What Awaits Housing ETFs As US Existing Home Sales Fall?

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

Also, low employment levels and rising new coronavirus cases might impede momentum of the U.S. housing market.

Going on, there has been a rise in the average commitment rate. Per the Freddie Mac, fixed-rate mortgage came in at 3.08% in March, comparing favorably with 2.81% in February.

Meanwhile, the housing market has steadily benefited from changing demographical preferences of a large chunk of population as people increasingly looked for work-from-home-friendly properties. Notably, individuals were shifting from city centers to suburbs and other low-density areas looking for spacious accommodations for home offices and schools, per the sources.

Thus, commenting on the market conditions, Yun has reportedly said that "at least half of the adult population has received a COVID-19 vaccination, according to reports, and recent housing starts and job creation data show encouraging dynamics of more supply and strong demand in the housing sector."

Housing ETFs That Might Suffer

Against such a backdrop, here are a few housing ETFs that might struggle due to the tough housing sector scenario:

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 $2.81 billion, it holds a basket of 46 stocks, heavily focused on the top two firms. The product charges 42 basis points (bps) in annual fees (read: 4 Sector ETFs at All-Time Highs).

SPDR S&P Homebuilders ETF XHB

A popular choice in the homebuilding space, XHB, follows the S&P Homebuilders Select Industry Index. The fund holds about 35 securities in its basket. It has AUM of $2.08 billion and charges 35 bps in annual fees (read: 4 ETF Zones Set to Bloom in a Booming Job Market).

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