Homebuilders Yield 11% in 2010... How About 2011? (XHB, LEN, KBH)

A rebound in demand for new homes this year will be beneficial for large building companies, according to

. The homebuilder sector, as measured through the exchange-traded fund

, gave investors returns over 11% in 2011. Investors are wondering whether 2011 will be as friendly. One cause of the expected increase in 2011 is that new home inventory is so low. During and after the recession, home-building stalled significantly as home purchases were down as well and foreclosures were rampant. Perhaps the real estate market is finally starting to make its rebound. However,

reports that housing starts in December were not as high as anticipated. Perhaps forecasters are overly optimistic about 2011 new home construction. Even so, traders may consider investing in home building companies for the long-term. To obtain a stake in the potential rebound, you might consider going long on big home building companies like Lennar

which is trading at $20.49, close to its 52-week high of $21.79. Also to be considered is KB Homes

, which is trading at $15.46, right in the middle of the 52-week high and low. December housing starts were just released today, coming in much lower than expected. Housing starts fell 4.3% to 529,000, versus the expected 550,000. Futures were modestly lower after the results. Dow futures were immediately off 7 points, NASDAQ futures flat, and S&P futures lower by 3 points. Neither Benzinga nor its staff recommend that you buy, sell, or hold any security. We do not offer investment advice, personalized or otherwise. Benzinga recommends that your own due diligence and consult a certified financial professional for personalized advice about your financial situation.