Homebuilder stocks surged the most in two months on the Fed’s unexpected decision to maintain quantitative easing, but home construction related exchange traded funds could not maintain their momentum Thursday, even after home resales hit a six-and-half year high.
The SPDR S&P Homebuilders ETF (NYSEArca: XHB) and iShares U.S. Home Construction ETF (NYSEArca: ITB) were both down about 0.9% Thursday. After the Fed revealed no change to its monthly bond purchasing plan, XHB end 3.1% higher Wednesday while ITB gained 4.8%.
Existing home sales rose a higher-than-expected 1.7% to an annual rate of 5.48 million units lats month, the highest level since February 2007, reports Margaret Chadbourn for Reuters.
Lawrence Yun, chief economist at the National Association of Realtors, believes the housing market is at a temporary peak as buyers try to lock in deals ahead of potential price and borrowing cost hikes.
“Rising mortgage interest rates pushed more buyers to close deals, but monthly sales are likely to be uneven in the months ahead from several market frictions,” Yun said in the Reuters article, pointing to tight inventory. “There’s an ongoing housing shortage. I don’t anticipate this housing shortage to go away.”
Homebuilders jumped Wednesday on the Fed’s decision, along with a better-than-expected 7% rise in August home starts from July and a 16.9% increase for the same month year-over-year, reports Kris Hudson for the Wall Street Journal.