After a banner 2017, housing stocks pace for worst year since the financial crisis

Housing stocks, among the top performers of 2017, are biting the dust.

Homebuilders as a group, measured by the U.S. home construction ETF ITB, has sunk over 12 percent this year; that places the group on pace for its worst year since 2008, when it lost 44 percent, and its first negative year since 2011.

Boris Schlossberg, managing director of foreign exchange strategy at BK Asset Management, says challenges may continue for the housing space. Here are his reasons why.

• The existing home sales report, due out before Thursday's opening bell, could have an impact on equities and the dollar. Housing demand appears to have peaked because construction starts for new single homes have been flat for months.

• This downside comes even as homebuilder confidence is near all-time highs.

• The recent rise in interest rates has pushed mortgage rates to a seven-year high, and affordability is clearly becoming an in issue. Although shares of Lowe's soared 10 percent on Wednesday following the company's quarterly earnings, it missed Wall Street's forecasts for quarterly same-store sales. This could signal the market is slowing down.

• Housing and all of its related services contribute nearly 18 percent of total U.S. gross domestic product, so any slowdown in the sector could reverberate through the whole equity market, especially homebuilders.

Bottom line: Home construction stocks are tumbling this year, and upcoming data could have a bearing on the group and the broader market.

Vote to see results
Total Votes:

Not a Scientific Survey. Results may not total 100% due to rounding.


Trades to Watch

Trader Bios


Trading Nation is a multimedia financial news program that shows investors and traders how to use the news of the day to their advantage. This is where experts from across the financial world – including macro strategists, technical analysts, stock-pickers, and traders who specialize in options, currencies, and fixed income – come together to find the best ways to capitalize on recent developments in the market. Trading Nation: Where headlines become opportunities.

Michael Santoli

Michael Santoli joined CNBC in October 2015 as a Senior Markets Commentator, based at the network's Global Headquarters in Englewood Cliffs, N.J.  Santoli brings his extensive markets expertise to CNBC's Business Day programming, with a regular appearance on CNBC's “Closing Bell (M-F, 3PM-5PM ET).   In addition, he contributes to CNBCand CNBC PRO, writing regular articles and creating original digital videos.

Previously, Santoli was a Senior Columnist at Yahoo Finance, where he wrote analysis and commentary on the stock market, corporate news and the economy. He also appeared on Yahoo Finance video programs, where he offered insights on the most important business stories of the day, and was a regular contributor to CNBC and other networks.

Follow Michael Santoli on Twitter @michaelsantoli

Read more