Builder ETFs took a poor housing report in stride last week when the Commerce Department estimated new home sales in February dropped about 17% to a record low.
However, some Wall Street analysts caution not to get too excited over the winter data. The real test for the U.S. residential market will be the key spring selling season.
“It’s worth noting as well that normally volatile winter data has become even more so with volumes at all time lows,” Deutsche Bank analyst Nishu Sood wrote in a recent research note. “When volumes are as low as they are, normal levels of survey error are magnified – dramatically reducing the information value of month to month trends.”
The SPDR S&P Homebuilders ETF is up nearly 3% so far this year but trails the S&P 500 Index.
The national vacancy rate has risen above 13% and is weighing on the housing market, CNNMoney reported Monday.