Homebuilder index enters bear market territory

|By:, SA News Editor

Off more than  20% since its May high, the iShares U.S. Home Construction ETF (ITB -1.6%) is officially in a bear market, notes Ryan Detrick. The previous 3 instances the ETF fell 20%, it declined another 7.7% in the following month.

Know your ETF: The S&P Homebuilders ETF (XHB -0.8%) has strongly outperformed the ITB during this 3-month slump.

While ITB's main holdings are concentrated in actual homebuilders like LEN, PHM, DHI, TOL, and NVR, top holdings in the XHB are supply companies like Lumber Liquidators, Lennox, Lowe's/Home Depot, and A.O Smith - a homebuilder can't be found in its top 10 names.

Other related ETF: PKB.