Homebuilder ETF rallies on sales surprise

Homebuilder ETF rallies on sales surprise
The SPDR S&P Homebuilders exchange-traded fund hit its highest level since early March after a better-than-expected report on single-family home sales
MAY 27, 2020
By  Bloomberg

The largest homebuilder ETF surged to pre-crisis levels Tuesday on data showing a surprise increase in sales of new houses last month.

State Street’s SPDR S&P Homebuilders exchange-traded fund (XHB) rallied as much as 4.6% to the highest level since March 6. Purchases of single-family houses in the U.S. unexpectedly climbed in April after sales dropped the most since 2013 in March, when much of the U.S. economy shut down to stem the spread of coronavirus.

State Street's XHB rallies on new home sales data

Since tumbling to a more than seven-year low on March 23, XHB has soared 68%, compared with a 34% increase in the S&P 500. While the latest homebuilder data suggest the housing market is starting to stabilize, the industry rebound will depend on how quickly the rest of the economy bounces back. High levels of unemployment could serve as a headwind to the recovery.

“The housing market could be one of the brighter spots,” said Emily Roland, co-chief investment strategist at John Hancock Investment Management. “We’ve probably seen the worst of the data in the month of April, but it may take some time for the economy to recover from here.”

Government data also showed that the median sale price of homes in April fell 8.6% from a year earlier, to $309,900. And the S&P CoreLogic Case-Shiller National Home Price index rose 4.35% year-over-year in March after climbing 4.16% in prior month.

“Home prices are still relatively stable and are not showing any sign of a housing bubble bust like that which occurred in the Great Recession over a decade ago,” said Chris Rupkey, chief financial economist at MUFG Union Bank.

Latest News

LPL building out alts, banking services to chase wirehouse advisors, new CEO says
LPL building out alts, banking services to chase wirehouse advisors, new CEO says

New chief executive Rich Steinmeier replaced Dan Arnold on October 1.

Franklin Templeton CEO vows to "do what's right" amid record outflows
Franklin Templeton CEO vows to "do what's right" amid record outflows

The global firm is navigating a crisis of confidence as an SEC and DOJ probe into its Western Asset Management business sparked a historic $37B exodus.

For asset managers, easy experience is key to winning advisors' businesses
For asset managers, easy experience is key to winning advisors' businesses

Beyond returns, asset managers have to elevate their relationship with digital applications and a multichannel strategy, says JD Power.

Why retaining HNW clients ultimately comes down to one basic thing
Why retaining HNW clients ultimately comes down to one basic thing

New survey finds varied levels of loyalty to advisors by generation.

Stocks drop as investors digest Microsoft, Meta earnings
Stocks drop as investors digest Microsoft, Meta earnings

Busy day for results, key data give markets concerns.

SPONSORED Out with the old and in with the new: a 50% private markets portfolio

A great man died recently, but this did not make headlines. In fact, it barely even made the news. Maybe it’s because many have already mourned the departure of his greatest legacy: the 60/40 portfolio.

SPONSORED Destiny Wealth Partners: RIA Team of the Year shares keys to success

Discover the award-winning strategies behind Destiny Wealth Partners' client-centric approach.