Exchange traded funds that invest in U.S. homebuilder stocks have easily doubled the return of the S&P 500 in 2012 even though the homeownership rate has dropped to the lowest level in over a decade.
SPDR S&P Homebuilders ETF (NYSEArca: XHB) and iShares Dow Jones US Home Construction (NYSEArca: ITB) are up 26% and 30% year to date, respectively. The S&P 500 has gained about 12%.
The sector ETFs are getting a boost from upbeat homebuilder earnings and signs of improvement in housing data. For example, pending home sales rose about 4% in March to the highest level in about two years. [Builder ETFs Jump on Home Sales]
Still, most economists aren’t looking for a V-shaped recovery in the housing market, but rather a “prolonged bottom,” according to a recent WSJ.com article.
“The good news is that housing construction and home sales appear to have hit a floor,” the newspaper reported. “The problem, of course, is that foreclosures are still a very high share of sales in many of the hardest-hit markets.”