This chronic underperforming ETF may be turning around, according to the charts

Despite chronic underperformance in 2025, the iShares U.S. Home Construction ETF (ITB) is now exhibiting a significant technical shift, moving from a distribution to an accumulation phase. This is evidenced by a pattern of higher highs and lows, a bullish RSI above 60, positive Chaikin Money Flow, and breakouts above key moving averages and the 38.2% Fibonacci retracement level. This technical improvement, following an April 2025 low, suggests homebuilder stocks may be entering a new period of outperformance after struggling since Q4 2024.

Analysis

The U.S. homebuilder sector, as represented by the iShares U.S. Home Construction ETF (ITB), is exhibiting a significant bullish technical reversal after a period of chronic underperformance against the S&P 500 in 2025. Following a distribution phase that ended in April, the ETF has now shifted into an accumulation phase, characterized by a distinct pattern of higher highs and higher lows. This shift is substantiated by multiple indicators: the Relative Strength Index (RSI) has surpassed the 60 level, signaling strong momentum, and the price has decisively broken above both its 21-day exponential and 50-day simple moving averages, which are now sloping upward. Further confirmation is provided by a break above the 38.2% Fibonacci retracement level. The bullish conviction is supported by volume metrics, with the Chaikin Money Flow turning positive since early June and the Accumulation/Distribution line trending higher, indicating sustained investor buying. On a longer-term weekly chart, the April low successfully tested the 150-week moving average, a level that, when combined with a subsequent weekly PPO buy signal, has historically preceded major uptrends for the ETF. The primary remaining technical obstacle is the 200-day moving average, a break above which would strongly suggest further upside potential.

Key Decisions for Investors

• Given the shift to an accumulation phase confirmed by multiple bullish technical indicators, investors should consider initiating or adding to long positions in the homebuilder sector to capitalize on the emerging trend.
• The crucial 200-day moving average represents the next key resistance; a sustained breakout above this level would serve as a strong confirmation of a new long-term uptrend and a signal to potentially increase position size.
• The turn in relative strength after a period of significant underperformance presents a tactical opportunity for sector rotation, suggesting a reallocation of capital towards this improving industry group may be warranted.