Homebuilding ETFs Standing Tall Amid Rising Costs

As such, demand for homes will remain robust while higher prices of lumber and other materials will likely dampen the supply of new homes, leading to a spike in home prices. Further, new home sales increased 8.2% from February last year, and existing homes sales were also up 9.1% year over year, suggesting robust times for the homebuilding industry.

Further, the still stay-at-home culture due to the pandemic has resulted in high demand for big homes, as buyers now want specific spaces for working, schooling and exercising at home. The post-pandemic world has led to a demographic shift with millennials being the largest emerging homebuyers. According to the source, about 79% of millennials are first-time buyers.

Moreover, homebuilders are currently well placed, belonging to a top-ranked Zacks industry (placed at the top 14% of 250+ industries), suggesting a solid outlook.

Given this, investors could bet on the space with these homebuilder ETFs having a Zacks ETF (Hold) Rank:

iShares U.S. Home Construction ETF ITB

This fund provides exposure to U.S. companies that manufacture residential homes by tracking the Dow Jones U.S. Select Home Construction Index. With AUM of $2.4 billion, it holds a basket of 46 stocks with a heavy concentration on the top two firms. The product charges 42 bps in annual fees and trades in heavy volume of around 3.2 million shares a day on average. It has surged 12% in a month.

SPDR S&P Homebuilders ETF (XHB - Free Report)

This ETF provides exposure to homebuilders with a well-diversified exposure across building products, home furnishings, home improvement retail, home furnishing retail, and household appliances. It is the most popular option in the homebuilding space with AUM of $1.5 billion and an average daily volume of 2.2 million shares. The product charges 35 bps in annual fees and has gained 11.9% so far this year.

Invesco Dynamic Building & Construction ETF PKB

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Disclosure: Zacks.com 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 ...

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