Proprietary Data Insights
Financial Pros’ Top Homebuilder ETF Searches in the Last Month
The Best ETF to Play the Housing Shortage
In 2008, we had too many houses.
Now, there’s not enough.
For over a decade, housing supply outweighed demand. So, homebuilders had little incentive to build excess inventory, especially after the beating they took during the Great Recession.
But the tides have turned.
Moody’s estimates there’s a gap of nearly 2 million homes.
Naturally, that’s a boon for homebuilders who now have a mile-long backlogs.
So what’s the best way to play this rebound?
Our TrackStar data suggests financial pros prefer the iShares U.S. Home Construction ETF (ITB).
It ranked #1 in search volume for homebuilder ETFs, barely edging out the SPDR S&P Homebuilder ETF (XHB).
We agree with the pros here, and will explain why we prefer the ITB over all other housing-related ETFs.
Key Facts About ITB
There are less than 20 publicly traded homebuilder stocks in the U.S.
So, the ITB, and similar ETFs, hold related stocks like Home Depot, Whirlpool, and the like.
The ITB is more of a market-weighted pure play on housing construction than any other ETF.
Its top 4 stocks, all homebuilders, represent over 40% of the total weighting.
The ETF has excellent liquidity with regular weekly option expirations.
ITB also comes with a low expense ratio and a small, but regular dividend.
The outstanding feature of the ITB is the ETF’s performance.
Over the last five years, the ITB gained over 200%, making it the top unleveraged performer of the homebuilder ETFs.
Our list of homebuilder and related ETFs includes a few different ways to gain exposure to the sector.
As we often see, a more concentrated position yields better results over time.
However, this is one instance where the leveraged ETF actually did the best.
Our Opinion 10/10
There is no better ETF to gain exposure to homebuilders than the ITB.
We prefer it’s market-weighted approach that focuses on the construction and less on suppliers and related companies.
With a reasonable expense ratio and moderate yield, this ETF is one you can add to your long-term portfolio to gain exposure without company-specific risk.
Want to get content like this directly to your inbox? Then we urge you to sign up for our newsletter here