Is the housing market finally starting to show some signs of life?
Recently released data certainly seems to point to that. Last week’s report from Freddie Mac noted that the housing market has seen a bit of a lift. This has been driven by lower mortgage rates, along with strong activity from first-time homebuyers.
However, Freddie Mac conceded that some housing market headwinds have remained persistent. One particular factor that’s still slowing down the market is the lack of supply. Even if homebuyers are ready to make the plunge, market growth will always be limited by the amount of homes available.
That being said, the tide may be turning for the supply of available homes. The National Association of Home Builders recently noted that sentiment from builders has risen for the second month in a row.
For newly built single-family homes, builder confidence in the market rose to 43 points in October. This represents a jump from September’s reading of 41 points.
“While housing affordability remains low, builders are feeling more optimistic about 2025 market conditions,” added Carl Harris, NAHB Chairman. “The wild card for the outlook remains the election, and with housing policy a top tier issue for candidates, policymakers should be focused on supply-side solutions to the housing crisis.”
An iShares Strategy
For investors looking for ETFs to help them bet on housing momentum, there are plenty of options. One such fund is the iShares U.S. Home Construction ETF (ITB).
ITB gives investors access to U.S. companies that construct residential homes. The fund’s sector-focused strategy is well positioned to capitalize on any momentum in the housing market.
This is due to ITB’s portfolio of leading companies across the housing industry. Some of the fund’s largest holdings include D.R. Horton, PulteGroup, Lowe’s, and Home Depot.
Even now, ITB has been offering compelling results for its investors. As of Sept. 30, 2024, ITB’s total return has risen 62.74% over the last twelve months.
Equally Weighed Homebuilding Exposure
As an alternative choice, investors could consider the SPDR S&P HomeBuilders ETF (XHB). XHB’s goal is to provide compelling return through focused exposure to the homebuilding industry.
Unlike ITB, XHB tracks an equally weighted index, mitigating specific exposure to particular companies. As such, this fund can be well-positioned to capture any overall growth in the homebuilding sector.
XHB’s strategy is also generating strong long-term returns. The fund’s NAV has jumped 63.71% over the course of the last year, as of Sept. 30, 2024.
For more news, information, and analysis, visit VettaFi | ETF Trends.
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