U.S. new home sales experienced their best month in over eight years, buttressing homebuilders sector-related exchange traded funds.
On Tuesday, the SPDR S&P Homebuilders ETF (NYSEArca: XHB) rose 2.9% and iShares U.S. Home Construction ETF (NYSEArca: ITB) gained 3.8%. XHB broke above its short-term resistance at the 50-day simple moving average and is testing its long-term, 200-day average. ITB, on the other hand, surged above its 50- and 200-day average.
The home construction industry bounced Tuesday after the Commerce Depart revealed purchases of new, single-family homes increased 16.6% in April month-over-month, the fastest pace since January 2008, reports Jeffrey Sparshott for the Wall Street Journal.
The median price of a new home also rose to $321,100 in April, up 9.7% year-over-year, and was the highest level on record.
”The fundamentals for new home sales are good, and getting better: more jobs, rising wages, more household formations, and very low mortgage rates,” Gus Faucher, deputy chief economist at PNC Financial Services, told the WSJ.
Moreover, sales of existing homes, which make up the majority of the housing market, increased for the second straight month in April.[related_stories]