Homebuilder exchange traded funds (ETFs) were deflated at the news about a further slump in construction spending as the housing crisis deepened.

For the month of May, it was down 0.4%, making it the 11th drop in the last year, reports Martin Crutsinger for the Associated Press. It was slightly less than expected, and office and hotel construction showed strength.

Residential construction fell by 1.6% in May, though, the 25th decline in 26 months.

Flooding and severe storms in the Midwest is bolstering optimism for some people, though: builders and contractors. Damage from the tornadoes and floods has surpassed $4 billion, reports Michael J. Crumb for the Associated Press. Repair and reconstruction efforts in the region could rejuvenate the sector.

Homebuilder ETFs are down so far today, as well as year-to-date:

• SPDR S&P Homebuilders (XHB), down 14.3% year-to-date
• iShares Dow Jones US Home Construction (ITB), down 18.9% year-to-date

Shares
of homebuilders have slumped for the fourth quarter in a row, with any
recent gains getting erased coupled with disappointing second-quarter
results and a glum outlook, reports Michelle Rama for Forbes.

Companies such as KB Home (KBH) and Lennar (LEN) are disappointing many with low second quarter numbers. Lisa LaMotta for Forbes reports
that these companies are suffering from the low confidence
within the housing sector.

In more positive news, U.S. manufacturing activity rose for the first time in five months in June because of strong exports, reports Ellen Simon for the Associated Press. Inventories were still on the rise, though, and prices jumped for every commodity except copper.

Tags | Copper, Homebuilders, Real Estate