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ITB, XHB lag YTD, though recent weekly gains hint at short-term stabilization.
The housing market, which has underperformed in recent years, has entered into a traditionally better spell, the key spring selling season, which is considered the peak time for home sellers. Winter months normally remain subdued for home building as the weather is too wet in the south and severely chilly in the north. But spring brings about good days for housing businesses.
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.
Housing Market Rebounding in 2026?
At the start of 2026, many economists hoped for normalization in the housing market after three straight years of sales near multidecade lows (as reported on Yahoo Finance), but the sudden uptick in mortgage rates in recent weeks amid the Iran war has dampened that brighter outlook.
Still, the backdrop is improving slowly. The number of homes that went under contract in March rose 4.6% year over year, according to Zillow, as quoted on the above-mentioned Yahoo Finance article. That rise came despite the pickup in mortgage rates. Rates started the month below 6%, a multiyear low, but were at 6.38% by month-end, per Freddie Mac data, the same source revealed.
Deals under contract may also fail before the sale is actually done. Still, there are other signs that call for hopefulness about the U.S. housing market. Active inventory was up 4.2% year over year, meaning buyers have more options. Both buyers and sellers are finally returning to the market.
Existing home sales rose 1.7% from the previous month to an annualized rate of 4.09 million in February of 2026, beating market expectations that they would fall to 3.89 million, per Tradingeconomics. Sales price of existing homes inched up by 0.3% year over year, despite the drop in mortgage rates since the period.
What Lies Ahead for Mortgage Rates?
While we do not expect the Fed to cut rates ahead, we do not expect the Fed to turn hawkish either. This means a moderate-rate environment for longer, which is not detrimental to the homebuilding business.
Note that Fed Chairman Jerome Powell recently stated that long-term inflation expectations remain stable despite the latest oil-induced price pressures. He noted that the monetary policy is “in a good place” to adopt a wait-and-see approach, dampening previous expectations of rate hikes.
A Mixed Outlook Awaiting?
Despite the improving scenario, NAR Chief Economist Dr. Lawrence Yun said, “still, there is a long way to go to return to pre-pandemic levels of transaction activity. There are more than 6 million more jobs than in 2019, yet home sales per year are down by one million. Despite the modest gain in home sales, actual housing demand remains muted relative to wage growth and job gains,” as quoted on Tradingeconomics.
ETFs in Focus
iShares US Home Construction ETF (ITB - Free Report) has lost about 6.3% so far this year (as of April 6, 2026). The fund started the year on a strong note and maintained a steady trend until mid-February, but the following weeks proved unfavorable. ITB is down 6.6% over the past month, though it has gained 1% in the past week (as of April 6, 2026).
State Street SPDR S&P Homebuilders ETF (XHB - Free Report) has lost about 5.1% in the year-to-date frame, retreated about 5.7% past month, but inched higher by 1.4% over the past week.
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Will Spring Selling Season Boost Homebuilding ETFs?
Key Takeaways
The housing market, which has underperformed in recent years, has entered into a traditionally better spell, the key spring selling season, which is considered the peak time for home sellers. Winter months normally remain subdued for home building as the weather is too wet in the south and severely chilly in the north. But spring brings about good days for housing businesses.
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.
Housing Market Rebounding in 2026?
At the start of 2026, many economists hoped for normalization in the housing market after three straight years of sales near multidecade lows (as reported on Yahoo Finance), but the sudden uptick in mortgage rates in recent weeks amid the Iran war has dampened that brighter outlook.
Still, the backdrop is improving slowly. The number of homes that went under contract in March rose 4.6% year over year, according to Zillow, as quoted on the above-mentioned Yahoo Finance article. That rise came despite the pickup in mortgage rates. Rates started the month below 6%, a multiyear low, but were at 6.38% by month-end, per Freddie Mac data, the same source revealed.
Deals under contract may also fail before the sale is actually done. Still, there are other signs that call for hopefulness about the U.S. housing market. Active inventory was up 4.2% year over year, meaning buyers have more options. Both buyers and sellers are finally returning to the market.
Existing home sales rose 1.7% from the previous month to an annualized rate of 4.09 million in February of 2026, beating market expectations that they would fall to 3.89 million, per Tradingeconomics. Sales price of existing homes inched up by 0.3% year over year, despite the drop in mortgage rates since the period.
What Lies Ahead for Mortgage Rates?
While we do not expect the Fed to cut rates ahead, we do not expect the Fed to turn hawkish either. This means a moderate-rate environment for longer, which is not detrimental to the homebuilding business.
Note that Fed Chairman Jerome Powell recently stated that long-term inflation expectations remain stable despite the latest oil-induced price pressures. He noted that the monetary policy is “in a good place” to adopt a wait-and-see approach, dampening previous expectations of rate hikes.
A Mixed Outlook Awaiting?
Despite the improving scenario, NAR Chief Economist Dr. Lawrence Yun said, “still, there is a long way to go to return to pre-pandemic levels of transaction activity. There are more than 6 million more jobs than in 2019, yet home sales per year are down by one million. Despite the modest gain in home sales, actual housing demand remains muted relative to wage growth and job gains,” as quoted on Tradingeconomics.
ETFs in Focus
iShares US Home Construction ETF (ITB - Free Report) has lost about 6.3% so far this year (as of April 6, 2026). The fund started the year on a strong note and maintained a steady trend until mid-February, but the following weeks proved unfavorable. ITB is down 6.6% over the past month, though it has gained 1% in the past week (as of April 6, 2026).
State Street SPDR S&P Homebuilders ETF (XHB - Free Report) has lost about 5.1% in the year-to-date frame, retreated about 5.7% past month, but inched higher by 1.4% over the past week.