What Homebuilder ETFs Are Up Against
January 9th at 1:00pm by Tom Lydon
Along with the usual New Year market predictions were a slew of guesses as to what’s going to happen in the housing market. Homebuilder exchange traded funds (ETFs) have got their work cut out.
Some major points that are dominating the industry include:
- John Spence at MarketWatch has pointed out that homebuilders are a sector to watch this year. They’ve been bouncing around in a narrow range since the May 6 flash crash
- The latest S&P/Case-Shiller Home Price Index report revealed that not only are prices still moderating across the country, six of the 20 metro areas surveyed saw home values drop below lows last seen in spring 2009, reports Cinthia Murphy for Index Universe. [What's Holding Homebuilder ETFs Back?]
- On the other hand, Phrasant Gopel and Scarlet Fu for Bloomberg report that the U.S. housing market relies on the job market, and that market is predicted to improve halfway through this year. Foreclosures and an unemployment rate close to 10% are depressing homebuyer demand and weighing down prices.[Homebuilder ETFs Send Mixed Signals.]
Few can seem to agree on what will happen to the housing market, but there appears to be a current uptrend in place given that both homebuilder ETFs are above their 200-day moving averages.
There are two ways to play homebuilders with ETFs: SPDR S&P Homebuilders (NYSEArca: XHB), which concentrates primarily on homebuilder stocks, and iShares Dow Jones U.S. Home Construction (NYSEArca: ITB), which has a larger holding in home retailers in addition to homebuilders.
Tisha Guerrero contributed to this article.
