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ETFs & Stocks to Spring Higher in Key Home Selling Season
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The housing market, which has been very strong for about a year, is entering into an even better spell. Winter months normally remain subdued for home building as the weather is too wet in the south and severely chilly in the north.
However, the housing market has now entered the key spring selling season, which is considered the peak time for home sellers. Normally, the season starts in March and lasts through May-June thanks to warmer weather after a chilly winter and buyers’ inclination to move to a new house before the next school calendar starts.
Experts believe that homebuyers approach the housing market this time with tax checks in their bank accounts and about 40% of home sales take place between April and July in the United States. This year, buyers will be trying to dip their toes into the housing market for as long as the rates remain affordable.
Biden’s Stimulus to Drive Stock Market & Wealth Effect?
The rollout ofBiden’s $1.9-trillion fiscal stimulusshould be great for U.S. households’ and corporates’ affordability. A solid amount of money injection should increase households’ demand for stocks. Goldman's chief U.S. equity strategist David Kostin expects households to be the largest source of equity demand this year, followed by corporations (read: $1.9-T Stimulus to Boost U.S. Equity Demand? ETFs to Gain).
All these things are likely to create a wealth effect, which might result into higher home demand. Moreover, an expected improvement in the job market thanks to the rollout of Biden’s fiscal stimulus and growing vaccination will do their jobs in driving the housing segment.
Overall Demand for Homes Remains Strong
Demand in the space remained strong even in the pandemic-stricken 2020 despite high home prices. Notably, record-low mortgage rates amid a super dovish Fed drove demand. Per the latest data, existing home sales jumped 0.6% in January 2021 to a seasonally adjusted annual rate of 6.69 million units after increasing 0.9% in December. On a year-over-year basis, existing home sales jumped 23.7% in January. A gauge of prospective buyer traffic rose 4 points to 72 in February.
Post-Pandemic “Suburban Revival”
According to Alex Pettee, president, director of Research & ETFs, Hoya Capital Real Estate, a potential post-pandemic “suburban revival” would boost home buying. The coronavirus outbreak has made the work-from-home option a big hit. Companies now will likely be offering the option permanently with more ease; so many are now moving to suburban areas to avoid high expenses needed to incur in a dense and expensive city. Suburban areas offer more affordable homes.
Home Listing to Go Up Ahead
The housing market has been struggling with low inventory for quite some time. Last fall, Zillow research indicated that COVID-19 uncertainty was keeping some potential sellers from listing their homes, depressing inventory. With growing vaccination, sentiments now have improved among sellers.
ETFs & Stocks in Focus
Against this backdrop, we expect homebuilding ETFs like iShares U.S. Home Construction ETF (ITB - Free Report) , SPDR S&P Homebuilders ETF (XHB - Free Report) and Hoya Capital Housing ETF (HOMZ - Free Report) to gain ahead. As for as stocks are concerned, GMS Inc. (GMS - Free Report) has a Zacks Rank #2 (Buy). The company's product consists of wallboard, suspended ceilings systems or ceilings and complementary interior construction products in commercial and residential buildings.
Apart from homebuilding stocks and ETFs, home furnishing stocks are also likely to advance. Home Depot Inc. (HD - Free Report) is the world’s largest home improvement specialty retailer. It offers a diverse range of branded and proprietary home improvement items, building materials, lawn and garden products, décor products and related services. The stock HD has about 10% focus in VanEck Vectors Retail ETF (RTH - Free Report) , followed by Consumer Discretionary Select Sector SPDR Fund (XLY - Free Report) (weight 8.37%).
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ETFs & Stocks to Spring Higher in Key Home Selling Season
The housing market, which has been very strong for about a year, is entering into an even better spell. Winter months normally remain subdued for home building as the weather is too wet in the south and severely chilly in the north.
However, the housing market has now entered the key spring selling season, which is considered the peak time for home sellers. Normally, the season starts in March and lasts through May-June thanks to warmer weather after a chilly winter and buyers’ inclination to move to a new house before the next school calendar starts.
Experts believe that homebuyers approach the housing market this time with tax checks in their bank accounts and about 40% of home sales take place between April and July in the United States. This year, buyers will be trying to dip their toes into the housing market for as long as the rates remain affordable.
Biden’s Stimulus to Drive Stock Market & Wealth Effect?
The rollout ofBiden’s $1.9-trillion fiscal stimulusshould be great for U.S. households’ and corporates’ affordability. A solid amount of money injection should increase households’ demand for stocks. Goldman's chief U.S. equity strategist David Kostin expects households to be the largest source of equity demand this year, followed by corporations (read: $1.9-T Stimulus to Boost U.S. Equity Demand? ETFs to Gain).
All these things are likely to create a wealth effect, which might result into higher home demand. Moreover, an expected improvement in the job market thanks to the rollout of Biden’s fiscal stimulus and growing vaccination will do their jobs in driving the housing segment.
Overall Demand for Homes Remains Strong
Demand in the space remained strong even in the pandemic-stricken 2020 despite high home prices. Notably, record-low mortgage rates amid a super dovish Fed drove demand. Per the latest data, existing home sales jumped 0.6% in January 2021 to a seasonally adjusted annual rate of 6.69 million units after increasing 0.9% in December. On a year-over-year basis, existing home sales jumped 23.7% in January. A gauge of prospective buyer traffic rose 4 points to 72 in February.
Post-Pandemic “Suburban Revival”
According to Alex Pettee, president, director of Research & ETFs, Hoya Capital Real Estate, a potential post-pandemic “suburban revival” would boost home buying. The coronavirus outbreak has made the work-from-home option a big hit. Companies now will likely be offering the option permanently with more ease; so many are now moving to suburban areas to avoid high expenses needed to incur in a dense and expensive city. Suburban areas offer more affordable homes.
Home Listing to Go Up Ahead
The housing market has been struggling with low inventory for quite some time. Last fall, Zillow research indicated that COVID-19 uncertainty was keeping some potential sellers from listing their homes, depressing inventory. With growing vaccination, sentiments now have improved among sellers.
ETFs & Stocks in Focus
Against this backdrop, we expect homebuilding ETFs like iShares U.S. Home Construction ETF (ITB - Free Report) , SPDR S&P Homebuilders ETF (XHB - Free Report) and Hoya Capital Housing ETF (HOMZ - Free Report) to gain ahead. As for as stocks are concerned, GMS Inc. (GMS - Free Report) has a Zacks Rank #2 (Buy). The company's product consists of wallboard, suspended ceilings systems or ceilings and complementary interior construction products in commercial and residential buildings.
Apart from homebuilding stocks and ETFs, home furnishing stocks are also likely to advance. Home Depot Inc. (HD - Free Report) is the world’s largest home improvement specialty retailer. It offers a diverse range of branded and proprietary home improvement items, building materials, lawn and garden products, décor products and related services. The stock HD has about 10% focus in VanEck Vectors Retail ETF (RTH - Free Report) , followed by Consumer Discretionary Select Sector SPDR Fund (XLY - Free Report) (weight 8.37%).
Want key ETF info delivered straight to your inbox?
Zacks’ free Fund Newsletter will brief you on top news and analysis, as well as top-performing ETFs, each week. Get it free>>