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The WSJ’s John Spence reports that home builder exchange traded funds and bank ETFs are number one and two so far this year.

In the article Home Builders Craft ETF Gains, Spence reports that the home builders are benefiting from surprisingly good earnings reports for the fourth quarter.  Spence notes that the sector is highly volatile and that solid performance doesn’t guarantee future gains.

Top home builder ETFs include the iShares Dow Jones U.S. Home Construction Index Fund (ITB) and the SPDR S&P Homebuilders ETF (XHB).  In terms of 2010 performance,  the SPDR KBW Bank ETF (KBE) is a close second to ITB.

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SmartMoney’s Rob Wherry takes a look at the impact of today’s announcement by federal officials of plans to kickstart consumer markets including auto, education and housing.

In the article, New Bailout Plan Can’t Lift ETFs, Wherry notes that home builder ETFs performed better than the overall market which was up less than 1%.

The iShares Dow Jones U.S. Home Construction Index Fund (ITB) was up 11% and SPDR S&P Homebuilders (XHB) was up 8% on the news.

We have seen this movie before. Homebuilders rallied in September before falling dramatically in October and November. See the article Homebuilders Climb Out of the Basement for more.

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