Market Insider

Homebuilders ETF rises 1.5 percent after strong October housing starts

Contractors work on a new home under construction at Taylor Morrison Home Corp.'s La Solara Community in Dublin, California, U.S., on Tuesday, May 14, 2013.
David Paul Morris | Bloomberg | Getty Images

The S&P Homebuilders ETF rose nearly 1.5 percent in early trading on Wednesday following a report that showed U.S. housing starts surged to a nine-year high in October.

Housing starts, an estimate measuring the number of new residential construction projects in a reported month, is a leading indicator of strength in the housing sector.

According to the report, privately-owned housing starts in October were at a seasonally-adjusted annual rate of 1.32 million. The October estimate is 25.5 percent above the September measurement of 1.05 million, and 23.3 percent above October 2015's rate of 1.07 million.

In addition, building permits in October were at an adjusted annual rate of 1.23 million, an increase of 0.3 percent above the September estimate of 1.23 million and 4.6 percent above the previous year's October rate of 1.18 million.

Homebuilders Lennar and D.R. Horton assisted in the ETF's rally with both companies' shares climbing nearly 3 percent after the housing report.

Lennar and D.R. Horton are on pace for its best day since March and May of this year, respectively, when Lennar gained 4 percent and D.R. Horton gained 4.2 percent.

-- CNBC's Gina Francolla contributed to this report.

Homebuilders ETF 5-Day Performance