over 2 years ago • 1 min
As US house prices heat up, shares in homebuilding-related companies are failing to keep pace – potentially creating an opportunity to profit.
The chart shows how prices of homes in 10 major US cities (plotted in blue) are hitting fresh records each month. Meanwhile, the pink line shows how the S&P Supercomposite Homebuilding Index, which tracks homebuilding stocks, has failed to climb much relative to the wider S&P 500.
While both the pink and blue lines swept higher in tandem during the last US housing boom of the early 2000s, this time around shares in homebuilding firms are performing relatively poorly compared to the wider stock market.
To be clear, US homebuilder stocks have had a great run since the stock market bottomed in March 2020, rising 207% versus the S&P 500’s 92% gain. But that’s nothing compared to the first five years of the 21st century, when homebuilder stocks surged 520% even as the S&P 500 declined 15%.
If you believe history will repeat and US homebuilder stocks have room left to climb, there are plenty of exchange-traded funds (ETFs) available that track US homebuilder stocks – like the SPDR S&P Homebuilders ETF (ticker: XHB).
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