Home Construction ETF hits record high as housing booms

iShares Home Construction ETF has rallied over 40% this year

The iShares Home Construction exchange-traded fund jumped to a new 52 week-high this week and is poised to rise even further amid strong consumer demand for new and existing homes.

Ticker Security Last Change Change %
ITB ISHARES TRUST U.S. HOME CONSTRUCTION ETF 76.69 -1.26 -1.62%

The ETF, which currently gives investors exposure to 46 U.S. companies that manufacture residential homes, has rallied more than 40% this year and has over $3 million assets under management. 

TOLL BROTHERS POSTS STRONG QUARTER

Ticker Security Last Change Change %
DHI D.R. HORTON INC. 98.53 -1.23 -1.23%
LEN LENNAR CORP. 108.16 -0.38 -0.35%
NVR NVR INC. 5,718.00 +25.97 +0.46%

Top weighted stocks in the ETF include D.R. Horton, Lennar Corporation and NVR. 

TOLL BROTHERS SEES 20% GROWTH IN 2022 AMID STRONG DEMAND

Despite low inventory and rising housing prices, existing home sales rose 0.8% in October to a seasonally adjusted rate of 6.34 million units, the fastest pace since January, while pending home sales, which tracks the number of homes that are under contract to be sold, rose 7.5% to a reading of 125.2 in October. 

home sale

Despite low inventory and rising housing prices, existing home sales rose 0.8% in October to a seasonally adjusted rate of 6.34 million units, the fastest pace since January, while pending home sales, which tracks the number of homes that are under c (Michael Conroy / AP Newsroom)

The median existing-home price in October jumped 13.1% year-over-year to $353,900, marking a record 116 straight months of year-over-year increases. The median existing single-family home price jumped 13.5% year-over-year to $360,800 in October, while the existing condo price rose 8.7% year-over-year to $296,700.

Total housing inventory in October fell 0.8% month-over-month and 12% year-over-year to 1.25 million units. Unsold inventory, which is at a 2.4-month supply at the current sales pace, remains unchanged from the previous month and is down from 2.5 months a year ago. 

First-time home buyers accounted for 29% of existing home sales in October, up from 28% in September and down from 32% in October 2020, while individual investors or second-home buyers purchased 17% of homes in October, up from 13% in September and 14% in October 2020.

National Association of Realtors chief economist Lawrence Yun says continued job growth, a stock market at all-time highs and rising, but still historically low mortgage rates are helping to drive home sales.

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iShares' Home Construction ETF isn't the only fund seeing momentum as the SPDR Homebuilders ETF, Invesco Dynamic Building & Construction ETF and Direxion Daily Homebuilders & Supplies Bull 3x Shares ETF have also recently flirted with record highs. 

Ticker Security Last Change Change %
XHB SPDR SERIES TRUST SPDR S&P HOMEBUILDERS ETF 78.88 -1.68 -2.09%
PKB INVESCO EXCHANGE TRADED FD TR DYNAMIC BLDG & CONSTRUCTION 50.43 -1.01 -1.97%
NAIL DBX ETF TRUST DIREXION DAILY HOMEBUILDERS 96.77 -4.55 -4.49%

The ETFs are up 51%, 34.6%, and 179.6% this year, respectively, as of the time of publication.