Playing a Soft Housing Market

All those kids in their twenties and thirties who are living with their parents will eventually want their own homes.

Stocks of companies that build houses have been languishing. Over the past year, SPDR S&P Homebuilders ETF (symbol XHB), an exchange-traded fund, gained 2.3%, while Standard & Poor’s 500-stock index returned 20.5%. With a gap that wide, the contrarian in me can’t help but wonder whether builder stocks are undervalued. Is there an opportunity for bargain-hunting investors who like to buy what others shun?

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James K. Glassman
Contributing Columnist, Kiplinger's Personal Finance
James K. Glassman is a visiting fellow at the American Enterprise Institute. His most recent book is Safety Net: The Strategy for De-Risking Your Investments in a Time of Turbulence.