The HomeBuilders

One indication that there is housing bubble (in many markets) is to look at Home Builder's stock.

It has gotten even worse, when I was discussing the real estate bubble earlier this year the Dow Jones Homebuilding Index was trading at nearly 800, it has increased over 30% in just a few months and trades at 1,070 as I write!! It has doubled in the last year. This, of course, is not sustainable. (HoweStreet.com, Dave Skarica)

Now lets look at individual Homebuilder's stock:



KB Homes (KBH) stock has almost tripled in value in the past year.



Pulte Corporation (PHM) stock has almost doubled in the past year.

Is this sustainable? No. The housing bubble has caused a bubble in the stock value of Home Building companies. As the housing bubble bursts, the stock prices of these home builders will tumble.