Exchange traded funds (ETFs) that invest in U.S. housing stocks rose Tuesday after the Commerce Department estimated starts increased 7.2% in March.
“We remain at very low levels,” said Richard DeKaser, an economist at Parthenon Group, according to Bloomberg. “The best description is bumping along the bottom. The underlying trend is one of stability or modest improvement since we hit our low point a couple of years ago.”
SPDR S&P Homebuilders (NYSEArca: XHB) has traded in a range this year along with Treasury yields, although mortgage rates have been creeping higher lately. [Homebuilder ETFs and Mortgage Rates.]
Spring selling season is here and analysts are watching trends to see where the U.S. residential housing market is headed. With the national vacancy rate at 13%, investors are interested to see if there are any signs of a recovery within the U.S. housing market. [Homebuilder ETFs Press On Resistance.]
U.S. homebuilder confidence is low, as residential housing sales are flat, and new home construction is moving at a snails pace, if any. Bob Willis for Bloomberg reminds us that there are more looming foreclosures in the pipeline, existing home prices are falling and the unemployment rate is set to hover at 8.7% in 2011, setting the tone for disappointment within this sector.
iShares Dow Jones US Home Construction (NYSEArca: ITB) was up more than 1% Tuesday, however, after the data on housing starts.
An index on builder confidence released this week showed industry confidence levels fell for April.
“While builders in some areas are starting to see a pickup in traffic of prospective home buyers, many consumers remain skittish about the health of the housing market and overall economy, particularly in view of recent legislative and regulatory proposals that could make it much harder to get a mortgage,” said Bob Nielsen, chairman of the National Association of Home Builders. “At the same time, builders are competing against a large number of foreclosed and distressed properties on the market, which are holding down prices and appraisals and making it tough for potential clients to sell their existing homes.”
Tisha Guerrero contributed to his article.