The U.S. Housing Market has been dealing with a decline in real estate values, spikes in foreclosure rates and unemployment rates threatening the security of existing homeowners.  The less reported story reveals how busy some mortgage brokers have been as a combination of the U.S. government back home buyer tax credits and extremely low 30-year mortgage loan interest rates has fueled buyers to pursue their homeownership desires.  According to BankRate.com the current interest rate for a 30-year mortgage is 4.73%.

Lower May 2010 Housing Indicators

On June 16, 2010 a joint press release by the U.S. Department of Housing and Urban Development and the U.S. Census Bureau revealed that the following leading economic indicators were below rates published in April 2010.

• Building Permits
• Housing Starts
• Housing Completions

Breaking Down Why Housing Starts Matter

The rate of building permits and housing starts can give investors an indication about the health of the U.S. economy.  One factor to not overlook is that investors must look for a trend over several months rather than only comparing housing starts and building permits from month to month.  While rates for the three indicators fell from the previous month (April 2010), both building permits and housing starts in May 2010 were higher than the numbers reported 1-year ago.  This does not mean the housing market is recovering, but it does mean investors will want to pay attention to the trend as it reveals itself.

Homebuilder and Home Construction ETFs

When it comes to investing sometimes no news or bad news in the media can be good news for investors.  Investors may want to avoid over hyped investments as opposed to investments facing challenging times.  The iShares Dow Jones U.S. Home Construction Fund (NYSE:ITB) and the SPDR S&P Homebuilders ETF (NYSE:XHB) are two ways investors can track investor sentiment or consider building a position using a dollar cost averaging approach (buying a set dollar amount of shares each month).  While the (NYSE:ITB) funds top holdings are homebuilder the (NYSE:XHB) fund takes a different approach by holding a bed maker and a floor covering producer among its top holdings.

Source: http://www.census.gov/const/newresconst.pdf

Written By Gregory S. Davis From ETF Ready

Related posts:

1. Will Europe’s Democracy Problem Bring Down The Euro? (EUO, VGK, VWO, EEM, EPV)
2. Health-Care ETFs: Are Healthcare Stocks Still A Good Bet For 2012 (XLV, VHT, IYH, IXJ, FXH, XLU)
3. S&P ETF Technicals: Will Santa Bring The S&P 500 Index A Rally? (SPY, SDS, SSO, SH, SPXU)
4. ETFs Good or Bad? Dick Grasso Weighs In

ITB, SPY, XHB