PHLX Housing Sector Index (HGX)

What Is the PHLX Housing Sector Index (HGX)

The Philadelphia Stock Exchange (PHLX) Housing Sector Index (HGX) tracks housing development companies working straightforwardly in the U.S. construction market. Various companies in the building and construction of residential homes, mortgage insurers, and providers of building materials make up the index. The index trades on the Nasdaq.

Understanding the PHLX Housing Sector Index (HGX)

The initial value of HGX was 250 in July 2022. The HGX encountered a 2-for-1 split in February 2006. At the market's closing on June 30, 2011, the total return index (XHGX) was synchronized to match the value of the price return index (HGX).

By and large, in the event that home prices are rising, builders commit more construction contracts, bringing about increased revenue for home builders and a spike in their portion of the index.

Factors that influence the housing market, for example, changes in blunder prices, frequently lead to relating changes in the index.

The Philadelphia Stock Exchange (PHLX) Housing Sector Index (HGX) utilizes two methods to work out its value. These two methods are the price return index (Nasdaq: HGX) and the total return index (Nasdaq: XHGX).

The calculation of the price return index does exclude the value of cash dividends on Index Securities. On the other hand, the total return index comprises of the reinvestment of cash dividends, on the ex-dates, in its figures.

Parts of the PHLX Housing Sector Index (HGX)

The Nasdaq records numerous requirements for the structure of the PHLX HGX. The index is a changed market capitalization-weighted index. Weighting demonstrates the underlying parts have changes in view of the total value of all outstanding shares of that company.

As the value of the outstanding shares changes due to daily market activity, the weighting of that element in the index will likewise change. Recalculation of the index happens all through the trading day, and its value refreshes consistently.

In the case where an underlying part stops trading on its listed market, the index will utilize the "last safe price" for the security in its calculations. Further, no individual stock will have in excess of a 15% weight, and the index will rebalance each quarter.

A portion of the top underlying parts of the PHLX Housing Sector Index, along with the trading ticker symbol of each company, are:

Armstrong World Industries (AWI)
Vulcan Materials Company (VMC)
Weyerhaeuser Company (WY)
PennyMac Financial Services, Inc. (PFSI)
M.D.C. Holdings, Inc. (M.D.C)
Lennox International Inc. (LIL)
LGI Homes, Inc. (LGIH)
Mueller Water Products, Inc. (MWA)
M/I Homes, Inc. (MHO)
D.R. Horton, Inc. (DHI)

True Example

Numerous occasions impact the value of the Philadelphia Stock Exchange (PHLX) Housing Sector Index (HGX), particularly the interest rate. At the point when the Federal Reserve initiated three interest rate hikes all through 2018 and projected several additional hikes all through 2019, this higher-rate campaign pushed 30-year mortgage rates to long term highs.

Subsequently, new home sales plummetted, falling for two sequential months in June and July, which are generally strong sales months. In 2018, the HGX dropped 42% by year-end from its January highs.

During the COVID-19 pandemic in 2020, the index saw a boom as the housing market developed after a long period of decline. The price of the index in the mid year of 2021 was higher than the price before the pandemic started in March 2020.

By mid-2022, the Federal Reserve Board started raising interest rates and the index dropped since rate increments frequently signal impending slumps in the housing market. The index tumbled from 528.8 on January third, 2022 to 355.8 on June 29th, 2022, addressing a 32.7% decline.

Features

Trading on the Nasdaq, the index computes its value utilizing the price return index and the total return index.
Recalculation of the index happens all through the trading day and the index is rebalanced each quarter.
The Philadelphia Stock Exchange Housing Sector Index (HGX) tracks housing development companies in the U.S. construction market.
HGX started trading in July 2002 with an initial value of 250.
Underlying part companies incorporate Armstrong World Industries, M.D.C. Holdings, and Weyerhaeuser Company.