Exchange traded funds that invest in homebuilder stocks fell Tuesday after a report estimated U.S. housing starts declined nearly 11% in April.
SPDR S&P Homebuilders ETF (NYSEArca: XHB) was down almost 1% in premarket trading after the weaker-than-expected housing report.
Builder ETFs fell Monday after disappointing first-quarter sales numbers from Lowe’s (NYSE: LOW). Also, builder confidence in the market for newly built, single-family homes held unchanged at the low level of 16 in May, according to the National Association of Home Builders/Wells Fargo Housing Market Index. [Can Lowe’s, Home Depot Improve Housing ETFs?]
Investors will get a report on existing home sales on Thursday. Sales “should brighten considerably in the months ahead given very good affordability and continuing improvement in the job market,” said David Kelly, chief market strategist at JP Morgan Funds. “For now, high-frequency indicators such as mortgage applications just don’t suggest any significant pick up.”
“As new housing volumes continue to hover near cyclical lows, the disagreement between pessimists and optimists is mainly about how long recovery will take,” Deustche Bank analysts said in a report. “The two big unknowns are excess housing inventories and growth in new households.”