Home construction sector-related exchange traded funds are building up as the improving economic conditions and confidence help bring more buyers into the housing market.

The SPDR S&P Homebuilders ETF (NYSEArca: XHB) gained 2.1% Tuesday on the positive new home sales numbers. The fund is up 8.8% year-to-date. [Homebuilder ETFs Rise to Multiyear Highs on Housing Starts]

According to the Commerce Department, new home sales rose 1.5% over March after a 7.6% dip in February, reports Margaret Chadbourn for Reuters. Year-over-year, March home sales jumped 18.5%, pointing to a stronger economic growth.

The median sales price on new homes is also up 3.0% year-over-year to $247,000.

“Trends in new home sales remain consistent with a broad-based recovery in US housing,” Barclays researcher Michael Gapen wrote in a research note, according to CSMonitor. “We look for lean inventories of both new and existing homes to support homebuilder activity and house prices in the coming quarters.”

Home purchases are now back up to a point where demand is slightly stifled by inadequate supplies of homes on the market. Inventory of new homes on the market sits around 153,000, far from record lows, but at its current pace, it will take 4.4 months to clear the houses on the market – a supply of six months is considered a healthy balance between supply and demand. [Homebuilder ETFs Rise as Firms Scramble to Meet Demand]

Subscribe to our free daily newsletters!
Please enter your email address to subscribe to ETF Trends' newsletters featuring latest news and educational events.