Recent Housing Data Takes A Toll On The Homebuilder ETFs (XHB, ITB)
“Exchange-traded funds that concentrate on residential-construction stocks may see activity pick up this week as investors digest the Federal Open Market Committee’s latest decision on interest rates as well as several key pieces of economic and housing data. The SPDR S&P Homebuilders ETF (NYSE:XHB) and iShares Dow Jones U.S. Home Construction Index Fund (NYSE:ITB) are volatile sector ETFs that tap the stock market to provide exposure to residential construction. However, they have key differences and some of the top holdings may surprise investors — a reminder not to judge a book by its cover when it comes to ETFs and mutual funds. The SPDR S&P Homebuilders ETF (NYSE:XHB), the bigger and higher-volume fund, was off 7.1% for the three months ended Monday,” John Spence Reports From MarketWatch.
Spence goes on to say, “Builder stocks have traded lower on weak recent housing data and on concerns about a double dip in home prices after government tax credits for buyers expire. Housing starts fell 10% in May, with potential ramifications for growth in gross domestic product during the second quarter, while the builder confidence index took a tumble in June. “With the weak May starts and permits data it is increasingly likely that residential investment will be a drag on second-quarter GDP and possibly the third quarter as well,” wrote PNC economists in a June 16 report. “We do expect builder confidence to slowly improve as we emerge from a long hot summer in housing markets into the fourth quarter when market fundamentals are expected to improve.” Still, major hurdles for the housing market include high inventory levels and foreclosures as many borrowers remain hamstrung by a soft U.S. jobs market. The move lower in builder stocks may reflect those challenges.”
“The National Association of Realtors on Tuesday said existing home sales fell more than 2% in May. On Friday, the Commerce Department reports a revised projection for growth in first-quarter GDP. Builder stocks could see volatility tick up as these reports cross the wires. Despite its name, SPDR S&P Homebuilders ETF (NYSE:XHB) is far from a pure play on the sector. The fund’s top five holdings are Tempur Pedic International Inc. (NYSE:TPX) , A.O. Smith Corp. (NYSE:AOS) , Mohawk Industries Inc.(NYSE:MHK) , Owens Corning (NYSE:OC) and Aaron’s Inc.(NYSE:AAN). The ETF does own traditional builders such as NVR Inc. (NYSE:NVR) , Ryland Group Inc. (NYSE:RYL) and others, but most of the stocks are consumer and industrials companies linked to housing,” Spence Reports.
We have put together some more details on the SPDR S&P Homebuilders ETF (NYSE:XHB) and iShares Dow Jones U.S. Home Construction ETF (NYSE:ITB) including a list of some of the top holdings within the ETF below:
SPDR S&P Homebuilders ETF (NYSE:XHB) Visit Our XHB Category: HERE
The investment seeks to replicate, net of expenses, the S&P Homebuilders Select Industry Index. The fund will invest at least 95% of assets in securities that comprise the index. The index represents the homebuilding sub-industry portion of the S&P TMI.The fund is nondiversified.
| TOP 10 HOLDINGS ( 40.45% OF TOTAL ASSETS) |
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iShares Dow Jones US Home Construction ETF (NYSE:ITB) Visit Our ITB Category: HERE
The investment seeks investment results that tracks Dow Jones U.S. Select Home Construction index. The fund generally invests at least 90% of assets in securities of the Underlying index and depositary receipts representing securities of the Underlying index. It may invest the remainder of assets in securities not included in the Underlying index but which BGFA believes will help the fund track Underlying index, and in futures contracts, options on futures contracts, options and swaps as well as cash and cash equivalents, including shares of money market funds advised by BGFA. The fund is nondiversified.
| TOP 10 HOLDINGS ( 66.65% OF TOTAL ASSETS) |
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