Homebuilder exchange traded funds (ETFs) continue to be challenged, much like the broader real estate market. After losing more than 20% in the last three months, is there hope yet for these ETFs?
The National Association of Home Builders said its monthly index of builders’ sentiment about the housing market fell to 13, the lowest reading since March 2009. Any reading below 50 marks a negative sentiment.
According to the Associated Press, factors that are contributing to the sluggish homebuilders sector are jobless and unemployment rates, brisk sales of bargain-bin foreclosure properties, tight credit and a prediction that prices are going to further fall. [What’s Behind the Homebuilders Numbers?]
On the other hand, home improvement store Lowe’s (NYSE: LOW) has reported a strong second quarter, thanks to sales of grills and air conditioners this summer. Right there, you can see the benefits of diversification.
Associated Press reports that Americans are responding to programs such as the federal cash-for-appliances rebates and sales but says 2010 is a “bouncing along the bottom” year. [REITs Outperformed the S&P 500.]
However, the retailer is still taking a cautious outlook about consumer spending, and cut its yearly revenue guidance as worries about a stalling economy grow.
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- SPDR S&P Homebuilders (NYSEArca: XHB)
- iShares Dow Jones U.S. Home Construction (NYSEArca: ITB)
Tisha Guerrero contributed to this article.