Exchange-traded funds investing in homebuilders are on a roll this year, enjoying record returns despite challenging market conditions.
The gains mark an impressive rebound after a torrid 2022 – which saw both funds fall by over a quarter after the Federal Reserve began its war against inflation by raising interest rates sharply. The central bank has boosted benchmark rates by 525 basis points since early 2022, taking them to a 22-year high.While these effects are evident in the current economic climate, the high rates have also discouraged potential sellers – as they would have to take on a higher mortgage elsewhere.
In fact, a decade-long housebuilding shortfall has given homebuilding ETFs the chance to capitalize on historically low construction figures.