The S&P Supercomposite Homebuilding index has jumped 83% this year through October. The top 11 U.S. homebuilders show a price-to-earnings ratio of 38.8, compared to the S&P 500’s 14.5. Nevertheless, most homebuilding analysts project that the top homebuilders, Lennar Corp. (NYSE: LEN) and PulteGroup (NYSE: PHM), can still see profits double this quarter while the third largest DR Horton (NYSE: DHI) will take profits of 75% and fifth largest NVR Inc (NYSE: NVR) will see a gain of 70%. [Builder ETFs in Focus on Toll Brothers Earnings, Housing Data]
Among ITB’s holdings, LEN is 9.8%, PHM is 9.3%, DHI is 8.3% and NVR is 7.4%. The XHB ETF follows a more equally weighted methodology and among its top holdings NVR is 3.6%. Moreover, XHB has a greater allocation toward other home-related sub-sectors, such as building products 29.5% and homefurnishing retailers 14.5%.
iShares Dow Jones U.S. Home Construction Index Fund
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Max Chen contributed to this article.