We use cookies to understand how you use our site and to improve your experience. This includes personalizing content and advertising. To learn more, click here. By continuing to use our site, you accept our use of cookies, revised Privacy Policy and Terms of Service.
You are being directed to ZacksTrade, a division of LBMZ Securities and licensed broker-dealer. ZacksTrade and Zacks.com are separate companies. The web link between the two companies is not a solicitation or offer to invest in a particular security or type of security. ZacksTrade does not endorse or adopt any particular investment strategy, any analyst opinion/rating/report or any approach to evaluating individual securities.
If you wish to go to ZacksTrade, click OK. If you do not, click Cancel.
PulteGroup, Inc. (PHM) - free report >>
Lennar Corporation (LEN) - free report >>
D.R. Horton, Inc. (DHI) - free report >>
NVR, Inc. (NVR) - free report >>
What's Behind the Surge in Homebuilder Stocks & ETFs?
Homebuilder stocks are among the top-performing areas of this year. They had suffered last year as the Federal Reserve raised rates aggressively and the housing market plunged from its pandemic-driven highs.
Housing starts jumped 21.7% in May, by the most since 2016 and were well above consensus estimates. Earlier this week, the National Association of Home Builders (NAHB) reported that homebuilder sentiment improved to an 11-month high and moved into positive territory in June, thanks to solid demand, a lack of existing inventory, and improving supply chain efficiency.
The supply in the existing-home market remains tight as higher mortgage rates have discouraged many homeowners from selling and giving up their current low rates. About a third of all homes listed for sale are new homes now.
Lumber prices are down about 25% this year, according to Calculated Risk, boosting builders’ profits. In fact, many homebuilders reported positive surprises for the first quarter.
The average rate on the 30-year fixed mortgage fell for the third consecutive week and is close to 6.7%, down from its 20-year high of over 7% hit in the fall. While the Federal Reserve is close to the end of its tightening campaign, many prospective homebuyers are adjusting to the possibility of rates staying at elevated levels for a long time.
The iShares U.S. Home Construction ETF (ITB - Free Report) tracks a market cap weighted index of home construction and related stocks. It is top heavy with four holdings--D.R. Horton (DHI - Free Report) , Lennar (LEN - Free Report) , NVR (NVR - Free Report) and PulteGroup (PHM - Free Report) --accounting for about 45% of the portfolio.
The SPDR S&P Homebuilders ETF (XHB - Free Report) is an equal-weighted ETF that has significant exposure to building-products and home-furnishing companies as well in addition to homebuilders.
To learn more about these ETFs, please watch the short video above.