{"id":57841,"date":"2021-09-29T01:16:34","date_gmt":"2021-09-29T08:16:34","guid":{"rendered":"https:\/\/drduru.com\/onetwentytwo\/?p=57841"},"modified":"2021-09-29T01:16:36","modified_gmt":"2021-09-29T08:16:36","slug":"d-r-horton-leads-home-builder-etf-down-to-important-test","status":"publish","type":"post","link":"https:\/\/drduru.com\/onetwentytwo\/2021\/09\/29\/d-r-horton-leads-home-builder-etf-down-to-important-test\/","title":{"rendered":"D.R. Horton Leads the Home Builder ETF Down to An Important Test"},"content":{"rendered":"\n

The seasonal trade in home builders<\/a> continues to unfold more like a typical year. The iShares U.S. Home Construction ETF (ITB) peaked in May on an absolute basis and relative to the S&P 500 (SPY). Since that peak, ITB is down 12.2% while the S&P 500 is UP 3.9%. This gap is so wide that I am tempted to get an early start on the seasonal buying period. However, ITB faces an important test of support at its 200-day moving average (DMA) (the blue line below). ITB last closed below this important long-term trend line 15 months ago. A breakdown here would immediately put the July intraday low into play. That low also marks where ITB broke out in March to fresh all-time highs. Accordingly, after repeating a reversal of an important breakout, ITB would quickly become vulnerable to much lower lows. <\/p>\n\n\n\n

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The iShares U.S. Home Construction ETF<\/a> (ITB) failed to challenge the May all-time high and is now vulnerable to a significant 200DMA breakdown.<\/em><\/strong><\/figcaption><\/figure><\/div>\n\n\n\n

While a fresh rise in long-term interest rates<\/a> are once again weighing on housing-related stocks, the most recent housing price data raised the specter of growing affordability problems. However, a report<\/a> from First American Financial Corporation\u00a0(FAF) claims that housing affordability at least remains better than the peak of the last housing bubble (emphasis mine):<\/p>\n\n\n\n

“In July, housing affordability continued its decline as year-over-year nominal house price appreciation reached a record 20 percent, vastly outpacing the increase in house-buying power compared with a year ago…<\/p>

However, while affordability declined again in July, it\u2019s helpful to put affordability in historical context. Nationally, nominal house prices in July were 35 percent higher than at the housing boom peak for prices in 2006, yet real, house-buying power-adjusted house prices remain nearly 38 percent below their 2006 housing boom peak<\/strong>.\u201d<\/p><\/blockquote>\n\n\n\n