Bloomberg Expert: Home Construction ETF ITB Poised for Recovery

The iShares U.S. Home Construction ETF (ITB) is rebounding steadily, in-line with my analysis that the home construction market has bottomed-out and the worst is behind us. Mortgage rates remain low, supporting the housing market, and I expect it to continue to grow beyond 2025.

PulteGroup reported a decline in third-quarter profit as affordability concerns continue to deter home buyers. The company's net income fell to $585.8 million, or $2.96 per share, down from $697.9 million, or $3.35 per share, the previous year PulteGroup Profit Falls as Housing Market Remains Stalled^[1]. Gross margin also decreased to 26.2% from 28.8%.

Chief Executive Ryan Marshall attributed the drop to weaker consumer confidence and ongoing affordability challenges, despite the recent decline in mortgage rates PulteGroup Profit Falls as Housing Market Remains Stalled^[1]. PulteGroup's home deliveries fell 5% to 7,529 units, but the average sales price rose 3% to $564,000, indicating a shift towards higher-end homes. However, home sale revenues decreased to $4.25 billion from $4.34 billion in the prior year.

Analysts suggest that PulteGroup has been more successful than other builders in maintaining pricing and margins, partly due to its lower exposure to entry-level homes PulteGroup Profit Falls as Housing Market Remains Stalled^[1]. The housing market remains stagnant, with mortgage rates expected to stay above 6% and a weakening labor market raising concerns about future sales growth PulteGroup Profit Falls as Housing Market Remains Stalled^[1].

Despite these challenges, the iShares U.S. Home Construction ETF (ITB) is rebounding, suggesting that the home construction market may have bottomed out . Mortgage rates remain low, supporting the housing market and indicating potential growth beyond 2025.