The housing industry continues to struggle from the weight of high interest rates as data like Housing Starts and Pending Home Sales have shown this week.
The S&P Homebuilders ETF (XHB), which contains homebuilders, building products, home improvement, and home furnishing and appliance companies, just made new 52-week lows in the last few trading days:
The two stocks in the Homebuilder ETF (XHB) that best represent the good times and bad over the past few years are probably Builders FirstSource (BLDR) and Dream Finders Homes (DFH).
Builders FirstSource (BLDR), based in Texas, supplies and makes building materials, factory-built components and construction services for professional homebuilders, subcontractors, remodelers and consumers.
Dream Finders (DFH) is a Jacksonville-based homebuilder that uses an asset-light model to build single-family homes across the Southeast, Mid-Atlantic and Midwest. (Note that the founder of DFH, Patrick Zalupski, recently led a group that bought the Tampa Bay Rays who just won the ALCS last night.)
Below is a snapshot that shows the performance of BLDR and DFH shares since the end of 2022. These were two of the market's biggest winners coming out of the 2022 bear market. At their peaks in March 2024, BLDR was up 225%, while DFH was up 405%.
In the two and a half years since March 2024, however, both have essentially given up all of their gains. DFH is now barely up since the end of 2022 with a gain of 10.5%, while BLDR is actually down 16.4%.
In terms of drawdowns from their all-time highs, BLDR is now down 74%, while DFH is down even more at 78%.
Now that these two stocks have fully round-tripped huge gains from 2023 and early 2024, it will be interesting to see if they can find a bottom around current levels. To do so, it's highly likely that they'll need interest rates to cooperate by coming down some. We'll be keeping an eye on them.
While BLDR and DFH have been huge laggards in the Homebuilder ETF (XHB), one stock that has held up is SharkNinja (SN). As a home appliance maker, SN actually has the largest weighting in XHB right now because of how well it has done.
As shown below, the stock is up 110% over the last year and just touched fresh all-time highs this week:
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