Homebuilder ETFs Run On Housing Data (XHB, ITB)

The new home sales data is showing a very mixed bag, with a bit of a positive twist to it. We are seeing a run up in the SPDR S&P Homebuilders (NYSE: XHB) and the iShares Dow Jones US Home Construction (NYSE: ITB) as a result.  March 2009 new home sales came in at a rate of -0.6% down to 356,000 on an annualized basis.  We had consensus estimates pegged at 337,00 from Dow Jones and 330,000 from Bloomberg.  February was given a sharp revision to its already high +4.7% to a higher +8.2%.

The key metric we wanted to watch is the inventory levels.  This is coming down as companies have halted new construction and the March reading was 10.7 months worth of new housing inventory.  This reading is down from 11.2 months in February and that was down from 12.9 months in January.

The two ETF’s we track for the housing sector are up on the news: SPDR S&P Homebuilders (NYSE: XHB) is up over 4% at $13.54 and the iShares Dow Jones US Home Construction (NYSE: ITB) is up 4% at $11.00 on much thinner volume.

JON C. OGG