“Homebuilders have come under pressure due to rising mortgage rates, a slowdown in demand and housing affordability issues. But a rebound in U.S. pending home sales could help a comeback. Contracts to buy previously owned homes rose for the first time in three months, an indication that the recent market slump could be stabilizing, National Association of Realtors data showed last week,” according to Bloomberg.
Declining prices could allow more buyers to enter the market, which could be a positive for XHB and rival funds.
The S&P CoreLogic Case-Shiller National Home Price Index, which measures average home prices in major metropolitan areas across the country, was up 5.8% in the year ended in August, compared to a 6% year-over-year rise reported in July. The measures was also the first time in a year that annual price gain fell below 6%, the Wall Street Journal reports.
Leveraged plays on homebuilder stocks include the bullish Direxion Daily Homebuilders and Supplies Bull and Bear 3X Shares (NYSEArca: NAIL), which attempts to deliver triple the daily returns of the Dow Jones U.S. Select Home Construction Index.
For more information on the housing market, visit our homebuilders category.