An important reason behind the underperformance of homebuilding stocks is the plummeting sentiment:
The number of workers employed in construction in the US is approaching pre-recession levels. This is an awesome tool by Bloomberg using the jobs report:
You can also look at the number of jobs vs average hourly wages through time:
This is a monthly chart from Chris Kimble:
Source: Kimble Charting Solutions
XHB is right at a strong support level, which would be important to hold if someone is considering a long position in this ETF.
Disclosure: We have no positions in XHB.
This is an interesting chart from Chris Kimble:
I am not entirely convinced that the US Homebuilding industry should plunge based on the retreat of lumber futures, but it is worth keeping an eye on this important commodity.
Disclosure: We are long ITB, but have no positions in lumber.