XHB - Despite The High Interest Rates The XHB Homebuilding ETF Refuses To Die
2024-05-02 11:39:06 ET
Summary
- I’m not living under a rock, so I know interest rates are high.
- I also know that conventional wisdom warns us to avoid homebuilders when rates are high.
- But conventional wisdom is incomplete; there’s more to housing than interest rates.
- Supply and sticker prices are also critical.
- Prospects for better supply and sticker prices make the XHB ETF appealing even without Fed help.
Stop me if you've heard this: ((A)) High interest rates hurt homebuilders. ((B)) Interest rates are up. ((C)) So, homebuilders are bleeding. ((D)) Therefore, the SPDR S&P Homebuilders ETF (XHB) is a dog.
Sounds like a slam dunk… right? Actually, it's not so simple.
XHB did retreat from recent highs, as did most other stocks. And as with so many others, today's interest rate chatter (higher for longer rather than multiple cuts in 2024) is relevant. But if you're waiting for the Fed to reverse all or most of the increases since 2022, think again.
For one thing, the Fed's not going to bring benchmark rates back toward zero absent a major economic crisis. (And if we do get something like a new pandemic or World War III, we'll all have bigger fish to fry than worrying about XHB.)...
Despite The High Interest Rates, The XHB Homebuilding ETF Refuses To Die