Not Yet Time for Homebuilders

The SPDR S&P Homebuilders Index Fund (XHB) is down about 15% since May 29. It’s tempting to buy this dip given the positions of top professionals like Ken Fisher of Fisher Asset Management in U.S. homebuilding stocks.

But I believe it's still be too early to buy the SPDR S&P Homebuilders Index Fund because U.S. inventories of new and resale housing remain at 15-year highs -- while mortgage rates edge up and banks tighten lending standards.

XHB 1-yr. chart:

Comments

[joyofyoga:]

This is an ugly chart that is not tempting and dip is a slide that has a way to go. When real estate goes up, it is quickly! And when it declines, it for protracted periods ever so slowly but persisently. And there aren't any fundamentals that indicate this is a good time to jump into this market. There will be an increasing glut of inventory on the market as owners return the keys to banks.

2007 Jun 28 10:07 PM