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Higher Home Prices Boosting ITB, XHB

U.S. home prices continue to rise. And two homebuilder ETFs are benefitting.

The iShares U.S. Home Construction ETF (NYSE: ITB) and the SPDR S&P Homebuilders (NYSE: XHB) ETF are both up today on the good housing news. ITB shares are up 0.6%, while XHB shares are up 0.6%.

The two exchange-traded funds have long been a solid proxy for the recovery of the housing market. ITB shares are up 110% the last two years as the housing market has healed, while XHB shares have risen 88%.

The latest catalyst driving the two ETFs was a 12.8% increase in U.S. home prices in August based on the S&P/Case-Shiller 20-City Composite Index. That’s the biggest annual increase the index has seen since February 2006. It was also a 0.9% increase from July.

The sharp increase in home prices is seen as a strong indicator of the health of the housing market. The more Americans are willing to pay for houses, the stronger the U.S. economy is.

Among housing stocksHome Depot (NYSE: HD) is the day’s biggest gainer at +1.3%.