Housing ETFs: iShares Home Construction Down, Barclays' New REITS Offerings

The latest numbers show 2007 going down as one of the worst years for housing in decades. And, iShares Dow Jones US Home Construction (ITB) is the worst performing ETF year-to-date.

At -13.7%, do not look for a rebound anytime soon. Maya Roney for BusinessWeek reports soft home sales are likely to continue through May, a time when home sales are traditionally the highest. [click to enlarge]

ITB 1-yr chart:

Stricter lending reduced the pool of buyers and even if they kept the standards the same, there wouldn't be a decent recovery, mostly because home prices accelerated faster then incomes during the boom. ETF investors who are looking to go bottom fishing with ITB might keep an eye on the 200 day moving average as an entry and exit point.

Also in housing- related ETF news, Barclays launched five new iShare real estate ETFs on the New York Stock Exchange. These ETFs will follow FTSE NAREIT Index, which cover many disciplines and aspects of REITs according to Lisa Dallmer of NYSE in the press release.

• iShares FTSE NAREIT Real Estate 50 Index (FTY)
• iShares FTSE NAREIT Residential Index (REZ)
• iShares FTSE NAREIT Industrial/Office Index (FIO)
• iShares FTSE NAREIT Retail Index (RTL)
• iShares FTSE NAREIT Mortgage REITs Index (REM)

Although the homebuilding sector has been in a decline, commercial real estate continues to thrive. This is just one example of how each industry group has its own cycle and trend. Because of these cycles, investment disciplines that follow trends, like the 200-day average, are that much more important. The new REIT ETFs allow investors to take advantage of the areas within real estate that are trending in the right direction.