“XHB has 67% of its portfolio in non-home construction industries versus 33% for its largest competitor, and offers a more well-rounded exposure to the housing market with higher weights to housing retail and building products industries,” adds Mazza.
The U.S. housing market is under tight inventory, which has helped push up home prices. The expanding job market and potential rise in wage growth would also help fuel demand as the traditional Spring selling season starts. Moreover, the low interest-rate environment has kept borrowing costs near record lows.
“As previously owned home sales comprise a much larger proportion of the market than sales of new homes, a resurgent housing market translates into more than just an increase in new home construction,” said Mazza. “Household spending, such as household projects and renovations should receive an additional boost from a strengthening labor market and an increase in consumer sentiment.”
SPDR S&P Homebuilders ETF