Homebuilder ETFs Rise to Multiyear Highs on Housing Starts

ETF Trends

The iShares DJ US Home Construction (ITB) and SPDR S&P Homebuilders ETF (XHB) keep setting new multiyear highs on data suggesting the U.S. housing market continues its slow but steady recovery.

Both homebuilder ETFs were up more than 1% on Tuesday to their highest levels since 2007. However, the sector funds still remain well below their highs set before the subprime crisis and housing bust.

On Tuesday, the Commerce Department said housing starts rose 0.8% in February. New permits for construction also climbed to the highest level since 2008.

“Home building continues to recover and add to the recovery,” said Gus Faucher, an economist at PNC Financial Services, in a Reuters article. “The rise in permits suggest we will have a solid spring.”

Homebuilder ETFs could also see action Wednesday as markets get the Federal Reserve announcement on interest rates, followed by a press conference with Fed chief Ben Bernanke.

The sector enjoyed a huge rally last year with both homebuilder funds gaining more than 50% in 2012.

Still, some economists aren’t convinced the housing market is in a sustained recovery.

“It may have bottomed, but I am not sure it has a strong recovery,” Gary Shilling tells Yahoo Finance. “I think the risks are on the downside … I think housing is probably going to limp along at best.”

iShares DJ US Home Construction

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The opinions and forecasts expressed herein are solely those of John Spence, and may not actually come to pass. Information on this site should not be used or construed as an offer to sell, a solicitation of an offer to buy, or a recommendation for any product.

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