Is there opportunity in housing exchange traded funds (ETFs) in the current market? After reading our post in August about housing ETFs falling on home sales news, Selena Maranjian for The Motley Fool went looking to see if it all spells trouble. Maranjian uses some of our points to illustrate how in the midst of a downswing in the housing market there are things to keep in mind:
- The downswing isn’t unilateral. While some areas may be experiencing lower home sales and prices, it isn’t the same across the country.
- When sales slip, it means people are holding off on buying homes. Instead of buying, they could remodel, benefiting other housing-related companies.
- Some industries, like housing, are cyclical. As the industry is down, investors can watch for the opportunity to get into the market as it goes back up. Determining when that is, is not easy.
As we mentioned in our post, SPDR S&P Homebuilders (XHB) has been suffering from the lower home sales. It is still down 40% year-to-date, although it had a good day on Friday.
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.