• Despite common knowledge, Jim Cramer says investors should buy shares of homebuilding businesses the next time they fall.
• “I believe these equities will fall again, but when they do… I believe you have to pounce,” the “Mad Money” host added.

Jim Cramer suggested Thursday that, contrary to popular belief, investors should buy homebuilding companies the next time they fall.

“I believe these stocks will drop again, but when they do — and that might be on a statement from the Fed that says they’re still seeing signs of inflation — I think you’ve got to pounce,” the “Mad Money” host said. “That could be as soon as the next rate hike.”

In May, homebuilder morale plummeted to a two-year low due to declining demand and increased prices. Mortgage rates jumped dramatically this week after falling in recent weeks, while property prices continued to grow.

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However, Cramer believes that, despite the Federal Reserve’s plans to tighten the economy, homebuilding companies may go against the stream and become appealing assets for investors’ portfolios.

He said that the epidemic has altered the face of the homebuilding sector, leaving downtown businesses unoccupied due to work-from-home, filling potential purchasers’ bank accounts, and fueling a baby boom that could mean more revenue for homebuilding companies.

Furthermore, increasing rent rates have caused some people to invest in homes rather than sign a lease, while limited housing supply has stopped properties from declining in value and led to bidding wars between potential buyers, he said.

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“We’ll get more downgrades and maybe even some estimate cuts, but when they come I’m going to go out on a limb right here and I’m going to say the time is right to buy the homebuilders,” Cramer said.

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