A Few Ways To Play A Stronger US Housing Market

The US housing market didn't recover as quickly as expected in 2014, but many believe 2015 will see steady, sustainable growth as the US economy picks up speed.

Data out this week showed that sales of previously owned homes increased, while pending home sales gained 0.8 percent from October to November and 4.1 percent from November 2013.

While the housing market is still struggling with falling home prices in the wake of a wave of foreclosures, many see stabilizing fundamentals in the sector as a promising sign.

Related Link: Robert Shiller On The Current State Of The Housing Market

In order to reap the benefits, traders are looking to companies that will benefit from the sector's improvement.

A Few Ways To Play It

Homebuilders like Toll Brothers Inc TOL and KB Home KBH offer a direct line to the housing sector, but many are also considering developers like LGI Homes Inc LGIH and D.R. Horton, Inc. DHI, which target first-time buyers.

The first-time home buyer's market could see a boost in 2015, due to improving unemployment figures and a steady economic recovery in the US. Given that, it's possible companies that build single-family starter homes will see an increase in customers.

Another option is to target retailers with businesses centered on home improvement.

Home Depot Inc HD, Lowe's Companies, Inc. LOW and TJX Companies Inc TJX all cater to home owners looking to add value to their properties.

A recovering economy also means disposable income for repair and reform projects may increase.