Have you ever watched a stock or ETF languish for months, wondering if it’s destined to stay in the doldrums forever? That’s been the story for homebuilder stocks in 2025—until now. The iShares U.S. Home Construction ETF (ITB) has been stuck in neutral, barely keeping pace with the broader market’s recovery. But something’s shifting. The charts are whispering a different tale, one of potential and promise. As someone who’s spent countless hours poring over market trends, I can’t help but feel a spark of excitement when I see patterns like this emerge. Let’s dive into why this underdog ETF might just be gearing up for a comeback.
A New Dawn for Homebuilder Stocks?
For much of 2025, homebuilder stocks have been the wallflowers at the market’s dance. While major indices like the S&P 500 have clawed their way back from early-year lows, the ITB has barely budged. Since the market’s April 7th low, this ETF has posted only modest gains, leaving investors questioning its potential. But here’s the thing: markets are cyclical, and even the most stubborn underperformers can surprise you. Recent technical signals suggest the ITB is entering a new phase—one that could reward those paying attention.
Breaking Down the Technical Shift
Charts don’t lie—they tell a story, if you know how to read them. Earlier this year, the ITB was a textbook case of distribution, with prices carving out lower highs and lower lows. The moving averages sloped downward, and the Relative Strength Index (RSI) hovered below 50, signaling weak momentum. It was enough to make any investor wince. But fast forward to July, and the picture is changing. The ETF has started forming higher highs and higher lows, a classic sign of an accumulation phase.
What’s driving this shift? For starters, the RSI has climbed above 60, a threshold that often indicates bullish momentum. The price has also broken above both the 21-day exponential moving average and the 50-day simple moving average—key levels that traders watch closely. These moving averages are now trending upward, adding fuel to the bullish case. Perhaps most intriguing, the ITB has cleared the 38.2% Fibonacci retracement level, a technical milestone that often marks the start of a new uptrend.
“When an ETF breaks above key Fibonacci levels with rising momentum, it’s like a runner finding their stride—it’s a sign of strength.”
– Veteran market analyst
But the real test lies ahead. The 200-day moving average looms as the next hurdle. If the ITB can push past this level, it could unlock significant upside, potentially signaling a broader rally for homebuilder stocks.
Volume Tells a Compelling Story
Price action is only half the equation—volume is where the rubber meets the road. Since early June, the ITB’s volume profile has turned increasingly constructive. The Chaikin Money Flow, a volume-based indicator, flipped positive, suggesting that investors are starting to accumulate shares. This isn’t just random noise; it’s a sign that smart money might be positioning for a move.
The Chaikin Money Flow works by weighting daily volume based on price action. A strong close higher means more significant buying pressure, and that’s exactly what we’ve seen. Meanwhile, the Accumulation/Distribution line is also trending upward, reinforcing the idea that investors are quietly building positions. To me, this feels like the market’s way of saying, “Don’t sleep on homebuilders just yet.”
- Rising Chaikin Money Flow: Indicates growing buying pressure.
- Accumulation/Distribution Line: Trending higher, signaling investor interest.
- Price Breakout: Above key moving averages and Fibonacci levels.
The Weekly Chart: A Longer-Term Perspective
Zooming out to the weekly chart offers even more clarity. Since 2018, the ITB has tested its 150-week moving average four times, and each time, it’s been a pivotal moment. In the three prior instances, a buy signal from the Percentage Price Oscillator (PPO) confirmed a new uptrend, propelling the ETF higher. Guess what? We saw a similar setup in early June 2025, right after the April low hugged that 150-week moving average.
This isn’t just a coincidence—it’s a pattern. The weekly PPO’s bullish signal suggests that the ITB could be on the cusp of a sustained rally. For long-term investors, this is the kind of setup that gets your attention. It’s not a guarantee, of course, but it’s a compelling clue that the homebuilder sector might finally be ready to shine.
Why Homebuilders? The Bigger Picture
So, why should you care about homebuilder stocks? Beyond the technicals, there’s a fundamental case brewing. The housing market has faced headwinds—rising interest rates, inflation concerns, and supply chain hiccups have kept a lid on growth. But as economic conditions stabilize, the sector could be poised for a rebound. Lower borrowing costs, pent-up demand, and a recovering economy could all play into the hands of homebuilders.
From a personal perspective, I’ve always found the housing sector to be a fascinating barometer of economic health. When people are buying homes, it’s a sign of confidence—not just in their finances but in the future. If the ITB’s technical signals are any indication, we might be seeing the early stages of that confidence returning.
| Indicator | Signal | Implication |
| RSI | Above 60 | Bullish momentum building |
| Moving Averages | Price above 21-day and 50-day | Uptrend confirmed |
| Chaikin Money Flow | Positive | Accumulation by investors |
| PPO (Weekly) | Bullish signal | Potential for sustained rally |
What Could Derail This Rally?
No market move is a sure thing, and it’s worth considering the risks. A sudden spike in interest rates could choke off housing demand, sending homebuilder stocks back into a slump. Economic uncertainty or a broader market pullback could also weigh on the sector. And let’s not forget the 200-day moving average—if the ITB fails to break through, it could signal a false start.
That said, the current setup is encouraging. The combination of rising momentum, supportive volume, and a favorable weekly chart suggests that the odds are tilting in favor of the bulls. As someone who’s seen plenty of false breakouts, I’d keep a close eye on that 200-day moving average—it’s the line in the sand for this rally.
How to Play This Potential Breakout
So, what’s the game plan? For traders, the ITB’s breakout above the 38.2% Fibonacci level is a green light to consider a position, with a stop-loss below the 50-day moving average for risk management. Long-term investors might wait for confirmation above the 200-day moving average before committing capital. Either way, this ETF is worth watching.
- Monitor Key Levels: Watch the 200-day moving average for confirmation of the uptrend.
- Check Volume Trends: Ensure the Chaikin Money Flow remains positive.
- Stay Disciplined: Use stop-losses to manage risk in case the breakout falters.
In my experience, the best trades come from spotting shifts like this before the crowd piles in. The ITB’s chart is screaming opportunity, but it’s up to you to decide if it’s worth the risk.
Final Thoughts: A Sector to Watch
The iShares U.S. Home Construction ETF has been a chronic underperformer, but the charts are telling a new story. From rising momentum to increasing volume, the signals are aligning for a potential breakout. Whether you’re a trader looking for a quick move or an investor eyeing a longer-term trend, this ETF deserves a spot on your radar. The housing sector has a way of surprising skeptics, and 2025 could be its moment to shine.
Will this be the start of a major rally, or just another head-fake? Only time will tell, but the technicals are giving us plenty to be optimistic about. Keep an eye on those key levels, and don’t be afraid to act when the opportunity feels right.
