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Housing Stocks: Taking a 20,000-Foot View of Relative Performance


From the Buzz & Banter: Housing is not at bubble levels quite yet.

This article was originally posted on the Buzz & Banter where subscribers can follow over 30 professional traders as they share their ideas in real time. Want access to the Buzz plus unlimited market commentary? Click here to learn more about MV PRO+.

Housing stocks are booming in 2014.

The iShares US Home Construction ETF (NYSEARCA:ITB), which is more housing-centric than the better-known SPDR S&P Homebuilders ETF (NYSEARCA:XHB) is now up 5.6% after being ignited by this morning's better-than-expected January new home sales data.

However, I wanted to take a bigger-picture look back at housing's relative performance.

Below you'll see two charts.

They track the SPDR S&P 500 ETF (NYSEARCA:SPY) (bar chart) against the relative performance of housing (blue line), which I calculated by dividing ITB by SPY.

The first chart tracks the relationship year on a daily basis:

Click to enlarge

This second chart shows it on a monthly basis going back nine years:

Click to enlarge

Obviously, we're not remotely close to the bubble levels of 2006.

But note -- we're also not at levels seen in late 2012.

Twitter: @MichaelComeau

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No positions in stocks mentioned.
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