Long-Term Housing Data Paints Rosy Picture For Homebuilders

Share This Article
February 17, 2017 10:02am NYSE:XHB

home-remodel

From Jill Mislinski: Yesterday we reported separately on the latest residential building permits and housing starts in the government’s monthly report, courtesy of the Census Bureau and the Department of Housing and Urban Development. Despite the fact that both are monthly SAAR series (seasonally adjusted annualized rate), they are exceptionally volatile and subject to extensive revisions. Thus it is unwise to assign much credibility to a single month.


Over the long haul, however, the two offer a compelling study of trends in residential real estate, especially when we adjust the Permits and Starts for population growth. Here is an overlay of the two series since the 1959 inception of the Starts data and the 1960 inception of the Permits data. The monthly data points are preserved as faint dots. The trends are illustrated with 6-month moving averages of data divided by the Census Bureau’s mid-month population estimates.

Housing Permits and Starts Population-Adjusted

Here is a closer look at the overlay since 1990.

Since 1990

About that volatility…

The extreme volatility of these indicators is the rationale for paying more attention to the 6-month moving average than to its noisy monthly change.

Over the complete data series, the Starts absolute MoM average percent change is 6.3%. The MoM range minimum is -26.4% and the maximum is 29.3%.

Permits are slightly less volatile with an absolute MoM average percent change of 4.4%. The MoM range minimum is -24.0% and the maximum is 33.9%.

The SPDR S&P Homebuilders ETF (NYSE:XHB) was trading at $35.19 per share on Friday morning, down $0.19 (-0.54%). Year-to-date, XHB has gained 3.96%, versus a 4.75% rise in the benchmark S&P 500 index during the same period.

XHB currently has an ETF Daily News SMART Grade of A (Strong Buy), and is ranked #5 of 45 ETFs in the Consumer-Focused ETFs category.


This article is brought to you courtesy of Advisor Perspectives.


Read Next


Get Free Updates

Join over 50,000 investors who get the latest news from ETFDailyNews.com!

Most Popular


From Our Partners


Explore More from ETFDailyNews.com

Free Daily Newsletter

Get daily ETF insights from our market experts. Never miss another important market development again!

ETFDailyNews.com respects your privacy.

Best ETFs

We've rated and ranked nearly 2,000 ETFs and ETNs using our proprietary SMART Grade system.

View Top Rated ETFs

Best Categories

We've ranked dozens of ETF categories based on relative performance.

Best ETF Categories