Beginning with the collapse of Lehman Brothers, to the depressed housing market, banks curtailing loans, to the current mortgage foreclosure debacle and the pain still felt by homebuilder exchange traded funds (ETFs) – containment of the housing crisis does not appear to have been achieved.
Mixed news continues to dog the real estate sector. On the one hand, economists reported that builders likely started work on fewer homes last month, sending housing starts down 3%, reports Bob Willis for Bloomberg. [Homebuilder ETFs Take Hits.]
On the other hand is the fact that homebuilder confidence rose this month for the first time in several months. Behind the number is the real story, however: the National Association of Builders index rose to 16; a reading above 50 indicates that more builders view sales condition as good instead of poor, reports Joseph Lazzaro for Daily Finance. [Tom Lydon Makes ETF Picks on CNBC.]
The fact is that real estate may continue to lurch along as long as unemployment remains high and consumers go into lockdown mode. Homebuilder ETFs are a way to play the recovery of this market, but they may continue to see challenges. Sign up for alerts to be notified of a trading opportunity in these ETFs.
- SPDR S&P Homebuilders (NYSEArca: XHB)
- iShares Dow Jones U.S. Home Construction (NYSEArca: ITB)
Gregory A. Clay contributed to this article.
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.