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Homebuilder ETFs Prep for Fed, Housing Starts


The Fed’s anticipated September FOMC meeting will be a pivotal point in the markets, but home construction exchange traded fund investors are also waiting to see if new housing data continues to support a rebounding sector.

On Tuesday, Sept. 17, the National Association of Home Builders is releasing an update on its Housing Market Index. The index reveals the pulse of demand for housing and economic momentum. [iShares: Housing Will Help Make or Break U.S. Recovery]

According to MarketWatch, the index showed a 59 reading in August and the markets expect it to remain unchanged for September. Any number over 50 indicates more builders view conditions as good rather than poor. [ETF Chart of the Day: Homebuilders]

Along with the FOMC meeting announcement on Wednesday, Sept. 18, observers will be watching for housing starts data on new registrations for the start of construction of new residential buildings. Housing starts reveal residential construction trends and a strong housing market is a bullish indicator for the stock market. Analysts anticipate a slight increase to about 913,000 in August from July’s 896,000.

On Thursday, Sept. 19, housing watchers will also look for existing home sales on number of previously constructed homes, which account for the larger portion of the market. Analysts expect a decrease to 5.3 million in August from 5.39 million for July.

The SPDR S&P Homebuilders ETF (XHB) is up 5.2% over the past week and iShares U.S. Home Construction ETF (ITB) rose 7.3%. Year-to-date, XHB increased 13.5% and ITB gained 4.0%.

SPDR S&P Homebuilders ETF

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

Max Chen contributed to this article.

Full disclosure: Tom Lydon’s clients own XHB.

The opinions and forecasts expressed herein are solely those of Tom Lydon, 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.