We’ve heard it before: The housing market has hit bottom after the subprime debacle. But is it true this time? The rally in homebuilder ETFs this year suggests many investors are positioning for better times in the residential real estate market.
Analysts predict that even if robust growth is not seen right away, the sector will not drag on the U.S. economy anymore.
The iShares Dow Jones US Home Construction Fund (NYSEArca: ITB) is up nearly 40% year to date to rank among the top-performing sector ETFs. SPDR S&P Homebuilders ETF (NYSEArca: XHB) is another option for the industry.
“Even with the overall economy slowing,” Wells Fargo Securities economists said, cautiously, in a note to clients, “the budding recovery in the housing market appears to be gradually gaining momentum.” [Homebuilder ETF Breaks Out to Highest Level Since 2008]
It has been about seven years since the housing bubble burst, and for the first time in a while home prices are shifting up, reports David Wessel for The WSJ. Plus, the number of unsold homes has been reduced, which is a key indicator, according to Mark Fleming, chief economist at CoreLogic.
Homebuilders also resumed constructing new homes in May, up 26% compared to one year ago. Lennar (NYSE:) and KB Home (NYSE:) followed up with strong second quarter earnings, with an increase in revenue seen for the past three quarters.