Homebuilder ETFs Resilient In Face of Housing Crisis | ETF Trends

The housing market crisis and its continued effect on exchange traded funds (ETFs) isn’t over yet.

KB Home (KBH) is one of the nation’s largest homebuilders, and it’s not immune from the troubles: its third-quarter loss quadrupled from one year ago. Revenue plummeted by 56%, reports Alex Veiga for the Associated Press.

Unsurprisingly, the rough conditions for KB Home and other homebuilders is exacerbated by lower demand for new homes. Sales are at their slowest pace in 17 years. Half of the company’s homebuyers backed out of their contracts during the quarter. Falling home values don’t seem likely to improve anytime soon, either.

The company’s CEO also blamed rising foreclosures and increasingly tight lending standards.

Lennar Corp. (LEN) has narrowed its third-quarter loss, but the company’s revenue fell by more than 50%.

Interestingly, homebuilding ETFs appear to have been resilient for much of this year:

  • iShares Dow Jones US Home Construction (ITB): up 6.3% year-to-date; KB is 5.2%; Lennar is 5.5%
  • SPDR Homebuilders (XHB): up 7.3% year-to-date
  • FocusShares ISE Homebuilders (SAW): up 3.4% year-to-date

Real Estate, Homebuilder Exchange Traded Funds (ETFs)

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.