Homebuilder exchange traded funds could see action Tuesday when a report on existing home sales for May crosses the wires later in the morning.
Sentiment is leaning downward after a weak pending home sales report. The anemic housing market is anchoring homebuilder shares and related ETFs, and is reflective of the slow growth and recovery in the U.S. economy.
“Given the great affordability conditions, job creation and pent-up demand, home sales should be stronger,” said Lawrence Yun, chief economist for the National Association of Realtors. “Although existing-home sales are expected to trend up unevenly through next year, unnecessarily tight credit is continuing to restrain the market, along with a steady level of low appraisals that result in contract cancellations.” [Housing ETFs Build Gains on Toll Brothers.]
The number of sales in May is expected to be a continuation of the downward spiral, as a reading below 5 million is anticipated on an annual adjusted rate. A minimum reading of 5 million existing home sales is necessary to force a reversal, says FX Street.
Existing home sales eased 0.8% in April, and are already 12.9% below the pace of 5.8 million seen in April 2010. Investors will get a report on U.S. new home sales later in the week on Thursday. The report is expected to be under par as the housing market is slow to recover .[Housing ETFs Rise After Starts, Pier One Results.]