Homebuilders Could Be on Solid Ground

Housing stocks outperformed earlier this year thanks to low interest rates, an exodus from cities and tight inventories. They recently pulled back but could now be at support.

The iShares US Home Construction ETF is sitting around the same $52 zone where it bounced in September and late October. ITB is also near its 100-day simple moving average (SMA), a line it hasn’t tested since the rally began.

Interest rates are the other key issue. Homebuilders fell recently as Treasury yields jumped. But that trend might have run its course for now because bond prices are back at the bottom of the channel cited last week.



Finally, attention could soon return to the industry with key events next week: NAHB’s sentiment index, housing starts/building permits, plus earnings from Home Depot and Lowe’s.

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