Saturday, January 28, 2023
Market-Reporter
  • Home
  • Markets
    • U.S. Markets
    • Canada
    • Europe & Middle East
    • Emerging Markets
    • Asia
    • Latin America
  • Investing
    • Stocks
    • IPOs
    • Mutual Funds
    • ETFs
    • Bonds
    • Commodities
    • Currencies
    • Cryptocurrencies
  • Economy & Politics
    • Personal Finance
    • Spending & Saving
    • Retirement
    • Real Estate
No Result
View All Result
  • Home
  • Markets
    • U.S. Markets
    • Canada
    • Europe & Middle East
    • Emerging Markets
    • Asia
    • Latin America
  • Investing
    • Stocks
    • IPOs
    • Mutual Funds
    • ETFs
    • Bonds
    • Commodities
    • Currencies
    • Cryptocurrencies
  • Economy & Politics
    • Personal Finance
    • Spending & Saving
    • Retirement
    • Real Estate
No Result
View All Result
Market-Reporter
No Result
View All Result
Home ETFs

Will Housing ETFs Suffer as US New Home Sales Decline?

MtR by MtR
June 29, 2021
in ETFs
0


The U.S. housing sector has been consistently grappling with soaring softwood lumber prices and other material and labor costs. Now, the new home sales falling to a one-year low in May highlights the same. Per the U.S. Census Bureau and the U.S. Department of Housing and Urban Development data, new home sales were down 5.9% in May to a seasonally-adjusted annual rate of 769,000 units (the lowest level since May 2020). This compares unfavorably with April’s downwardly revised sales of 817,000 units from 863,000 units.

Moreover, the metric lagged economists’ forecast of 870,000 units in May, per a Reuters poll. New home sales rose 9.2% in May year over year, gaining from a limited inventory of previously owned homes. Notably, new home sales are considered a leading housing market indicator since it is counted at the signing of a contract, per a Reuters article.

New home sales declined 14.5% in the Southern region. Meanwhile, new home sales were up in the Northeast and West and remained flat in the Midwest, last month. Notably, there was an 18.1% year-over-year rise in median new house price to $374,400 in May, per a Reuters article. Also, the number of new homes on market in May rose to 330,000 from 315,000 in April.

Current U.S. Housing Market Scenario

The U.S. housing sector has pleased investors with impressive performance amid the tough pandemic times. In fact, residential construction investment rose double digits since the third quarter of 2020, per a Reuters article. Moreover, market experts expect the housing sector to contribute modestly to gross domestic product growth in the second quarter.

However, it seems the space is now facing the brunt of rising lumber prices. Rising softwood lumber, material and labor costs continue to be a major hurdle for homebuilders. The supply chain disturbances caused by the lockdown to contain the coronavirus outbreak have also led to a rise in concrete, metal products, appliances and other expenses, as mentioned in a FOX Business article.

Notably, there was a 154.3% year-over-year rise in May in prices of softwood lumber, which is used for constructing frames and trusses of houses, per a Reuters article. Moreover, there was a sharp rise in prices of plywood. Going on, scarcity in supplies of copper along with tariffs on steel imports is also bumping up building costs. Moreover, scarce supplies of semiconductors globally have resulted in shrinking supplies of some appliances, per a Reuters article.

These factors are affecting affordability as prices of existing and new homes are soaring. Notably, house prices soared the most in more than 15 years annually, increasing worries that some first-time buyers might be priced out of the market, as stated in a Reuters article.

Also, low employment levels might impede momentum of the U.S. housing market. Moreover, it is expected that the housing supplies crunch will remain as the number of homes authorized for construction but not yet begun increased to the highest level since 1999, per a Reuters article. This factor is also expected to increase housing price inflation for a while.

Meanwhile, the housing market has steadily benefited from changing demographical preferences of a large chunk of population as people increasingly looked for work-from-home-friendly properties. Notably, individuals were shifting from city centers to suburbs and other low-density areas looking for spacious accommodations for home offices and schools, per the sources.

Commenting on the housing market, Mark Vitner, a senior economist at Wells Fargo in Charlotte, NC, has said, “While we remain optimistic about housing demand for the year as whole, we may see a few more months of underwhelming sales. Several builders have reported lighter prospective buyer traffic in recent weeks, particularly in what had been some of the hottest housing markets in the South and Mountain West,” per a Reuters article.

Housing ETFs That Might Suffer

Against such a backdrop, here are a few housing ETFs that might struggle due to the tough housing sector scenario:

iShares U.S. Home Construction ETF ITB

This fund provides exposure to U.S. companies that manufacture residential homes by tracking the Dow Jones U.S. Select Home Construction Index. With AUM of $2.43 billion, it holds a basket of 46 stocks, heavily focused on the top two firms. The product charges 42 basis points (bps) in annual fees (read: Inflation Is Picking Up: 5 ETFs to Make the Most of It).

SPDR S&P Homebuilders ETF XHB

A popular choice in the homebuilding space, XHB, follows the S&P Homebuilders Select Industry Index. The fund holds about 35 securities in its basket. It has AUM of $1.90 billion. The fund charges 35 bps in annual fees (read: 5 ETFs That Skyrocketed During Biden’s 100 Days in Office).

Invesco Dynamic Building & Construction ETF PKB  

This fund follows the Dynamic Building & Construction Intellidex Index, holding a basket of well-diversified 30 stocks, each accounting for less than a 5.50% share. It has amassed assets worth $287 million. The expense ratio is 0.59% (read: Looking for Earnings Surprise? 6 Sector ETFs to Play).

Hoya Capital Housing ETF HOMZ

The fund seeks to provide investment results that before fees and expenses, correspond generally to the total return performance of the Hoya Capital Housing 100 Index, a rules-based Index designed to track the 100 companies that collectively represents the performance of the U.S. housing Industry. It has AUM of $74.2 million. The fund charges 30 bps in annual fees (see all the Materials ETFs here).

Want key ETF info delivered straight to your inbox?

Zacks’ free Fund Newsletter will brief you on top news and analysis, as well as top-performing ETFs, each week.  Get it free >>

Click to get this free report

SPDR S&P Homebuilders ETF (XHB): ETF Research Reports

iShares U.S. Home Construction ETF (ITB): ETF Research Reports

Invesco Dynamic Building & Construction ETF (PKB): ETF Research Reports

Hoya Capital Housing ETF (HOMZ): ETF Research Reports

To read this article on Zacks.com click here.

Zacks Investment Research

Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.



Source link

Related articles

Hedge Funds Suffer Outflows as ETFs had Inflows

August 10, 2022

Australia’s 6 biggest ETF providers

August 10, 2022

Related Posts

Hedge Funds Suffer Outflows as ETFs had Inflows

by MtR
August 10, 2022
0

ETFGI, a leading independent research and consultancy firm covering trends in the global ETFs and ETPs ecosystem, reported that the...

Australia’s 6 biggest ETF providers

by MtR
August 10, 2022
0

Exchange Traded Funds or ETFs are now a BIG thing in Australia. The rise of ASX ETFs is making investing...

New Treasury ETFs launch as fixed income ETFs enter “sweet spot”

by MtR
August 9, 2022
0

The U.S. Treasury building is seen in Washington, September 29, 2008. REUTERS/Jim BourgRegister now for FREE unlimited access to Reuters.comRegisterNEW...

SoFi Launches First-of-its-Kind Web 3 ETF and a Smart Energy ETF to Empower People to Invest in the Future | News

by MtR
August 9, 2022
0

SAN FRANCISCO--(BUSINESS WIRE)--Aug 9, 2022--SoFi Technologies, Inc. (“SoFi”), the digital personal finance company, today announced that SoFi Invest1 is launching...

J.P. Morgan Asset Management Launches JPMorgan Active Growth ETF (JGRO)

by MtR
August 9, 2022
0

Unifies two industry-leading growth strategies into one actively managed ETF NEW YORK, Aug. 9, 2022 /PRNewswire/ -- J.P. Morgan Asset Management...

Load More
  • Trending
  • Comments
  • Latest

Bank of England tells ministers to intervene on digital currency ‘programming’

June 21, 2021

Tips for checking smoke alarms during daylight saving time

March 12, 2022

GLOBAL MARKETS-U.S. stocks follow Europe up; Treasury yields rise, dollar firm

July 9, 2021

What will Durham County education bonds pay for? A full list

July 8, 2022
African currencies week ahead: Zambia's kwacha seen on back foot, Kenyan shilling up – Business Recorder

African currencies week ahead: Zambia's kwacha seen on back foot, Kenyan shilling up – Business Recorder

0
Maxum Foods releases Global Dairy Commodity Update for June

Maxum Foods releases Global Dairy Commodity Update for June

0
Letter: Perpetual bonds can help states fight hunger

Letter: Perpetual bonds can help states fight hunger

0
United Kingdom ETFs Are Riding the Re-Opening Momentum

United Kingdom ETFs Are Riding the Re-Opening Momentum

0

Investment in overseas real estate surges : The DONG-A ILBO

August 11, 2022

U.S. inflation CPI report, Wall Street, currencies

August 10, 2022

Alberta oil production set new record in first half of 2022

August 10, 2022

Industrial Lubricants Market to Reach $71 Billion by 2027.

August 10, 2022

Recent News

Investment in overseas real estate surges : The DONG-A ILBO

August 11, 2022

U.S. inflation CPI report, Wall Street, currencies

August 10, 2022

Alberta oil production set new record in first half of 2022

August 10, 2022

Categories

  • Asia
  • Bonds
  • Canada
  • Commodities
  • Cryptocurrencies
  • Currencies
  • Emerging Markets
  • ETFs
  • Europe & Middle East
  • IPOs
  • Latin America
  • Mutual Funds
  • Personal Finance
  • Real Estate
  • Retirement
  • Spending & Saving
  • Stocks
  • U.S. Markets
  • Privacy & Policy
  • About Us
  • Contact Us
  • Advertise with us

© 2021 Copyright Market-Reporter

No Result
View All Result
  • Home
  • Markets
    • U.S. Markets
    • Canada
    • Europe & Middle East
    • Emerging Markets
    • Asia
    • Latin America
  • Investing
    • Stocks
    • IPOs
    • Mutual Funds
    • ETFs
    • Bonds
    • Commodities
    • Currencies
    • Cryptocurrencies
  • Economy & Politics
    • Personal Finance
    • Spending & Saving
    • Retirement
    • Real Estate

© 2021 Copyright Market-Reporter