Yesterday, they moved higher, but in midday trading so far today, real estate-related exchange traded funds (ETFs) are down what they gained and in some cases, more. Blame the one-two punch of bad housing news this morning.

First, it was reported that housing prices dropped in February at the fastest rate ever. It’s being taken as an indication that not only is the housing crisis not letting up, but it’s gathering steam, says the Associated Press.

The Standard & Poor’s/Case-Shiller home price index of 20 cities fell by 12.7% vs. the same period last year. It was the fastest drop since the index’s inception in 2001.

Then came the first quarter foreclosure numbers. According to Alex Veiga for the Associated Press, they jumped a whopping 112% from the first quarter in 2007. One in every 194 homes received a foreclosure filing in the quarter.

We seem to be stuck in a cycle: the market would pick up again if people would start buying properties, but without being able to secure loans, it can’t happen.

Related ETFs were down so far today, including:

  • PowerShares Dynamic Building & Construction (PKB), down 3.2% year-to-date
  • iShares Dow Jones U.S. Home Construction Index Fund (ITB), up 20.8% year-to-date
  • iShares FTSE NAREIT Real Estate 50 (FTY), up 10.1% year-to-date
  • DJ Wilshire REIT (RWR), up 11.6% year-to-date


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.