After outperforming the first two months of the year, the home building stocks have been falling apart in March as investors begin to second-guess the housing recovery.
The 10 percent pullback in the SPDR S&P Homebuilders ETF (NYSE: XHB) from a multi-year high could either be the beginning of a sustained sell-off or simply a pullback from a high that is a buying opportunity.
Tuesday morning, the Case-Shiller Home Price Index showed housing prices up 0.8 percent month-over-month in January and an increase of 13.2 percent from one year earlier. Both numbers were pretty much in line with expectations, but that was enough to help XHB and the housing sector open higher. Also helping the optimism for the sector today is the January FHFA Housing Price Index, which rose by 0.5 percent, slightly above the estimate of 0.4 percent.
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