{"id":28420,"date":"2023-06-27T22:50:40","date_gmt":"2023-06-28T02:50:40","guid":{"rendered":"https:\/\/ifintechworld.com\/markets\/homebuilder-etf-outperforms-sp-500-industrys-stocks-still-cheap-in-2023-market-rally\/"},"modified":"2023-06-27T22:50:42","modified_gmt":"2023-06-28T02:50:42","slug":"homebuilder-etf-outperforms-sp-500-industrys-stocks-still-cheap-in-2023-market-rally","status":"publish","type":"post","link":"https:\/\/ifintechworld.com\/?p=28420","title":{"rendered":"Homebuilder ETF outperforms S&P 500, industry\u2019s stocks still \u2018cheap\u2019 in 2023 market rally"},"content":{"rendered":"

Homebuilder stocks are relatively \u201ccheap\u201d even after surging this year, and represent a pocket of the U.S. equities-market rally that extends beyond the Big Tech sector as a recession does not appear imminent, according to DataTrek Research. <\/p>\n

\u201cThis is not a one-trick (Tech only) market,\u201d wrote DataTrek co-founder Nicholas Colas in a note emailed Tuesday.<\/p>\n

\n

The SPDR S&P Homebuilders ETF
\n XHB,
\n +2.87%<\/bg-quote>
\n has jumped almost 32% so far this year through Tuesday, according to FactSet data. Last year the ETF tanked in the broad-market selloff as the Federal Reserve aggressively hiked interest rates to battle high inflation, with its shares tumbling 29.7%.<\/p>\n

\u201cCan a U.S. recession really be just around the corner if homebuilding stocks just made a new\u201d 52-week high? Colas said in the note. \u201cThe short answer,\u201d he wrote, \u201cis \u2018no, obviously not\u2019, but there\u2019s more to the story than that.\u201d<\/p>\n

Colas also pointed to improving homebuilder sentiment on \u201cdecent demand and limited supply of existing homes.\u201d Meanwhile, inflation in materials has declined from pandemic-era levels, he said.<\/p>\n

Sales of newly built homes in the U.S. jumped in May, surging 12.2% to an annual rate of 763,000 from a revised 680,000 in April, the Census Bureau and U.S. Department of Housing and Urban Development announced jointly Tuesday.<\/p>\n

\u201cThis was a massive surprise,\u201d said Louis Navellier, chief investment officer of Navellier & Associates, in emailed commentary Tuesday. \u201cBetween lower home prices and consumers getting used to current mortgage rates, the housing market appears to be in the midst of a robust recovery.\u201d<\/p>\n

Read:<\/strong> U.S. new home sales surge in May for third straight month<\/p>\n

The median price of a new home sold in the U.S. in May was $416,300, down from as high as $496,800 in October, according to the Federal Reserve Bank of St. Louis\u2019s website, which cites data from the Census Bureau and Department of Housing and Urban Development.<\/p>\n

The housing market stands to benefit from the Fed potentially being close to ending its interest rate hikes.\u00a0<\/p>\n

\u201cIf the Fed really is near the end of their current tightening cycle, then interest rates should decline in 2024 and beyond and support demand over the longer term,\u201d said Colas.\u00a0<\/p>\n

While Big Tech has driven the S&P 500\u2019s gains this year, the jump in homebuilder stocks shows other parts of the U.S. equity market are also rallying in 2023, according to Colas. The S&P 500 is up 14% this year through Tuesday, lagging behind the SPDR S&P Homebuilders ETF\u2019s massive gains.\u00a0<\/p>\n

\u201cThey don\u2019t even have above-average valuations,\u201d Colas said of homebuilders.<\/p>\n

The top 10 holdings of the SPDR S&P Homebuilders ETF have an average valuation of 14.6x their 12-month forward-earnings estimates, remaining cheap relative to the market, according to the DataTrek note. By way of comparison, the S&P 500 trades at 18.6x, the note shows.<\/p>\n

The ETF\u2019s largest exposures include Carrier Global Corp.
\n CARR,
\n +1.77%<\/bg-quote>,<\/span>
\n Lennar Corp.
\n LEN,
\n +4.12%<\/bg-quote>,<\/span>
\n Owens Corning
\n OC,
\n +2.57%<\/bg-quote>,<\/span>
\n Trane Technologies plc
\n TT,
\n +0.99%<\/bg-quote>,<\/span>
\n NVR Inc.
\n NVR,
\n +2.95%<\/bg-quote>,<\/span>
\n PulteGroup Inc.
\n PHM,
\n +3.47%<\/bg-quote>,<\/span>
\n D.R. Horton Inc.
\n DHI,
\n +2.64%<\/bg-quote>,<\/span>
\n Builders FirstSource Inc.
\n BLDR,
\n +4.14%<\/bg-quote>,<\/span>
\n Lowe\u2019s Cos.
\n LOW,
\n +2.57%<\/bg-quote>
\n and Allegion plc
\n ALLE,
\n +1.55%<\/bg-quote>
\n as of June 26, according to the fund\u2019s holdings data on the website of State Street Global Advisors.\u00a0<\/p>\n

The average valuation for the top 10 holdings cited in the DataTrek note had included Carlisle Cos.
\n CSL,
\n +2.79%<\/bg-quote>
\n instead of Allegion. Carlisle remained among the SPDR S&P Homebuilders ETF\u2019s holdings as recently as June 26, data on State Street\u2019s website show.<\/p>\n

Shares of the SPDR S&P Homebuilders ETF outperformed the U.S. stock market on Tuesday, with a sharp gain of 2.9%.<\/p>\n

The S&P 500
\n SPX,
\n +1.15%<\/bg-quote>
\n finished 1.1% higher Tuesday, while the\u00a0 Dow Jones Industrial Average
\n DJIA,
\n +0.63%<\/bg-quote>
\n rose 0.6% and the technology-heavy Nasdaq Composite
\n COMP,
\n +1.65%<\/bg-quote>
\n gained 1.6%, according to Dow Jones Market Data.\u00a0<\/p>\n

In other economic data released Tuesday, new orders for manufactured durable goods jumped 1.7% in May, rising for a third a straight month, the U.S. Census Bureau said Tuesday. That was stronger than forecasts from economists polled by The Wall Street Journal for a 0.9% decline.<\/p>\n

Meanwhile, a Conference Board survey of U.S. consumer confidence jumped to a 17-month high in June, reflecting cooling inflation and fewer recession worries.<\/p>\n

Read:<\/strong> U.S. consumer confidence leaps to 17-month high on waning inflation and fewer recession worries<\/p>\n

\u201cThe combination of falling inflation and resilient labor markets appears to also be opening the door to a growing belief that a recession could be avoided and that a soft landing may still be possible,\u201d said Jim Baird, CIO of Plante Moran Financial Advisors, in emailed commentary Tuesday. <\/p>\n<\/p><\/div>\n

Read the full article here<\/a><\/p>\n","protected":false},"excerpt":{"rendered":"

Homebuilder stocks are relatively \u201ccheap\u201d even after surging this year, and represent a pocket of the U.S. equities-market rally that extends beyond the Big Tech sector as a recession does not appear imminent, according to DataTrek Research. \u201cThis is not a one-trick (Tech only) market,\u201d wrote DataTrek co-founder Nicholas Colas in a note emailed Tuesday. […]<\/p>\n","protected":false},"author":1,"featured_media":28421,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"gallery","meta":{"footnotes":""},"categories":[241],"tags":[83],"class_list":["post-28420","post","type-post","status-publish","format-gallery","has-post-thumbnail","hentry","category-markets","tag-featured","post_format-post-format-gallery"],"yoast_head":"\nHomebuilder ETF outperforms S&P 500, industry\u2019s stocks still \u2018cheap\u2019 in 2023 market rally | iFintechWorld<\/title>\n<meta name=\"description\" content=\"Homebuilder stocks are relatively \u201ccheap\u201d even after surging this year, and represent a pocket of the U.S. equities-market rally that extends beyond the\" \/>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/ifintechworld.com\/?p=28420\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta 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