Homebuilder ETFs Hit a Road Block as New Home Sales Fall

The new housing market, though, has not capitalized on the sharp shortage due to supply constraints facing builders, such as labor, land and finance.

“Rising prices in home construction due to increased materials cost and a dearth of property to build upon have inflated construction costs,” according to Direxion.

Consequently, some would-be homeowners have put off home purchases.

“If the most recent economic numbers serve as an indication, this trend could have a sustained impact on homebuilders exiting 2017. The overall price inflation in real estate, coupled with slow wage growth and the lack of any clear sign that either will reverse could spell lean third and fourth quarters,” according to Direxion.

Potential traders who want to capitalize or hedge this shifting trend can look to the triple-leveraged homebuilders ETF, the Direxion Daily Homebuilders & Supplies 3x Bear Shares (NYSEArca: CLAW). Alternatively, a bullish turn could be captured through the Direxion Daily Homebuilders & Supplies 3x Bull Shares (NYSEArca: NAIL).

For more information on the housing market, visit our homebuilders category.