But there is a better alternative. iShares has an ETF with symbol ITB with holdings closer to that which you would expect out of a home builder ETF. Although it's a bit better than XHB, 20% of the underlying stocks still have exposure to mortgage financing (Standard Pacific, Ryland, NVR, and MDC Holdings), with another 5% (Skyline) has exposure to recreational vehicles, and one company, Champion, has exposure to Canada and England as well as other segments like steel prison construction. The other 70% of the ETF is devoted to pure home builders, with the following discounts to book:
Cavco (CVCO) actually managed a profit last quarter, which may help to explain their premium to book. The rest of the builders could offer some value, if markets have indeed overreacted to the downside (which we know they are prone to do, from this article).