SPDR S&P Homebuilders ETF (NYSEArca: XHB) and iShares Dow Jones US Home Construction Index ETF (NYSEArca: ITB) slipped 5% on Monday following a report that homebuilder confidence declined to its lowest level in six months.
The National Association of Home Builders/Wells Fargo Housing Market Index fell in April for the third straight month.
“Many builders are expressing frustration over being unable to respond to the rising demand for new homes due to difficulties in obtaining construction credit, overly restrictive mortgage lending rules and construction costs that are increasing at a faster pace than appraised values,” said NABH Chairman Rick Judson. “While sales conditions are generally improving, these challenges are holding back new building and job creation.”
The decline in the homebuilder index surprised economists who had expected confidence to rise.