Homebuilder ETFs were surging in early Wednesday trade following
the latest U.S. Census Bureau housing data that showed U.S. home
construction is the strongest it's been in four years.
The $1.37 billion iShares Dow Jones U.S. Home Construction Index
Fund (NYSEArca:ITB) rallied some 3 percent right off the bat to hit
$20.66 a share, its highest level since the spring of 2008. The
fund moved even higher by mid-morning, coming close to $21 a
share--gains or some 4.3 percent.
Similarly, the $1.91 billion SPDR S&P Homebuilders ETF
(NYSEArca:XHB) gained 2.5 percent shortly after the opening bell
and broke through $26 a share to hit its highest level since
mid-2007. XHB traded as high as $26.19 at one point Wednesday.
Both ITB and XHB already rank among the top 10 best-performing
ETFs of 2012, with gains of 64 percent and 46 percent,
respectively, year-to-date, according to data compiled by
IndexUniverse. The funds' performance Wednesday was particularly
impressive given that the Dow Jones industrial average was actually
marginally lower in early trade.
The U.S. Census Bureau said new housing starts in September
reached an annual seasonally adjusted rate of 872,000, a number
that not only confirmed an increase of nearly 35 percent in housing
starts year-on-year, but that also exceeded market
The latest data added fodder to the view that the U.S. housing
market might have finally found a bottom since it started on a
steep decline that saw U.S. homes shed more than a third of their
value in six years. Many see a recovery in housing as key to any
sustained recovery in the broad U.S. economy.
Since late spring, the S&P Case Shiller Home Price Indices
have shown the clearest signs of price stabilization in real estate
since financial markets crashed in 2008. After slipping to new
cycle lows as recently as this spring, U.S. home values have on
average bounced back some 7.5 percent, according to the latest data
reported for July.
Earlier this week, the National Association of Homebuilders also
reported that its builder confidence index hit a six-year high this
Year-to-date, ITB has seen net inflows of more than $621 million
while XHB has attracted $436 million in net assets in the same
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