Friday, July 27, 2018

The U.S. housing market is weakening. Here's why

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.
Chart
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

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