Homebuilder exchange traded funds have been better performers this year as speculation the housing market is finally getting better has led the sector higher. The new home sales report may indicate that the sector is at least not getting worse.

“Housing is still far from healed, with the last few months showing decelerating jobs growth,”Tom Porcelli, chief U.S. economist at RBC Capital Markets said. “It is difficult to get behind the idea that we have any meaningful momentum in housing.” [Why a Homebuilder ETF is Outperforming it’s Rival]

The latest sales report for the month of June show that new U.S. single family home sales dropped by the most seen this year. Furthermore, sales prices have gone on a downward pattern, suggesting the housing market recovery may have been stunted, reports Reuters. [Homebuilder ETF Breaks Out to highest Level Since 2008]

Sales are down 8.4% from a seasonally adjusted 350,000 unit annual rate, the lowest in 5 months. This is the largest decline since February of 2011. Compared to June last year, new home sales were up 15.1%.[Homebuilder ETFs rally on Housing Bottom Calls]

The SPDR S&P Homebuilder ETF (NYSEArca: XHBlost about 1% on the news Wednesday, after gaining almost 7% last month. XHB is up with the markets today, about 1.5% in Thursday trading.

New home construction last June was a high point for the sector, as confidence in homebuilders reached new highs not seen in over  years. A recovery in housing will be  uncertain, as high unemployment rates are still a factor and lending standards become tighter.

Tisha Guerrero contributed to this article. 

The opinions and forecasts expressed herein are solely those of Tom Lydon, and may not actually come to pass. Information on this site should not be used or construed as an offer to sell, a solicitation of an offer to buy, or a recommendation for any product.