T
he US housing market has finally turned the corner after 39 months of year-over-year declines in single-family home sales, according to Ned Davis Research. This marks the end of the bear market, driven by affordability issues stemming from high mortgage rates and rising home prices. Investors may capitalize on this trend by investing in the iShares U.S. Home Construction ETF.

    The recent decline in home sales was largely due to affordability concerns, which plummeted 39 points between 2021 and 2024, compared to a 53-point increase during the housing bubble from 2005-2009. This time around, homeowners were locked into low interest rates and unwilling to sell, exacerbating the supply shortage and higher prices.

    Homebuilders have outperformed over the past three years, unlike during the previous downturn when they underperformed. Strategist Pat Tschosik believes this trend will continue in 2025, leading to a rebound in durable and home improvement spending. The iShares U.S. Home Construction ETF (ITB) could be a worthwhile addition to portfolios next year.

    Tschosik is watching ITB for an upgrade, suggesting that if inflation fears are overblown, the recent correction could be a buying opportunity. The ETF has declined by more than 15% since late November. Top holdings in ITB include homebuilders D.R. Horton and Lennar Corp, as well as retailers Home Depot and Lowe's.