Alternative Investments/Real Estate: Homebuilder ETFs In A Bull Grip

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Housing demand is very strong, and homebuilder confidence soars to all-time highs.

The NAHB/Wells Fargo National and Regional Housing Market Index (HMI) for single-family homes for the month of September rose from 78 in August to 83 in September. This monthly survey measures sentiment in the single-family housing market. It asks respondents to rate market conditions for the sale of new homes at the present time and in the next six months as well as the traffic of prospective buyers of new homes.

The reading for September indicates that homebuilder confidence and sentiment is at a record high – the highest in the survey’s 35-year record. It is a reflection of the strong demand for housing, particularly in the suburbs or exurbs. (CNBC)

Analysts show love for homebuilder stocks

  • RBC upgraded Lennar (NYSE: LEN) to Outperform
  • Evercore ISI upgraded shares of KB Home (NYSE: KBH) to Outperform
  • Oppenheimer bullish on MDC Holdings (NYSE: MDC)

Michael Bapis, managing director of Vios Advisors at Rockefeller Capital Management, said on a Trading Nation interview: “You’re seeing massive order expansion, massive earnings growth and the underlying companies like Home Depot and Lowe’s are supporting that growth because they’ve been able to rapidly move to an online growth structure because of their investment in technology,” he remarked.

Data from LegalShield confirms heat in the real estate market

LegalShield said its LegalShield Real Estate Index improved 4.3 points in August to 111.8, its strongest reading since late 2005. Low mortgage rates (“sub-3%”) has spurred demand for single-family homes significantly in 2020.

Meanwhile, the LegalShield Housing Activity Index surged nearly 10 points to 138.2, the highest level on record. It shows that housing starts are on the rise. The firm attributed the cause to improved building prospects in the suburbs and exurbs.

Homebuilder ETFs to watch

  • The iShares U.S. Home Construction ETF (BATS: ITB)
  • The SPDR S&P Homebuilders ETF (NYSEARCA: XHB)

Related Story:    HOMZ ETF Issuer To Ring NYSE Closing Bell To Mark Fee Cut

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