The S&P 1500 Homebuilder Group has had a strong start to the year, even as our housing survey data had a rough January. Below is a chart of the S&P 1500 Homebuilder Group going back to 1994. As shown, after ramping up significantly in the early part of the current bull market, the group has traded sideways since the end of 2012. After its run over the last couple of months, the group is now 2.5% away from breaking out of its current sideways range. If it can convincingly clear this level, it can attempt to make another leg higher as it tries to work its way back to prior highs reached during the housing bubble of the mid-2000s. It has a loooooong way to go to reach those levels, though.
One of the main trackers of the homebuilder group is the NAHB Homebuilder Sentiment survey. We’ve plotted this reading on the chart below so you can see the way the two move alongside each other. Interestingly, in recent years, the NAHB reading has made a nice move higher even as the homebuilder group remained in a sideways pattern. But NAHB Sentiment is also at another key breakout level right now, and if it’s able to, it would likely help the homebuilder stocks break out as well. The next NAHB Sentiment reading comes out next Monday, and economists are currently expecting it to tick up one point month-over-month from 57 to 58.