Housing related stocks have outpaced the broader market in 2012 as the new home market continues to recover. The SPDR S&P Homebuilders ETF (XHB) is up 24% year-to-date compared to a 7% gain for the broader market.
May’s correction hurt housing related stocks more than most other sectors. The SPDR S&P Homebuilders ETF (XHB) declined over 20% since May 3 before rebounding slightly last week.
An unexpected jump in existing home sales caused homebuilder stocks to jump on Friday and lifted hopes for an economic recovery. Sales of existing homes increased 7.2% in July from June according to the National Association of Realtors.
November housing starts dropped 19% to 625,000, the lowest level since the Commerce Department began keeping records in 1959. According to MarketWatch, economists had predicted a seasonally adjusted pace of 725,000 in November.