Homebuilder exchange traded funds added to their roughly 20% gains for the year after a measure of industry sentiment released Wednesday hit the highest level in several years.
Builder confidence in the market for new single-family homes rose to 29 in February from 25 the previous month to the highest level in over four years, according to the the NAHB/Wells Fargo Housing Market Index.
“Builder confidence has doubled since September as measured by the HMI. Given the recent improvements in new home starts … this consistency suggests that the housing market is moving toward more sustainable growth,” said NAHB Chairman Barry Rutenberg. [Why Homebuilder ETFs are Holding Their Own]
“However, it is important to remember that the HMI is still very low, and several factors continue to constrain the market,” Rutenberg added. “Foreclosures are still competing with new home sales, and many builders are seeing appraisals come in at less than the cost of construction. Additionally, prospective home buyers are finding it difficult to qualify for a mortgage.”
Rates on 30-year fixed mortgages are averaging 3.9%, according to the latest data from Freddie Mac.