Nov 17 (Reuters) - Stronger-than-expected U.S. home construction data sent the SPDR S&P Homebuilders ETF up nearly 1% on Friday, pushing it close to a one-year high even as the broader market remained largely flat.
The ETF, which tracks the performance of a group of stocks in the home construction industry as well as appliance manufacturers, home furnishings companies, and building products businesses, was up about 0.8% at $82.21 in early afternoon trading, just below the 52-week high of $85.13 recorded in July.
The rally brought its gains so far this month to 15%, or almost double the performance of the Standard & Poor's 500 index in the same period. That move has occurred in spite of the fact that mortgage rates north of 7% continue to cast a shadow over the outlook for the building industry.
Data on fund flows, however, suggest that investors are increasingly optimistic.
For the two weeks ended Nov. 15, investors directed $204 million into XHB, according to data from LSEG Lipper. That exceeds the $147.4 million in net total inflows for the year-to-date period for the ETF.
While confidence among homebuilders may be languishing at the lowest level in nearly a year, the combination of a recent dip in mortgage rates and data showing that permits for new construction of single-family homes hit the highest level in 17 months in October buoyed the sector and the ETF's holdings.
Overall housing starts rose 1.9% to a rate of 1.372 million units in October. That beat expectations, as economists polled by Reuters anticipated a slight dip to a rate of 1.350 million units.
The data "suggest that builders do not expect an impending recession," Quincy Krosby, chief global strategist for LPL Financial, wrote in an email to clients. (Reporting by Suzanne McGee; Editing by Paul Simao)
