Some sector-specific exchange-traded funds (ETFs) can be especially cyclical, and the SPDR S&P Homebuilders ETF (XHB 0.78%) is a good example.
The fund invests in companies tied to the housing and home improvement ecosystem, giving investors a way to participate in the ups and downs of the U.S. housing market.
Because this sector is influenced by interest rates, consumer confidence, and construction costs, the ETF’s performance can swing widely with market cycles.
While it seems simple on the surface, these traits make this ETF a risky choice for beginner investors.
What is it?
What is the SPDR S&P Homebuilders ETF?
This ETF passively tracks the S&P® Homebuilders Select Industry® Index, which selects stocks from the broader S&P Total Market Index across several housing-related subsectors:
- Building products: manufacturers of construction materials and equipment.
- Home furnishings: companies selling furniture and interior décor.
- Home improvement retail: big-box chains selling renovation supplies.
- Home furnishing retail: specialty retailers focused on household goods.
- Household appliances: producers of major and small home appliances.
Like most passive ETFs, this fund’s goal is not to beat the benchmark but to replicate its performance. Because it’s rules-based, objective, and transparent, investors always know what they’re getting.
Exchange-Traded Fund (ETF)
How to invest
How to buy the SPDR S&P Homebuilders ETF
- Open your brokerage account: Log in to your brokerage account where you handle your investments.
- Search for the ETF: Enter the fund’s name or ticker into the search bar to bring up the ETF’s trading page.
- Decide how many shares to buy: Consider your investment goals and how much of your portfolio you want to allocate to this ETF.
- Select order type: Choose between a market order to buy at the current price or a limit order to specify the maximum price you’re willing to pay.
- Submit your order: Confirm the details and submit your buy order.
- Review your purchase: Check your portfolio to ensure your order was filled as expected and adjust your investment strategy accordingly.
Holdings
Holdings of the SPDR S&P Homebuilders ETF
Unlike market cap-weighted ETFs, this homebuilder ETF is equal-weighted, meaning every quarter each stock -- large or small -- gets reset to roughly the same allocation.
This creates a built-in buy-low, sell-high mechanism: Underperforming stocks are topped up, while outperformers are trimmed back.
As of Oct. 9, 2025, the top holdings out of a basket of 35 total were:
- Allegion (ALLE 0.27%): 3.73%
- TopBuild (BLD 1.3%): 3.70%
- Trane Technologies (TT 0.61%): 3.64%
- Johnson Controls International (JCI 1.63%): 3.62%
- Sonoco Products (SON 1.22%): 3.58%
- Advanced Drainage Systems (WMS 1.24%): 3.54%
- Lennox (LII 2.26%): 3.47%
- Cavco Industries (CVCO 3.0%): 3.40%
- Williams-Sonoma (WSM 2.46%): 3.39%
- Carrier Global (CARR 2.62%): 3.37%
Because of its equal-weight design, the specific top names change over time depending on quarterly rebalancing.
Should I invest?
Should I invest in the SPDR S&P Homebuilders ETF?
This ETF could appeal to investors who believe housing starts will rebound, that interest-rate cuts will reignite demand, or that U.S. homebuilding stocks remain undervalued.
Compared with market-cap-weighted peers, this fund offers broader diversification across suppliers, retailers, and appliance makers, and not just the builders themselves.
However, this also means the ETF’s exposure to true home construction firms is smaller than its name suggests. Investors seeking a purer play on homebuilders might prefer alternatives with heavier weighting in those companies.
Because of its narrow focus and cyclical risk, the ETF is best used as a satellite position, meaning a smaller tactical addition around a diversified core portfolio of broader stock or bond ETFs.
Dividends
Does the SPDR S&P Homebuilders ETF pay a dividend?
Yes. The ETF has a 30-day SEC yield of 0.55%, paid quarterly. The relatively low dividend yield reflects the growth-oriented nature of its holdings, many of which reinvest profits rather than paying large dividends.
Expense ratio
What is the SPDR S&P Homebuilders ETF’s expense ratio?
The expense ratio is the annual cost investors pay to cover the fund’s management and operations. This ETF charges 0.35%, or about $35 per $10,000 invested, a reasonable rate for a sector ETF.
Expense Ratio
Historical performance
Historical performance of SPDR S&P Homebuilders ETF
| 1 Year | 3 Year | 5 Year | 10 Year | |
| Net Asset Value | -10.38% | 27.53% | 16.43% | 13.41% |
| Market Price | -10.35% | 27.50% | 16.43% | 13.42% |
Related investing topics
The bottom line
This ETF offers a balanced way to capture the full homebuilding supply chain, from builders and materials producers to retailers and appliance makers. It’s a transparent, rules-based approach with an equal-weight design that keeps any single stock from dominating the portfolio.
However, before investing, consider why you’d choose this ETF over a market-cap weighted competitor. Some investors may prefer its broader mix and equal weighting, while others might want more concentrated exposure to the builders themselves.
Either way, it’s best viewed as a satellite holding for long-term investors who understand the risks and cycles of the housing market.
FAQ
Investing in SPDR S&P Homebuilders ETF FAQ
Is the SPDR S&P Homebuilders ETF a good long-term investment?
It can be for investors confident in the long-term outlook for U.S. housing, but it’s cyclical and better suited as a small, supporting position.
How do I buy the SPDR S&P Homebuilders ETF?
You can purchase it through any brokerage account by searching for the ETF and placing a trade.
What is the SPDR S&P Homebuilders ETF?
It’s a passively managed fund tracking the S&P Homebuilders Select Industry Index, offering exposure to U.S. housing-related companies.
What is the symbol for the SPDR S&P Homebuilders ETF?
The ticker symbol is XHB.
