Home Construction Consolidating

On a day when major US equity indices were lower across the board, the homebuilder group staged a nice rally. Below we provide a check-up on the group.

From the March lows until the October high, the iShares Home Construction ETF (ITB) rallied over 170%, but since that high, the ETF has been in consolidation. As shown below, ITB has been fluctuating around its 50-DMA for the past few months making some higher lows and lower highs in the process. The past few sessions have seen some more moves above and below the 50-day with today’s 1.8% gain currently bringing it back above and positive on a year-to-date basis. Currently, ITB is now 6.23% below its October 15th closing high.

As for the individual homebuilder stocks, below we show the constituents of the S&P 1500 Homebuilders index and the story is mostly the same. After surging from the March lows through October, most of these stocks are down double digits from their respective 52-week highs. Similar to the FAANG names that have mostly traded sideways for the past few months, the homebuilders have quietly been experiencing consolidation as well. 

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