A Timeline of U.S. Home Building Values (DJUSHB) for the Past Year

While many Americans watched CNN and other news media cover the 1,500 point drop in the Dow Jones during the second week of October, the Dow Jones U.S. Home Construction Index (DJUSHB) had already lost 78.1 percent of its value from its high-water mark. That's right: On July 20, 2005, DJUSHB was trading at 1120.47; on Jan. 9th, 2008, it was trading at 245.76, nearly the equivalent of four separate bear markets. While mutual fund and hedge fund managers, along with small private investors, look at recent stock trends to determine whether to position themselves "short" or "long" trying to make quick money in the market, homeowners, laborers connected to the home building industry, and Americans can look at this timeline of the U.S. Home Construction Index for signs that the housing market, the home building industry, and the economy, in general, is on the mend.

U.S. Home Construction Index
The Dow Jones U.S. Home Construction Index is composed of just over 3,000 companies including home builders and companies connected to the home building industry. Like most stock indexes, the U.S. Home Construction Index (DJUSHB) has a corresponding exchange-traded fund, the iShares Dow Jones U.S. Home Construction Index Fund (ITB). To see basic investment information for this stock index, click here: http://www.google.com/finance?client=ob&q=INDEXDJX:DJUSHB

1. May 16th-May 23rd, 2008
Another week of steep declines from 378.78 to 319.11 is capped off by The National Association of Realtors reporting that sales by homeowners dipped in April to an annual pace of 4.89 million, down 1 percent from a March reading of 4.94 million. At the same time, it was released that the median home price fell 8 percent from 219,900 to $202,300 over the past year.

2. July 15th-July 23rd, 2008
Over a long decline from 413.42 at the beginning of April to 238.25 on July 14th, the index shows signs of life and rallies back to 304.01 on July 23rd. The National Association of Realtors claim that real estate listings, a reasonable measure of the housing supply, are actually decreasing for the first time since February. By the end of the month, however, another report shows that sales by homeowners dipped in June to an annual pace of 4.86 million, the worst rate since 1998.

3. Sept. 17th-Sept. 23rd, 2008
After the second half of the summer sees the index swell to 365.76 on Sept. 19th—rising 19.1 percent in just two days—the index declines again, setting the stage for the upcoming collapse in the stock market and economy. Earlier that month, the U.S. Chamber of Commerce reports that "the housing market may be showing the first signs of stabilization, as existing home sales and new home sales increased. Government rebate checks and higher exports led the Bureau of Economic Analysis to upwardly revise their estimate for second quarter GDP growth, as consumer confidence continued its resurgence."

4. Oct. 1st-Oct. 9th, 2008
The index plummets from 332.57 to 231.21 with fallout from the recently passed Economic Emergency Stabilization Act. While "Black Monday" had occurred the week before, the following saw the prolonged precipitous drop in stock values. Most notably, while the Dow Jones Industrial Average lost 20.8 percent of its value, the DJUSHB lost 30.5 percent of its value, most likely due to the perception that the legislation would do little to curb the underlying problems with the housing market.

5. Nov. 18th-Nov. 26th, 2008
The index continues to sink and bottoms out at 143.87 on Nov. 21st (130.01 during intraday trading), before rallying back to 212.00. During this time, the National Association of Realtors reports that sales by homeowners slid in October to an annual pace of 4.98 million, down 3.1 percent from September's revised reading of 5.14 million. Meanwhile, the monthly Case-Shiller Index Home Price Index report for September fell to 173.35 from 176.71 the previous month.

6. Feb. 5th-Feb. 10th, 2009
Showing the continued volatility of the housing market and home building industry, the index rallies 9.9 percent on Friday, Feb. 6th to 234.31 only to drop 9.9 percent two trading days later on Feb. 10th all the way back to 204.70. The National Association of Realtors said that home sales increased to a seasonally-adjusted, annualized rate of 4.74 million units, more than the rate of 4.4 million units projected by a consensus of industry analysts. Yet, at the same time, a report from the real estate website Zillow.com claimed that 20 percent of home sales came from foreclosed properties with an additional 11 percent coming from short sales.

7. March 20th-March 26rd, 2009
The index is able to extend its recent rally from 158.21 up to 239.03 on news from The National Association of Realtors that existing home sales rose in February last to a seasonally adjusted annual rate of 4.72 million units, up 5.1 percent from a rate of 4.49 million in January, defying economists' expectations.

Recent Expert Opinions
March 23, 2009: Ian Shepherdson, chief U.S. economist at High Frequency Economics, sums up the state of the housing market. As reported by CNN: "There's a 'good chance' the collapse in home sales that has been going on since September is 'now over.' Though a sustained recovery is still a long way off," he added.

March 25, 2009: The [U.S. Census Bureau] report is "generally a good sign," said Andreas Carbacho-Burgos, an economist at Moody's Economy.com. "But it's definitely not enough to say that the housing market is starting to recover," he said.

In general, the home building industry and its investors appear cautiously optimistic, understandable after more than two years of bad economic news and many false starts and rallies during this time. As you can see from this timeline, positive news items have been far and few between. Yet, while many Americans didn?t take notice of the fall of home builders' stocks until the general economy followed, a recovery that may very well precede the economy again may go similarly unnoticed.

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