Are Housing ETFs Recovering From Coronavirus Injuries?

The momentum in the U.S. housing market seems to be returning and some encouraging data sets are emerging from the sector. The May data on U.S. housing starts and building permits reflect improvements in U.S. home building. According to the Commerce Department, housing starts jumped 4.3% to a seasonally adjusted annual rate of 974,000 units in May per a National Association of Home Builders (NAHB) press release. The metric compares favorably with the fall of 26.4% in April and 19% in March. On a year-over-year basis, housing starts were down 23.2% in May.

Building permits, a construction pointer for the coming months, climbed 14.4% to a rate of 1.220 million units in May. There was a 0.1% rise in single-family home building, which constitutes a large portion of the housing market, to a rate of 675,000 units in May. Moreover, permits to construct single-family homes rose 11.9% to 745,000 units in the reported month (per a NAHB press release).

Meanwhile, housing starts for the multi-family housing segment were up 15% to 299,000 units last month. Moreover, there was an 18.8% increase in permits to build multi-family homes to a rate of 475,000 units in May.

The latest data on the U.S. homebuilder confidence seems encouraging even as the number of coronavirus cases continues to spike in the United States. Per the monthly National Association of Home Builders (NAHB)/Wells Fargo Housing Market Index (HMI), builder confidence for single-family homes surged to 58 points in June from 37 in May and 30 in April (the lowest since June 2012).

What’s Leading to the Housing Market Recovery?

Low interest rates are boosting demand in the housing market, as a result increasing mortgage applications are being observed as well. Going by a Reuters article, data suggests that applications for loans to purchase a home rose to a near 11-1/2-year high in the week ending Jun 12. Mortgage applications are also believed to have risen above the pre-pandemic levels (per a CNBC report).

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Disclosure: contains statements and statistics that have been obtained from sources believed to be reliable but are not guaranteed as to accuracy or completeness. References to any specific ...

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