Carpe Diem

Homebuilder ETFs close today at highest levels since 2007

Two major homebuilder ETFs (exchange-traded funds) closed today at their highest levels since July 2007, almost five and one-half years ago, as the housing sector recovers and “continues to lead the U.S. stock market higher in 2012.”  The blue line in the chart above shows the SPDR S&P Homebuilders ETF (XHB), which closed today at 26.89, the highest closing value since July 23, 2007.  Year-to-date, the index is up by almost 52%. The red line in the chart above shows the iShares Dow Jones US Home Construction ETF (ITB), which is up 77% year-to-date and closed today at 21.45, the highest closing price since July 16, 2007.  In contrast, the S&P500 Index is up by 13.3% this year.

The homebuilder ETFs were boosted today after the NAHB reported this morning that homebuilder confidence rose in December for the eighth straight month to its highest level since April 2006.  Evidence continues to mount that a recovery in the U.S. housing market is now underway, and the recovery continues to gain momentum with every new positive report.

11 thoughts on “Homebuilder ETFs close today at highest levels since 2007

  1. Housing’s Contribution to Gross Domestic Product (GDP)
    National Association of Home Builders

    “Housing contributes to GDP in two basic ways: through private residential investment and consumption spending on housing services. Historically, residential investment has averaged roughly 5 percent of GDP while housing services have averaged between 12 and 13 percent, for a combined 17 to 18 percent of GDP. These shares tend to vary over the business cycle.”

    If the housing market expands 10% in a year, it’ll add about 2% annual growth to GDP.

    Unfortunately, with contractionary fiscal policy and expansion of overregulation, it won’t be enough to generate a self-sustaining cycle of consumption-employment to get us out of this deep depression, although a recession, in this depression, would be mild.

    The destruction of productive capacity, which likely has been over 90% cyclical and less than 10% structural over the past few years, will continue.

    So, $1 trillion of real output will continue to be lost each year, unnecessarily.

      • It’s not all “cut-’n-paste.”

        Also, I may add, the National Association of Home Builders doesn’t give enough information. I suspect, since the housing market is smaller, a 10% expansion in that market boosts GDP growth closer to 1%.

  2. “Unfortunately, with contractionary fiscal policy”

    (Forehead slap)

    A “CONTRACTIONARY” fiscal policy??

    Tell me sir. What, in fact, do you trade?

Leave a Reply

Your email address will not be published. Required fields are marked *

You may use these HTML tags and attributes: <a href="" title=""> <abbr title=""> <acronym title=""> <b> <blockquote cite=""> <cite> <code> <del datetime=""> <em> <i> <q cite=""> <strike> <strong>