An Industry ETF for Spring As Homebuilding Blossoms

The SPDR S&P Homebuilders ETF (NYSEArca: XHB), one of the largest exchange traded funds offering exposure to homebuilders and related retail stocks, is up 4.6% over the past month. A spate of economic data due out this week and looming favorable seasonality could be catalysts to drive XHB to more gains.

The current low inventories has helped bolster property prices. The persistent low-rate environment has helped keep mortgage rates depressed and attract new home buyers. However, wage growth will be required to maintain a rising demand.

Looking ahead, expectations for wage growth in the first three months of this year jumped, with 58% expecting higher wages, compared to 44% in October. Mortgage rates may also continue to remain depressed as many expect the Federal Reserve to push off on additional interest rate hikes.

“Pending home sales in February posted a surprisingly strong increase — up 3.5% from January and 5.1% from a year ago, according to the National Association of Realtor’s Monday report. Economists were expecting an increase of 1.8%. In January, pending home sales fell 3%, seasonally adjusted,” reports Amey Stone for Barron’s.