Homebuilder exchange traded funds tumbled this week following mixed housing data and Toll Brothers’ earnings miss.  

Housing starts declined 8.5% to an annualized rate of 890,000 last month, weighing on the SPDR S&P Homebuilders ETF (XHB) and the iShares Dow Jones U.S. Home Construction (ITB). XHB plunged more than 4% this week while iShares Dow Jones U.S. Home Construction (ITB) fell nearly 6%.

Meanwhile, shares of Toll Brothers, the largest U.S. luxury homebuilder, posted its steepest decline in four years after reporting fiscal first-quarter 2013 earnings. The quarterly report showed the company closed fewer sales than analysts expected, further pressuring lumber prices.   

Despite lumber futures hitting a two-week low this week, lumber exchange traded funds are pushing higher. Claymore Beacon Global Timber Index (CUT) and iShares S&P Global Timber & Forestry Index (WOOD), which track the timber equity market, are both on track to post weekly gains.

But the sell-off in homebuilder funds could be a chance for investors to buy, that’s if you believe the housing recovery remains on track.   

“There’s no doubt that we’re on the road to recovery in housing,” said Stan Humphries, Zillow Chief Economist. “I’m not worried about January’s housing starts. We’re well into the recovery at this point.”

A bright spot in the housing was existing home sales. Sales of previously owned homes edged up in January to its second highest level in three years, pushing supply to a 13-year low. The National Association of Realtors reported sales rose 0.4% last month to a seasonally adjusted annual rate of 4.92 million units. National inventory dropped 4.9% from December to 1.74 million, its lowest level since December 1999.