The $1.6 billion gauge of stock market housing stocks surged on Tuesday after the Census Bureau released data showing an increase in housing starts construction. A 2.7% increase in single-family homes was reported. The figure has gone up from 838000 in February to 861000 in March. This is a vital sign according to house stock watchers that the housing market is stabilizing after being crippled by higher interest rates.
The iShares U.S. Home Construction ETF rose by 2.2% to 72.63. The ITB ETF gained 18% during 2023, which is higher than the S&P 500’s gain of about 8%. The fund has grown despite dour signals from the US housing market. Like a jump in the interest rates beyond 6% since last year.
The optimism in the house stock watchers has had an adverse effect on the homebuyer. The housing companies have slashed discounts in anticipation of higher demand. The number of housing companies offering discounts decreased from 35% to 30% in the last month.
There has been other troubling news in the housing market as well. The well-known Bespoke Investment Group noted that Housing Starts, on a 12 month average, fell for 10 consecutive months. This is a sign of recession according to them. Home construction fell to a 1.42 million annualized rate, which is a 0.8% drop. There is a decline in construction starts of multifamily units as well, the investment group noted.
Despite such mixed signals, the market seems to be enthusiastic about Housing right now, as evident from the ITB ETF’s 52 week high on the market.
