Renowned market strategist David Rosenberg is urging investors to abandon overhyped artificial intelligence (AI) market plays and instead rotate capital into heavily discounted U.S. residential construction equities.
The president of Rosenberg Research revealed that despite his notorious “perma bear” reputation, he expects a massive cyclical turnaround for the neglected housing sector.
The Valuation Disconnect
Speaking to Kitco News, Rosenberg highlighted a stark pricing mismatch between tech-fueled momentum indexes and traditional residential construction companies.
While the broader S&P 500 index currently trades at an elevated multiple well over 20, housing equities remain completely overlooked by mainstream institutional capital.
“The US home builders are trading with a 10 multiple,” Rosenberg stated, emphasizing that the sector presents a “huge discount off everybody’s radar screen” for value-driven investors.
Housing Stocks Set To ‘Double Very Quickly’
Because Rosenberg strictly avoids company-specific equity risk, his fund allocations are entirely managed through exchange-traded funds.
He revealed that a diversified homebuilding ETF has officially transitioned to the very top of his personal watch list. Though the sector remains down roughly 60% from its prior cyclical highs, it has already quietly clawed back 15% from its absolute bottom.
“The perma bear Rosenberg is going to is actually buy the homebuilding ETF,” he announced, adding that “this is a group that could double very quickly” as interest rate math shifts.
Here are four of the most prominent US homebuilder and construction ETFs that Rosenberg could be referring to:
| ETFs | YTD Performance | 6-Month Performance | One Year Performance |
| iShares U.S. Home Construction ETF (BATS:ITB) | 0.04% | -0.46% | 5.20% |
| SPDR S&P Homebuilders ETF (NYSE:XHB) | 5.09% | 3.93% | 11.09% |
| Invesco Building & Construction ETF (NYSE:PKB) | 16.07% | 14.63% | 39.04% |
| Direxion Daily Homebuilders & Supplies Bull 3X ETF (NYSE:NAIL) | -15.73% | -17.57% | -17.33% |
The Policy Catalyst: The Road To Housing Act
Rosenberg’s bullish outlook aligns perfectly with shifting regulatory winds in Washington. On Wednesday, President Donald Trump is set to sign the bipartisan 21st Century ROAD to Housing Act, marking the most significant federal housing legislation in over 30 years.
The sweeping bill aims to tackle the nation’s severe housing shortage by cutting red tape, establishing pre-approved home designs, and streamlining environmental reviews to accelerate residential construction. Crucially for homebuilder equities, the legislation heavily restricts large institutional investors and Wall Street real estate investment trusts (REITs) from purchasing single-family homes.
By sidelining institutional competition, the bill aims to redirect demand toward everyday American families while unleashing supply-side incentives for builders—creating the exact structural tailwind Rosenberg is banking on for the sector’s rapid revaluation.
Inside The Rosie Portfolio Playbook
The prospective homebuilder position joins a broader tactical “barbell approach” implemented within the Rosie model portfolio.
Rosenberg has split his personal capital evenly between high-quality fixed income and tangible hard equities. His defensive allocation holds short-duration sovereign debt, including two-year Canada bonds, U.S. treasuries, and Australian bonds to mitigate duration risk.
The equity half bypasses crowded tech giants entirely, focusing instead on cybersecurity ETFs, Canadian bank stocks, pipelines, energy infrastructure, uranium, and physical gold bullion paired with gold mining ETFs. He urged market participants to lock in profits now, warning that the AI tech trend is “only a paper gain until you sell.”
Disclaimer: This content was partially produced with the help of AI tools and was reviewed and published by Benzinga editors.
Image via Shutterstock
Login to comment