Homebuilders Make Up Ground Quickly

The iShares US Home Construction ETF (ITB) jumped more than 7% yesterday, bringing its five-day gain to 12.7%, the largest since July 2024. A week ago, ITB and the SPDR S&P Homebuilders ETF (XHB) both traded below their 50-day moving averages. Both are now extremely overbought, along with eight other names in the snapshot below. Builders FirstSource (BLDR) moved from below its 50-day moving average to extremely overbought (2+ standard deviations above the 50-DMA) after a 24.4% gain in five days, and NVR (NVR) went from oversold to overbought over the same stretch with a 10.1% gain. Cavco Industries (CVCO) has led the way, up 27.44% over the last five days.

Yesterday’s rally took ITB back above its 200-day moving average for the first time since August and through the short-term downtrend that started earlier this year. ITB closed at $100.30, putting it within about 4% of $104, the level it would need to clear to break the longer downtrend from its pre-election peak in 2024.

The SPDR S&P Homebuilders ETF (XHB) also closed back above its 200-day moving average after gaining 9.8% over the last five trading days, but still has some work to do before it breaks its downtrend. Both ETFs are now up just over 4% year-to-date, which gives you a sense of how quickly the past week erased their year-to-date losses.