Homebuilder exchange traded funds rallied about 4% on Tuesday following a report that home prices are rising in nearly 90% of U.S. cities.
The iShares DJ US Home Construction (NYSEArca: ITB) and SPDR S&P Homebuilders ETF (NYSEArca: XHB) were up 4.1% and 3.4%, respectively, on Tuesday afternoon. The housing ETFs are again trying to break out to the highest levels since the subprime bust.
Home prices posted their strongest year-over-year increase in seven years in the fourth quarter, the National Association of Realtors said.
“Home sales are on a sustained uptrend, mortgage interest rates are hovering near record lows and unsold inventory is at the lowest level in 12 years,” said Lawrence Yun, NAR chief economist. “Home sales are being fueled by a pent-up demand and job creation, along with still favorable affordability conditions and rents rising at faster rates.”
In the fourth quarter of 2012, the median existing single-family home price climbed in 133 out of 152 metropolitan areas.