 and 2, which was into the end of the third quarter.”
Bottom line: if the 10-year treasury yield continues to fall, housing should continue to “put points on the board,” says McCullough.
Watch the full clip above for more.