If you listen to the President, one takeaway that is true is the economy is performing well in terms of unemployment rates have fallen to the lowest level in 17 years and consumer confidence is near the highest in 17 years. The unemployment rate may be due to a natural shift in the demographics from the large baby boom generation to the next generation. The baby boom generation is retiring allowing more opportunities in the labor market to open up. However the reality is unemployment rates are down and that is a good thing.

In an article by April Joyner of Reuters one of the beneficiaries of the good trend is the home building industry. Presidents Clinton and Bush believed people living in a single family dwelling made a better society, the only thing they forgot was paying the bills where ever someone lives keeps society afloat. When too many people were in housing they could not afford, the housing market collapsed. Now days people still want to live in single family homes and demand is tight and growing. This leads us to the US housing industry – is it a good time to buy stocks which cater to the housing market?

There are a number of ways to invest – the home builders; the companies which distribute supplies – Home Depot and Lowes; the companies which make things to go into the home – appliances and such; often single family homes have a garage and driveway which means auto companies; you might look at where demand is growing fastest and look towards the utility companies because those bills are paid monthly and the list can go on.

The federal reserve has indicated it wishes to raise interest rates this year – higher rates would translate into higher mortgage costs for home buyers. Another cloud is last year’s tax bill which put a cap on deductions for state and local property taxes and lowered the amount of mortgage interest that can be deducted on tax returns.

The big companies to look at in the US housing market are Lennar, PulteGroup, D.R. Horton, Toll Brothers and NVR. Ideally, if you are investing in the home building industry – the ability to build from a starter home to luxury homes means not everyone will be affected by rising costs the same manner is a good thing. The S&P Composite 1500 Homebuilding Index has lagged the general market so there may be some good buys to be had as last year the Index was up nearly 75% on a yearly basis.

Linking to dividend paying stocks, in every industry there are very good choices and multiple ways to invest. Doing your homework on the companies and understanding what variables would send buy and sell signals is necessarily. An example is dividend company – does that company make a profit? can it pay its dividend? if yes then you do not have to do anything, but knowing alternatives is never a bad thing.

There are more questions than answers, till the next time – to raising questions.