Exchange traded funds indexed to homebuilders were dismal performers in the years following the subprime meltdown, but the long-suffering sector is finally beginning to show signs of life. ETFs tracking residential housing stocks are up more than 70% since the October low.
SPDR S&P Homebuilders (NYSEArca: XHB) has rallied 72% since the early October bottom, while iShares Dow Jones US Home Construction (NYSEArca: ITB) has gained 81% from its 52-week low.
The moves reflect improved sentiment on the U.S. housing market. Mortgage rates remain low for now and falling prices means better affordability, although qualifying for a loan is tougher.
“Potential homebuyers and sellers are growing more confident that the U.S. real estate market will begin to recover as soon as next year,” Bloomberg News reported Tuesday.