After years of tumbling share prices, investing in home builder stocks has been a profitable venture over the past few months.
Year to date, the exchange-traded fund for the home building industry, SPDR Home Builder (NYSE: XHB), is up by 26.1%.
It's the same story for individual home builder stocks, too.
Luxury home builder Toll Brothers (NYSE: TOL) has risen 25.9% since the first of the year. The largest home builder by market capitalization, Lennar Corp. (NYSE: LEN), has soared 43.6% in 2012.
So confident are home builders now that Lennar is expanding its corporate headquarters in Miami by 30,000 feet, an increase of one-third in square footage, according to an article in the South Florida Business Journal.
Home builder stocks, however, could be near the end of their steep rise. The housing market remains unstable and has triggered more skepticism in the sector.
Here's what you should consider before investing in home builder stocks.