homebuilder stocks are relatively “cheap” even after surging this year and represent a pocket of the us equitiesmarket rally that extends beyond the big tech sector as a recession does not appear imminent according to datatrek research “this is not a onetrick tech only market” wrote datatrek cofounder nicholas colas in a note emailed tuesday the spdr sp homebuilders etf xhb has jumped around 32 so far this year based on tuesday afternoon trading according to factset data at last check last year the etf tanked in the broadmarket selloff as the federal reserve aggressively hiked interest rates to battle high inflation with its shares tumbling 297 “can a us recession really be just around the corner if homebuilding stocks just made a new” 52week high colas said in the note “the short answer” he wrote “is ‘no obviously not’ but there’s more to the story than that” colas also pointed to improving homebuilder sentiment on “decent demand and limited supply of existing homes” meanwhile inflation in materials has declined from pandemicera levels he said sales of newly built homes in the us jumped in may surging 122 to an annual rate of 763000 from a revised 680000 in april the census bureau and us department of housing and urban development announced jointly tuesday “this was a massive surprise” said louis navellier chief investment officer of navellier  associates in emailed commentary tuesday “between lower home prices and consumers getting used to current mortgage rates the housing market appears to be in the midst of a robust recovery” read us new home sales surge in may for third straight month the median price of a new home sold in the us in may was 416300 down from as high as 496800 in october according to the federal reserve bank of st louis’s website which cites data from the census bureau and department of housing and urban development the housing market stands to benefit from the fed potentially being close to ending its interest rate hikes “if the fed really is near the end of their current tightening cycle then interest rates should decline in 2024 and beyond and support demand over the longer term” said colas while big tech has driven the sp 500’s gains this year the rally in homebuilder stocks shows other parts of the us equity market are also rallying in 2023 according to colas the sp 500 is up around 14 this year based on tuesday afternoon trading lagging behind the spdr sp homebuilders etf’s massive gains “they don’t even have aboveaverage valuations” colas said of homebuilders the top 10 holdings of the spdr sp homebuilders etf have an average valuation of 146x their 12month forwardearnings estimates remaining cheap relative to the market according to the datatrek note by way of comparison the sp 500 trades at 186x the note shows the etf’s largest exposures include carrier global corp carr  lennar corp len  owens corning oc  trane technologies plc tt  nvr inc nvr  pultegroup inc phm  dr horton inc dhi  builders firstsource inc bldr  lowe’s cos low and allegion plc alle as of june 26 according to fund holdings data on the website of state street global advisors the average valuation for the top 10 holdings cited in the datatrek note had included carlisle cos csl instead of allegion carlisle remained among the spdr sp homebuilders etf’s holdings as recently as june 26 data on state street’s website show shares of the spdr sp homebuilders etf were outperforming the us stock market on tuesday afternoon with sharp gains of around 3 according to factset data at last check the sp 500 spx was up 12 in tuesday afternoon trading while the dow jones industrial average djia rose 07 and the technologyheavy nasdaq composite comp gained 17 in other economic data released tuesday new orders for manufactured durable goods jumped 17 in may rising for a third a straight month the us census bureau said tuesday that was stronger than forecasts from economists polled by the wall street journal for a 09 decline meanwhile a conference board survey of us consumer confidence jumped to a 17month high in june reflecting cooling inflation and fewer recession worries read us consumer confidence leaps to 17month high on waning inflation and fewer recession worries “the combination of falling inflation and resilient labor markets appears to also be opening the door to a growing belief that a recession could be avoided and that a soft landing may still be possible” said jim baird cio of plante moran financial advisors in emailed commentary tuesday