Homebuilder exchange traded funds jumped over 5% on Wednesday on global liquidity actions from central banks and after a report estimating pending home sales rose 10.4% in October.
“The number of Americans who signed contracts to buy homes jumped in October to the highest level in a year. But the gain follows three months of declines and isn’t enough to signal a housing recovery,” the Associated Press reported.
SPDR S&P Homebuilders ETF (NYSEArca: XHB) and iShares Dow Jones U.S. Home Construction Fund (NYSEArca: ITB) have rallied sharply this week but remain in negative territory for 2011. The ETFs invest in homebuilders and related housing sectors.
Data earlier this week showed home prices fell in September.
“Well-qualified buyers in select areas are being tempted back into the market by today’s extremely favorable mortgage rates and prices,” David Crowe,NAHB Chief Economist, said on Bloomberg BusinessWeek. “We are anticipating further, gradual gains.”
The S&P Case/Schiller Home Prices Indices reported an overall decline in home prices for the month of September. Prices fell an average of 3.6% compared to September one year ago. On a year-over-year basis, prices fell in most of the 20 cities surveyed.