PHLX Housing Sector Index - HGX
Categories: Metrics, Real Estate
The PHLX Housing Sector Index (HGX) appears to be on the rise...but what does it all mean?
This index tracks companies that are involved in the U.S. residential development industry. Think: mortgage insurance companies, residential construction and contractor businesses, and material suppliers. Heavy hitters in on the weighted index include Armstrong World Industries (AWI), Vulcan Materials Company (VMC), Weyerhaeuser Company (WY), and Fidelity National Financial, Inc. (FNF) to name a few.
The HGX is a sensitive index. It can change course if the price of a common resource, like lumber, skyrockets from a shortage. If people are buying fewer homes, then the house-building and contracting businesses will also be slow.
The final hammer hit to the nail is interest rates set by the Fed. The Federal Reserve’s interest rates affect whether people are taking out mortgages or not. The higher interest rates, the more expensive a time it is to buy a home. Higher interest rates also impact the construction businesses themselves if they wanted to finance their business for a time.
If you want to get in on the HGX action, the index can be traded on the NASDAQ.
