ETF Strategies To Play The US Market Optimism

The streak of upbeat U.S. housing data continues to impress investors. Per the U.S. Census Bureau and the U.S. Department of Housing and Urban Development data, new home sales climbed 20.7% to a seasonally-adjusted annual rate of 1.021 million units in March, touching the highest level since August 2006. Moreover, the metric beat economists’ forecast of a rise to 886,000 units in March, per a Reuters poll.

New home sales rose 66.8% in March year over year, gaining from a limited inventory of previously-owned homes. Notably, new home sales are considered a leading housing market indicator since it is counted at the signing of a contract, per a Reuters article.

New home sales climbed in the South, Midwest, and Northeast regions but declined in the West in March. Notably, there was a 0.8% year-over-year rise in median new house price to $330,800 in March, per a Reuters article. However, the number of new homes on market in March remained flat at 307,000. Going by last month’s pace, it might take 3.6 months to clear the supply, declining from 4.4 months in February.

Present U.S. Housing Market Conditions

The U.S. housing sector has pleased investors with impressive performance amid the tough pandemic times. However, it seems space is now facing the brunt of rising lumber prices.

Rising softwood lumber, material, and labor costs continue to be a major hurdle for homebuilders. The supply chain disturbances caused by the lockdown to contain the virus outbreak have led to the rise in concrete, metal products, appliances, and other expenses, as mentioned in a FOX Business article. Notably, there was an 83.4% year-over-year rise in March in prices of softwood lumber, which is used for constructing frames and trusses of houses, per a Reuters article. Moreover, there was a sharp rise in the prices of plywood. These factors are affecting the affordability as prices for existing and new homes are soaring.

Per an Institute for Supply Management, congestion in the port on the West Coast as well as winter chills in Canada which have shut mills along with limited truck shipping was also responsible for the constrained supplies that were leading to higher prices of building materials, per a Reuters article.

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