Don and Jon Vialoux, who author daily reports on equity markets, sectors, commodities and ETFs on their websites www.timingthemarket.ca and www.equityclock.com are recommending ETFs in the U.S. homebuilding sector as a way to reap the rewards of the seasonal strength that has returned to the sector.
September housing starts were greater than expected and nicely above seasonal trends, according to the brothers. Consensus was an increase to 1,150,000 units. Actual was a 6.5-per-cent increase from August to 1,206,000 units.
This seasonal strength is related to the U.S. housing start cycle, as builders increase their housing starts into October with the intention of completing construction prior to the spring home purchase period.
“The easiest way to invest in the sector is to own either SPDR Homebuilder Index ETF or iShares U.S. Home Construction ETF,” stated their report. “The former is a modified equally weighted ETF that includes retail stocks such as Home Depot Inc. and Lowe’s Companies Inc. related to the home building sector. The later focuses more on home builder stocks and building material stocks, including D.R. Horton Inc., Lennar Corp., PulteGroup Inc. and Toll Brothers Inc.
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The latest round of encouraging U.S. housing data has investors looking for another option to capitalize on the market and some are leaning towards the homebuilding sector – a smart move, say some stock market analysts.