Homebuilder ETFs are trying to break out yet again on the latest round of upbeat data on the housing market. Some investors have scaled back on builder ETFs or hedged recently after the sector funds doubled in price the past year, so a fresh rally may cause traders to chase the breakout.
The homebuilder sector surged Wednesday on the strongest housing starts data in four years, with home construction exchange traded funds now trying to break out to new 52-week highs.
The iShares Dow Jones US Home Construction Index Fund (NYSEArca: ITB) up 2.8% Wednesday and the SPDR S&P Homebuilders (NYSEArca: XHB) was 1.8% higher. [Homebuilder ETFs in Focus This Week on Housing Data]
Housing starts in September rose to a better-than-expected 872,000 annual rate, up 15% to its highest since July 2008, Bloomberg reports. Additionally, a rise in building permits could indicate that gains in the housing sector will be sustainable.
“It’s no longer a question of whether the industry is rebounding,” Larry Sorsby, chief financial officer of Red Bank, said in the article. “There is clear evidence that we have bounced off the bottom and are in the midst of a recovery.”
Low-mortgage rate, smaller housing inventory and a growing population would help support homebuilders going forward.
The National Association of Home Builders/Wells Fargo builder sentiment index increased to 41 in October, up from 40 in September, hovering at its highest level in six years, reports Alex Veiga for the Associated Press.