U.S. equity markets struggled to maintain bullish momentum as several mixed economic reports hit the streets. Industrial production, manufacturing activity and initial jobless claims all came in below expectations, while U.S. retail sales and small business optimism beat analysts’ forecasts. Meanwhile, investors paid close attention to commentary from legendary hedge fund manager David Tepper, who stated that he is “definitely bullish” on stocks, and that he sees the improving economy, particularly in the housing and auto markets, as reasons to be bullish [see The Cheapest ETF for Every Investment Objective].
Building Permits Rise, But Housing Starts Take a Dip
The latest building permits data, compiled by the Census Bureau, came in at 1.02 million permits for the month of April, which was well above expectations. Analysts had forecasted the annualized number of new residential building permits issued in April to be around 0.92 million. In the previous recording, building permits came in well below expectations, with the metric coming in at 0.90 million compared to the forecasted 0.90 million.
Yesterday’s housing starts report, however, disappointed investors, coming in at 0.85 million for the month of April versus the estimated 0.98 million forecast. In the previous month, housing starts were reported to be well above expectations at 1.04 million [see also ETFs To Play The Online Sales Tax Reform].
Below, we highlight the trailing six-month building permits and housing data (note that the units are in millions):
While these particular metrics have had both hits and misses over the past six months, across the board, housing stats have been on the rise in recent years, including home prices, housing starts, building permits and construction – an encouraging sign for the industry.
Homebuilding ETFs Performance Recap
With housing data on the rise, building and construction ETFs have fared quite well, with several funds pumping out attractive double digit returns. Year-to-date the SPDR Homebuilders ETF (XHB, A+), the largest fund covering this sector, has gained over 21%, and over the trailing four-week period it has climbed 12.6%. While the broad market, as represented by the S&P 500, has also performed well in 2013, XHB has certainly kept up with the market’s quick pace:
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Disclosure: No positions at time of writing.