Could Pending Home Sales Report Dampen Real Estate ETFs?
February 7th at 12:00pm by Tom Lydon
Pending U.S. home sales fell 1.5% in December, proof that the housing market is even more sour than anticipated, but what could it mean for real estate-related exchange traded funds (ETFs)? The funds have been posting decent numbers overall so far this year.
The December report is the second-lowest reading on record. Alan Ziebel for Associated Press reports that The National Association of Realtors said its seasonally adjusted index for pending home sales for existing home sales fell to an 85.9 from an originally anticipated 87.2. August holds the court of the lowest yet, 85.5, the height of the credit crunch.
An index reading of 100 is considered normal as was in August 2001. The Realtors group has forecast a drop from 5.7 million in 2007 to 5.4 million this year.
Since Jan. 22, homebuilders and real estate ETFs have been posting gains, including SPDR S&P Homebuilders (XHB), which is up 10.6% and iShares Dow Jones US Home Construction (ITB), up 20.3%. The iShares Dow Jones US Real Estate (IYR) is up 4.7% since that date, but down 0.5% in the last week.
Bargain hunters appear to be out and about, snapping up deals.
