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ETF Specialist

A Sustained Rebound Ahead for Homebuilders?

This ETF offers the greatest exposure to homebuilding companies, which have significantly trailed the broader market since the start of 2013 but which recently have posted some good news.

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Recently released housing market data have shown some meaningful improvements, with both the new- and existing-home markets gaining strength simultaneously. Reports have shown nice increases in builder sentiment, housing starts, and existing-home sales, with data also coming in above expectations and housing start data from the previous month being revised upward.

This story has been very different from the way the housing market has looked over the past year. Previously, the housing market has shown a marked divide in its behavior: periods where new-home sales (or starts) did better and periods where existing-home sales did better. It's been rare for both to exhibit the same behavior. Most recently, that trend has broken, with strong performance both from new-home activity and existing-home sales. In addition, homebuilder confidence grew in August for the third straight month.

Robert Goldsborough does not own (actual or beneficial) shares in any of the securities mentioned above. Find out about Morningstar’s editorial policies.