Investors Gain Positive Opportunities in Housing

Posted by Steve Kleber on Feb 24, 2011

According to a recent article on Seeking Alpha, there is good news for investors—the housing sector is rising. As the following charts show, the lowest period for this sector was in July and September of last year. Since then, the index has been moving back toward the April 2010 high.

The first chart shows the Philadelphia Stock Exchange (PHLX) Housing Sector Index (HGX), which is comprised of companies in the building and remodeling of residential homes, mortgage insurers and suppliers of building material. As you can see, the index has been steadily increasing.

This chart shows the Dow Jones Home Construction Index, which has a similar increase in recent months. A move back to the April high of 333 would offer a gain of nearly 15% for investors.

The final chart shows the SPDRs Homebuilders ETF (XHB), which represents the homebuilding sub-industry portion of the S&P Total Markets Index. The S&P TMI tracks all of U.S. common stocks listed on NYSE, AMEX, NASDAQ National Market and NASDAQ Small Cap Exchanges. An increase is also visible on this chart, and the move above $18.50 is a break from the five week consolidation.

What do these charts mean? They mean that the housing market is going to be giving investors some pretty good opportunities over the next few months.

If these charts don’t give enough proof, the rise in stock prices for companies such as Mohawk Industries and Lowe’s Companies does. These stocks are either on top of the range or breaking through the top of the range.

If those numbers don’t raise your confidence, you should know that on February 16 housing statistics for January were 596,000… way above the expected 520,000.

As the recovery makes progress, the housing sector will continue to rise. So, if you are willing to do some work and put in some time, invest in these opportunities.

Note: images modified from SeekingAlpha.com.

This entry was posted by Steve Kleber on Thursday, February 24th, 2011 at 11:08 am and is filed under Housing Market. You can follow any responses to this entry through the RSS 2.0 feed. Both comments and pings are currently closed.

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