Market Overview

Housing ETFs Near 8-Year Highs

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Housing ETFs Near 8-Year Highs

The bears love to hate the housing sector, and for years they have been on the wrong side of the trade. On Tuesday, the new home sales number was released, and it crushed estimates. Within the report, the January number was revised higher to 500k, marking the first time sales have hit at least 500k in consecutive months since early 2008.

Last week, one of the nation's largest homebuilders, KB Home (NYSE: KBH), crushed earnings estimates when it announced its first quarter data. For the quarter ending February 28, the company reported revenue of $580 million, up 28 percent year-over-year and beating estimates by $105.2 million. Earnings per share came in at $0.08, beating estimates by $0.06.

Related Link: 2 New Homebuilder ETNs

Another popular homebuilder that performed well recently also reported earnings last week. Lennar Corporation (NYSE: LEN) reported first quarter EPS of $0.50, beating estimates by $0.05, as well as revenue of $1.64 billion, beating estimates by $140 million.

Homebuilder ETFs

The largest homebuilder ETFs on the market, the iShares Dow Jones US Home Const. (ETF) (NYSE: ITB) and the SPDR S&P Homebuilders (ETF) (NYSE: XHB), have been performing well this year following a slew of positive data mixed in with a handful of troubling numbers.

ITB is up 8 percent in 2015 and within 1 percent of a new eight-year high. XHB is also up 8 percent in the new year and within striking distance of a new eight-year high.

iShares Dow Jones US Home Construction

ITB follows 37 U.S. companies that are in some way involved with the construction of residential homes. The top weighted sectors in the ETF are household durables at 70 percent and building products at 13 percent.

The top individual holdings include:

  • D.R. Horton, Inc. (NYSE: DHI)
  • LEN with 10.8 percent allocations
  • PulteGroup, Inc. (NYSE: PHM) coming in at 8.8 percent

KBH is the 14th-ranked holding in ITB at 2 percent. Over the last 12 months, ITB is up 14 percent and up 18 percent over the last six months. The ETF has an expense ratio of 0.43 percent.

SPDR S&P Homebuilders

XHB tracks 37 U.S. companies that are involved with the construction of residential homes. The ETF is distributed across six sectors, with homebuilding at 34 percent and building products at 27 percent coming in at the highest weighted sectors.

The top holdings include:

  • Select Comfort Corp. (NASDAQ: SCSS) at 3.7 percent
  • Ryland Group Inc (NYSE: RYL) making up 3.6 percent
  • Standard Pacific Corp. (NYSE: SPF) with a 3.6 percent holding as well

XHB is up 20 percent over the last 12 months and up 19 percent over the last six months. The ETF has an expense ratio of 0.35 percent.

Posted-In: Sector ETFs Trading Ideas ETFs Real Estate Best of Benzinga

 

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