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Homebuilder ETFs On Watch As Pending Home Sales Plunge 2.8%

Monday, February 27, 2017 8:55
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(Before It's News)

From Jill Mislinski: This morning the National Association of Realtors released the January data for their Pending Home Sales Index.

Here is an excerpt from the latest press release:

Lawrence Yun, NAR chief economist, says home shoppers in January faced numerous obstacles in their quest to buy a home. “The significant shortage of listings last month along with deteriorating affordability as the result of higher home prices and mortgage rates kept many would-be buyers at bay,” he said. “Buyer traffic is easily outpacing seller traffic in several metro areas and is why homes are selling at a much faster rate than a year ago. Most notably in the West, it’s not uncommon to see a home come off the market within a month.” (more here).

The chart below gives us a snapshot of the index since 2001. The MoM change came in at -2.8%. Investing.com had a forecast of 0.8%.

Pending Home Sales

Over this time frame, the US population has grown by 14.3%. For a better look at the underlying trend, here is an overlay with the nominal index and the population-adjusted variant. The focus is pending home sales growth since 2001.

Pending Home Sales Growth

The index for the most recent month is 16% below its all-time high in 2005. The population-adjusted index is 24% off its 2005 high.

Pending versus Existing Home Sales

The NAR explains that “because a home goes under contract a month or two before it is sold, the Pending Home Sales Index generally leads Existing Home Sales by a month or two.” Here is a growth overlay of the two series. The general correlation, as expected, is close. And a close look at the numbers supports the NAR’s assessment that their pending sales series is a leading index.

Pending Home Sales Growth

The SPDR S&P Homebuilders ETF (NYSE:XHB) was trading at $36.18 per share on Monday morning, up $0.35 (+0.98%). Year-to-date, XHB has gained 6.88%, versus a 6.01% 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.

You are viewing an abbreviated republication of ETF Daily News content. You can find full ETF Daily News articles on (www.etfdailynews.com)



Source: http://etfdailynews.com/2017/02/27/homebuilder-etfs-on-watch-as-pending-home-sales-plunge-2-8/

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