Housing Market Crash Fears? Jim Cramer Says Hold On — These Homebuilder Stocks Might Surprise You

CNBC's Jim Cramer is bullish on homebuilders despite recent stock performance.

Cramer analyzed earnings reports from Lennar and KB Home, which reported last week. While Wall Street favored KB Home, Cramer expressed optimism for both companies and the homebuilding sector.

"Interest rates might stay elevated, but the housing shortage remains a significant factor," Cramer said.

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Cramer highlighted the seemingly contradictory market behavior — homebuilder stocks surged early in the year on expectations of rate cuts but have since stalled due to the Federal Reserve's more cautious approach.

While Lennar and KB Home exceeded Wall Street's expectations, Cramer identified factors causing investor caution toward Lennar.

He pointed out concerns regarding Lennar's guidance, which seemed mixed. Management mentioned "increased sales incentives." This could signal a less optimistic view of housing demand. Lennar's proposed spinoff might have raised concerns about the company's long-term housing market outlook.

In contrast, KB Home's stock rose after it raised its full-year housing revenue forecast.   Cramer pointed out that KB Home didn't heavily discuss using incentives to boost sales, which some investors viewed favorably.

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Cramer said he prefers KB Home's approach and is more optimistic about Lennar than Wall Street analysts. He noted the companies are taking different paths:

• KB Home prioritizes price stability over maximizing sales volume. This suggests they're less concerned about building up excess inventory.
• Lennar is more focused on managing inventory levels. This translates to higher deliveries and order fulfillment.

"If we get any relief on the interest rate front, Lennar's results suggest that could bring in a new wave of buyers, which is why I think this housing bull market is far from over," Cramer said.

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