Real Estate ETFs May Not Be At the Bottom…Yet

February 24th at 12:00pm by Tom Lydon

While the overall economy is improving, real estate exchange traded funds (ETFs) are still moving along in fits and starts.

S&P/Case-Shiller Home Price Index revealed that U.S. home values dropped 3.9% in the fourth quarter of 2010 year-over-year. It was the worst performance since mid-2009, writes Cinthia Murphy for IndexUniverse. David Blitzer, the chairman of S&Pā€™s index committee, commented that “despite improvements in the overall economy, housing continues to drift lower and weaker.” [Two Sides of Investing in Real Estate ETFs.]

Homebuilder ETFs have turned flat in recent days, though iShares Dow Jones U.S. Home Construction (NYSEArca: ITB) and SPDR S&P Homebuilders (NYSEArca: XHB) did manage to make gains even as homebuilder sentiment has been stuck at lows for months now.

If you’re among those doubtful that housing will really recover anytime soon, consider Direxion Daily Real Estate Bear 3x Shares (NYSEArca: DRV) if you’ve got the stomach and knowledge to own a leveraged ETF. Here’s how leveraged ETFs work.

Economists say prices will continue to drop, with Newport projecting another 5% national decline before the market will turn around in midyear, reports Alan J. Heavens for Philly. Mark Zandi, chief economist at Moody’s Analytics in West Chester, stated that foreclosure of total sales, the degree to which the market was overbuilt during the boom, the extent to which housing was overvalued and the job market will determine the course of the recovery in the housing market.

For more information on the housing market, visit our real estate category.

Max Chen contributed to this article.

The opinions and forecasts expressed herein are solely those of Tom Lydon, and may not actually come to pass. Information on this site should not be used or construed as an offer to sell, a solicitation of an offer to buy, or a recommendation for any product.