FYI: Throughout the bust and the ensuing recovery in residential housing, the performance of homebuilder stocks has closely tracked the trend in Housing Starts and Building Permits. Below, we highlight this relationship by comparing the iShares Home Construction ETF (ITB) to the three-month moving average of Housing Starts and Building Permits. The relationship between the two is so strong that the correlation coefficient between monthly Housing Starts and the closing prices of ITB is 0.89, while the correlation of ITB with Building Permits is even stronger at 0.91. For the sake of reference, a perfect correlation would be a reading of +1.
Regards,
Ted
https://www.bespokepremium.com/think-big-blog/housing-starts-and-home-builder-stocks-diverge/
