As the economy expands, one sector is a clear laggard: housing. After a 275% run for the SPDR S&P Homebuilders ETF (NYSEARCA:XHB) since the March 2009 lows, it seems like the housing boom is over. The upward trends in existing home sales, new home sales, and housing starts have flattened in 2013 and 2014. The Fed's tapering likely did not help, as it increased mortgage rates. And despite the drop in the 10-year yield by 40 basis points in 2014, the 30-year fixed rate mortgage has remained steady, at 4.34% in April.
Even without the divergence in mortgage rates and the 10-year yield, the housing market suffers from a phenomenon called "burnout," which I referred to in a...
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