Homebuilder ETFs: Framing the Opportunity

According to the Census Bureau, single-family housing starts ticked up to an adjusted 939,000 in July (8% higher year-over-year) even as homebuilder sentiment remains low. Along with these small yet optimistic signs, high-profile investors like Berkshire Hathaway have disclosed positions in large U.S. builders — including D.R. Horton and Lennar — signaling longer-term confidence in the space. Against this backdrop, homebuilder ETFs offer a diversified way to access the space and express a view on the recovery path for housing.

Berkshire Hathaway’s latest 13F shows new exposure to homebuilders close to $1 billion total: $191.5 million (1.5 million shares) of DR Horton (DHI) and $799 million (7.2 million shares) of Lennar Corp (LEN). D.R. Horton is the largest U.S. homebuilder by volume. It also has diversified operating segments in rental, mortgage and title, and residential lot development. Lennar is the second-largest homebuilder by volume. It also offers similar vertically integrated solutions for buyers, such as mortgage, title, and closing services.

Adjacent beneficiaries include home improvement retailers and coatings suppliers like Home Depot (HD), Lowe’s Cos (LOW), and Sherwin-Williams (SHW). Home Depot and Lowe’s are the largest and second largest home improvement retailers, respectively. Both offer products and services to professionals and do-it-yourself customers, which correlates with both new builds and remodels. Sherwin Williams is a leader in paint and coatings. Like Home Depot and Lowe’s, Sherman also sells to a broad range of customers in various stages of home ownership.

July 2025 new-home sales were reported at a higher-than-expected adjusted 652,000, with the median sales price at $403,800. That’s the lowest level in nearly five years (after adjusting for inflation). Single-family construction also grew higher, with July housing starts at an adjusted 939,000 (almost 8% higher than a year ago). (Read more from VettaFi’s Jennifer Nash on the recent data for new home sales and housing starts.)

Meanwhile, mortgage rates have decreased slightly (the latest reading shows about 6.7% in July and 6.6% in August). As you can see in the chart below, mortgage rates and single-family construction are inversely related. Lower mortgage rates typically lead to more sales and construction (although several other elements are involved).

There are a wide variety of ETFs in the homebuilding segment.

• The iShares U.S. Home Construction ETF (ITB A) is the largest of the group, with almost $3 billion in assets. It tracks the Dow Jones U.S. Select Home Construction Index. This index focuses on home construction, building materials, furnishings, and home improvement retailer stocks. It is market cap weighted, with a single company cap of 22.5% for home construction and a 4.5% cap for the other three segments. This means it tends to be more concentrated at the top in large homebuilders. Together, DR Horton and Lennar make up over a quarter of the ETF’s weight. The top 10 holdings make up almost two-thirds of the ETF’s weight.
• The SPDR S&P Homebuilders ETF (XHB A+) was launched three months prior to ITB. It currently has just under $2 billion in assets. But unlike ITB, XHB is modified equal-weighted. This gives larger weight to some of the smaller-cap names in the space, like Installed Building Products (IBP) and Topbuild (BLD).
• The Invesco Building & Construction ETF (PKB A) tracks an index that evaluates companies through price momentum, earnings momentum, quality, management action, and value. The index is limited to 30 constituents, which is significantly lower than its peers. PKB also leans more heavily toward industrial and material stocks. Its top holdings are construction and infrastructure company Emcor Group (EME) and buildings material provider CRH PLC (CRH). It actually does not currently hold builders like DR Horton and Lennar. That sets it apart significantly from the rest of the group. Still, it should benefit from similar trends in the housing market.
• The Hoya Capital Housing ETF (HOMZ ) is the newest of the group, with close to $40 million in assets. While its previous three peerslaunched in late 2005 to mid-2006, HOMZ debuted in 2019. HOMZ offers exposure to high dividend growth companies across the U.S. housing industry, making it the broadest ETF of the group. Its index targets a 30% weight to home owners and rental operators, 30% to homebuilding and construction, 20% to home improvement and furnishings, and 20% to home services and technology. These weights are based on their relative contribution to U.S. GDP. HOMZ is the cheapest of the group, at only 30 basis points.
• The Direxion Daily Homebuilders & Supplies Bull 3X Shares (NAIL C+) seeks 3x the performance of the Dow Jones U.S. Select Home Construction Index (the same index behind ITB). This attests to two things: 1) there is demand to trade the homebuilding sector — and maybe this sector has more excitement surrounding it than one might think; and 2) leveraged ETFs have a large breadth of offerings and don’t just revolve around growthy tech and tech-adjacent names.

New home activity has ticked up. And large investors are buying homebuilder stocks like D.R. Horton and Lennar. With more confidence in the homebuilding segment and the overall housing market, ETFs can offer investors a diversified way to capture early recovery.

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