Home Construction Turns Lower: Will It Be Different This Time?

Sharing is Caring!

via Chris Kimble 

Interest rates are steadily creeping higher. And housing, as measured by the several housing related ETFs and Indexes is facing a slowdown.

And not very many people are talking about it.  Well, it’s time to put it on your radar!

Housing carries implications for the economy and the stock market (and our portfolios).

See also  Dow 20,000, or lower?

Currently, the Home Construction Index and ETF (NYSEARCA: ITB) have turned lower.  The Homebuilders ETF (NYSEARCA: XHB) has turned down. And the broad Real Estate ETF (NYSEARCA: IYR) has been chopping sideways.

Looking at the chart below, we can see the relationship between housing and the stock market. Major divergences have formed at the last three big turns for the S&P 500.

See also  Mortgage Purchase Applications 14% Lower Than 12 Months Ago (Rising Home Prices Hurting Mortgage Demand)

In 2001/2002 and in 2008/2009, the Dow Jones Home Construction Index began to improve prior to the S&P lows. In mid-2005, the Index turned lower, prior to the 2007 stock market top. And once again we are seeing the Home Construction Index turning down while the S&P 500 is higher.


Leave a Comment

This site uses Akismet to reduce spam. Learn how your comment data is processed.