Keepin' It Real 

Economics, Housing, & Commercial Real Estate Analysis

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  • Alex Pettee, CFA

XHB Vs. ITB: The Homebuilder ETF Open House

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  • Homebuilders are the next stop on our “house tour” of real estate ETFs. XHB and ITB are two options for investors seeking focused exposure to the US residential construction sector.

  • While these two ETFs are driven by similar economic factors and are essentially “substitutes” over a longer time horizon, the portfolio composition of these ETFs is quite different.

  • ITB offers investors more pure-play exposure to homebuilders, while XHB offers relatively more diversified exposure to the broader residential construction industry including homebuilding suppliers and materials producers.

  • By most metrics, housing markets remain significantly undersupplied after a dearth of new construction over the last 30 years. Operationally-efficient builders have grown significant market share since the recession.

  • Focused and levered to the highly-cyclical residential construction sector, these ETFs represent a relatively small slice of the US housing industry and are generally not for the faint of heart.

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Hoya Capital Real Estate, LLC

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