Despite some cracks in the housing recovery and a pullback in home construction-related exchange traded funds, the housing market still has momentum going for it.
“There is a certain, substantial amount of momentum in the housing market—much more so than the stock market,” Robert Shiller, a Nobel prize winner and Yale University professor of economics, said in a CNBC article.
Shiller is the co-founder of the S&P/Case-Shiller Home Price Index, which represent certain metropolitan areas and is used as an underlying pricing mechanism in CME housing futures and options.
Looking ahead, “the futures market at the CME is predicting something like 25 percent higher home prices in 2018,” Shiller added. “That seems like a possibility.”
However, the economist warned that “there are signs of softening” in building permits and housing starts. Housing starts data for March will be reported Wednesday, April 16.
Homebuilder ETFs have been weakening this year. The SPDR S&P Homebuilders ETF (NYSEArca: XHB) is down 6.15 and iShares U.S. Home Construction ETF (NYSEArca: ITB) is 4.9% lower year-to-date.
Builders’ confidence in the housing market has slightly improved, but remain at low levels for the third straight month, CBS News reports. [Traders See Upside for Homebuilders ETF]
“Builder confidence has been in a holding pattern the past three months,” Kevin Kelly, chairman of the homebuilders association, said in the CBS article. “Looking ahead, as the spring home buying season gets into full swing and demand increases, builders are expecting sales prospects to improve in the months ahead.”
SPDR S&P Homebuilders ETF
For more information on the housing sector, visit our homebuilders category.
Max Chen contributed to this article.