Seeking Alpha

Homebuilder index enters bear market territory

  • 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.
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