Homebuilders Rise as Market Tumbles - Time to BUY!!

An upgrade from Goldman Sachs helped propel the Homebuilders sector higher on Monday even as the overall market fell by over 1%. The firm upgraded the sector to Attractive from Neutral and cited the beginning of a long-term positive trend for the stocks.

Here are some of the positive factors Goldman believes the sector has and my thoughts in parentheses:

• Renewed home price appreciation (likely considering prices are at or near multi-year lows).
• 2011-1H12 job growth supports 200,000 more new home sales without further job adds (this I do not totally agree with because I am not sure where a big increase in home sales comes from without new jobs).
• shadow supply has declined significantly, lowering the risk of another price shock (this is true and puts a bottom underneath current prices, thus limiting downside).
• housing policy has been supportive since August 2011 and should remain so (well the government tried, but failed; however low interest rates by the Fed help keep mortgage rates at all-time lows that is a plus).

MDC Holdings ($MDC) was put on the Conviction Buy List and is up 5.6%. The SPDR S&P Homebuilders ETF ($XHB) is down 0.3% and the iShares US Home Construction ETF ($ITB) is up 0.2%.