The U.S. housing market is weakening…
That’s the story of today’s chart, which maps the iShares US Home Construction ETF (ITB) – which tracks a basket of 47 U.S. homebuilders and construction-related companies – over the past 12 months.
As you can see, ITB has plunged 19% from its January peak of $46. Notice also how ITB sold off hard after the Federal Reserve announced rate hikes in both March and June of this year.
Rising interest rates appear to be having a material impact on demand in the U.S. housing sector.
U.S. home sales fell to an eight-month low in June, and sales forecasts were revised sharply lower. This indicates that the housing market is slowing down, as is demand for new homes… resulting in the sell-off in ITB.
And with the Fed expecting to raise the federal funds rate twice more before 2018 is out, there’s a good chance this trend in housing will continue.
– Joe Withrow