Housing Stocks Pop as Construction Reaches Four-Year High

Another sign that a housing recovery is underway gave housing stocks a nice boost today.

Housing starts reached their highest level in four years last month, increasing 15% from August and 35% over last September. With 872,000 new homes last month, housing starts are now almost double the 478,000 total they dipped to in April 2009.

More new homes being built means more buyers and, generally, a healthier economy. Despite the vast improvement, the 872,000 new homes built in September still trails the 1 million housing starts we saw on a monthly basis in early 2008 before the recession hit.

Nonetheless, a four-year high is nothing to sneeze at – and investors have taken notice.

The iShares Dow Jones U.S. Home Construction (NYSE: ITB) and SPDR S&P Homebuilders (NYSE: XHB) exchange-traded funds were up 3% and 2%, respectively, today.

Among housing stocks, Lowe’s (NYSE: LOW) shares climbed 1.4%, Pier 1 Imports (NYSE: PIR) shares jumped 2.5%, and Toll Brothers (NYSE: TOL) shot up 1.8%.

For the year, ITB is now up an even 70%, while XHB has returned 49%. Those two ETFs should keep rising as the housing market continues to recover from its post-recession abyss.

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