SPDR S&P Homebuilders (ETF) (NYSEARCA:XHB) have years of fundamental tailwinds ahead of them. Find one that is already sitting on huge swaths of land because land loans are still highly restrictive as prices for it continue to jump. The main impediment to a full blown housing surge isn’t higher rates, it is lack of supply. For all the fear of the alleged negative consequences of higher rates, they have done nothing to derailed the economy. In fact, as I opined in June, I think they are helping economic growth, not hurting it. In fact we continue to see lending loosen from its overly restrictive levels as interest rates climb.
Potential homebuyers cannot buy what is not for sale and because we have so many buyers chasing so few properties, price continue to climb. Because of that homebuilders will enjoy continued demand for homes as well as increasing pricing power.
Home construction and Supply/Demand remain in very positive territory. The Monthly Supply of (New) Homes for Sale was reported at 4.3mos this morning.
We should expect higher Residential Construction Employment in the coming months, higher general employment and higher stock prices in response to expanded economic activity.