For investors seeking momentum, SPDR S&P Homebuilders ETF (XHB Quick QuoteXHB - Free Report) is probably on the radar. The fund just hit a 52-week high and moved up 74.5% from its 52-week low of $63.83 per share.

Are more gains in store for this ETF? Let’s take a quick look at the fund and the near-term outlook on it to get a better idea of where it might be headed:

XHB in Focus

The underlying S&P Homebuilders Select Industry Index represents the homebuilding sub-industry portion of the S&P Total Markets Index. The S&P TMI tracks all the US common stocks listed on the NYSE, AMEX, NASDAQ National Market and NASDAQ Small Cap exchanges. The Homebuilder’s Index is a modified equal weight index. It charges 35 bps in fees per year from investors.

Why the Move?

The homebuilding sector of the broad stock market has been an area to watch lately, given the likely decline in mortgage rates. The Fed also indicated about the possibility of 75 bps of rate cut in 2024, propelling the demand for rate-sensitive homebuilding sector. Moreover, despite higher rates and home prices, existing home sales surged in February.

More Gains Ahead?

Currently, XHB has a Zacks ETF Rank #3 (Hold), with a “High” risk outlook. Therefore, it is hard to get a handle on its future returns one way or the other. However, a positive weighted alpha of 75.70 show that there is still some promise for risk-aggressive investors who want to ride on this surging ETF.