Housing: Time to Short?

Short term, traders are beginning to get weary of waiting for a rebound and short interest in many homebuilders is increasing driven this week by the sharp rise in mortgage rates. So, pick a publicly held homebuilder and take a look at the chart.

Market conditions make shorting the home builders and their cousins - suppliers, Home Depot (HD) et al - very difficult in the short run. In the long run, housing in the US will be permanently different, the ongoing profitability of these companies is in question and several of these outfits are going under. For sure and for certain.

Housing is a wreck and compared to market expectations, getting worse
Toll Brothers (TOL) and KB Homes (KBH) have weak balance sheets the shorts like. Longer term - two to eight quarters - play almost any of them or buy puts on the homebuilding index, the XHB.

Their suppliers have been crushed - Louisiana Pacific (LPX) and Masco (MAS) are the two big names. Check them out also - short interest is increasing and Masco's net cash - cash plus liquid securities plus accounts payable (assuming they will be paid) minus accounts receivable - wouldn't fill my gas tank for too long.

SOURCE: http://seekingalpha.com/article/140871-short-housing-for-the-long-term