Homebuilder exchange traded funds are outperforming the market by a wide margin in 2012 on better housing data, although a report Tuesday revealed new construction of single-family homes declined in February.
The iShares Dow Jones US Home Construction (NYSEArca: ITB) is up 37.3% over the past three months, more than doubling the 17.6% gain for the S&P 500, according to Morningstar. SPDR S&P Homebuilders (NYSEArca: XHB) is another ETF that invests in housing stocks.
“New construction of single-family homes, which account for three-quarters of the housing market, dropped nearly 10% to an annual rate of 457,000. Construction of single-family homes is still running 18% higher compared against a year ago, however,” according to a MarketWatch report on the February data.
Permits, a leading indicator, rose 5.1% last month to the highest rate since October 2008. [Builder ETFs: Finally Out of the Dog House]
Builder confidence in the housing market was unchanged in March, according to National Association of Home Builders/Wells Fargo Housing Market Index released Monday. The benchmark is holding at its highest level since June 2007.
“While builders are still very cautious at this time, there is a sense that many local housing markets have started to move in the right direction and that prospects for future sales are improving,” said Barry Rutenberg, chairman of the NAHB.
Homebuilder ETFs could see action later this week on more housing data. Investors will get February’s existing home sales report on Wednesday, followed by new home sales on Friday.
iShares Dow Jones US Home Construction
