Real estate prices keep on climbing, which can only help the case for the Invesco Dynamic Building & Construction ETF (PKB), up 22% already in 2021.
Counterbalancing higher home prices is lower interest rates relative. Thus far, it’s been a fantastic seller’s market as home supply cannot keep up with demand.
As for PKB, it seeks to track the investment results of the Dynamic Building & Construction IntellidexSM Index. The fund generally will invest at least 90% of its total assets in the securities that comprise the underlying intellidex.
The underlying intellidex is composed of common stocks of U.S. building and construction companies. These companies are engaged primarily in providing construction and related engineering services for building and remodeling residential properties, commercial or industrial buildings, etc.
“The national median home list price hit $370,000 in March—a new record high,” a Realtor.com article said. “The increase in prices, a 15.6% increase over last year, is a direct result of the severe shortage of properties on the market just as first-time and trade-up buyers seeking larger homes have flooded the market.”
“There were only half as many homes for sale in March as there were at the same time last year—when the country was already suffering from a gaping dearth of homes for sale,” the article added. “That translates to about a 52% decline year over year, or about 117,000 fewer homes going up for sale each month, compared with recent years.”
Seeking More Square Footage?
Meanwhile, social distancing measures have made homes sanctuaries for work and play. More homeowners are investing the time and money to improve their homes or seek refuge in larger dwellings, according to the Realtor.com article.
“Meanwhile, demand for homes has been strong as people have left tiny apartments and starter homes seeking additional square footage and bigger backyards as the pandemic drags on,” the article noted further. “Those who had been planning to buy in the next few years moved up their timelines as mortgage interest rates dropped to record lows. And millennials hitting their peak home-buying years flooded the market.”
“For every two homes they might have seen last year, today they’d just have one,” says realtor.com Chief Economist Danielle Hale. “Limited choices and high demand are fueling substantial price increases.”
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