Millennials, broadly defined as the generation that reached adulthood around the year 2000, get an arguably deserved bum rep on a lot of issues. One issue, and it probably is not millennials’ faults, is home ownership.
Or lack thereof and it is that lack of millennial home ownership that threatens to keep the iShares U.S. Home Construction ETF (NYSEArca: ITB) stuck in neutral.
“According to the U.S. Census Bureau, 17.7 percent of men aged 25 to 34 years old and 11.7 percent of women in the same age group live at home with mom and/or pop. That’s the highest percentage since such records began being kept three decades ago,” reports Lawrence Lewitinn for CNBC.
Said another way, even though mortgage rates remain near historical lows, millennials are not buying homes and that is particularly bad news for ITB, which as has been previously noted, is heavier on pure play homebuilder stocks than its rival, the SPDR S&P Homebuilders ETF (NYSEArca: XHB). [Low Mortgage Rates Could Lift Homebuilder ETFs]
ITB is down 2% this year while XHB is up half a percent. The former outperformed the latter last year, but over the past two years, XHB is up 20.1% compared to 8.5% for XHB. XHB allocates over 35% of its combined weight to home improvement and furnishing retailers, which can also benefit from purchases of paint, couches and related fare by renters.