Homebuilder stocks continued to strengthen Thursday after new-home construction rose to a nine-year high, pushing sector-related exchange traded funds back above their long-term trend line.
On Thursday, the SPDR S&P Homebuilders ETF (NYSEArca: XHB) rose 1.8% and the iShares U.S. Home Construction ETF (NYSEArca: ITB) gained 2.1%, with both funds testing their long-term resistance at the 200-day simple moving average. Over the past week, XHB increased 2.9% and ITB advanced 3.2%.
Buttressing the home construction industry, the Commerce Department revealed that residential starts jumped 25.5% to a 1.32 million annualized rate, its fastest since August 2007 and exceeding the highest market projections, reports Sho Chandra for Bloomberg.
The housing market has been strengthening before the jump in mortgage rates as hiring and healthier finances drove demand.
“Ongoing job creation, rising incomes and attractive mortgage rates are supporting demand in the single-family housing sector,” Robert Dietz, the home builder trade group’s chief economist, said, according to the Wall Street Journal. “This will help keep housing on a steady, upward glide path in the months ahead.”
[related_stories]Supporting the recent gains in the housing market, younger buyers are beginning to venture into the market.