Editor's note: Any and all references to time frames longer than one trading day are for purposes of market context only, and not recommendations of any holding time frame. Daily rebalancing ETFs are not meant to be held unmonitored for long periods. If you don't have the resources, time or inclination to constantly monitor and manage your positions, leveraged and inverse ETFs are not for you.
Housing remains a cornerstone of the American economy. When individuals or families achieve homeownership, it’s not just a milestone of personal security—it’s a major economic signal. But in 2025, the path to building homes affordably has become more complex than ever.
A fresh wave of macroeconomic developments—including newly announced tariffs from the Trump Administration—are injecting uncertainty into the housing market. For tactical traders, these disruptions can present powerful opportunities. The Direxion Daily Homebuilders & Supplies Bull 3X Shares (Ticker: NAIL) is built for those looking to harness these fast-moving shifts with amplified exposure.
Key Catalysts Shaping the U.S. Homebuilding Landscape
- New Trump Tariffs Add Pressure to Building Costs
President Trump has again leaned into tariffs as a policy lever, recently pledging to impose a broad set of tariffs on international goods, including a 25% duty on steel, aluminum, and a range of lumber and wood products. These materials are essential for residential construction. Higher costs on inputs directly translate to tighter margins for homebuilders—and ultimately, steeper prices for buyers.
Traders should watch lumber futures and construction input cost indices closely, as volatility* in these benchmarks can translate into significant swings in NAIL’s underlying holdings.
2. Labor Market Strains Intensify Amid Immigration Crackdowns
Immigration continues to be a hot-button issue. With Trump reaffirming plans to accelerate deportations of undocumented individuals, labor availability in the construction sector is under pressure. Immigrant workers make up roughly 13% of the construction workforce, per Pew Research Center data.
Reduced labor supply could push wages up, delay projects, and create further upward pressure on home prices—adding to inflationary* dynamics already present in the sector.
3. Federal Reserve Holds Rates Steady, But Affordability Lags
Although the Fed held its benchmark rate at 4.25% to 4.50% during the January FOMC meeting, inflation’s stubborn persistence has cast doubt on the pace of future rate cuts. Jerome Powell's speech on April 16 reaffirmed interest rate cuts will only occur if economic data aligns. Higher-for-longer borrowing costs may discourage home purchases and impact homebuilders’ bottom lines.
According to the National Association of Home Builders (NAHB), single-family housing starts retreated in early 2025, and affordability remains constrained due to persistent rate levels.
4. Builder Sentiment Slides Further Into Bearish Territory
Builder confidence is slipping. The NAHB/Wells Fargo Housing Market Index (HMI) was 40 in April, a one-point increase from March, but still historically very low. Sentiment is sagging under the weight of higher construction costs, labor uncertainty, and affordability challenges.
In the past, builder sentiment has correlated with homebuilder stock performance. Lower confidence often foreshadows earnings pressure—creating tactical entry or exit points for traders using leveraged ETFs like NAIL.
Navigating the Volatility with Direxion’s NAIL ETF
For active traders looking to attempt to capitalize on sector-specific volatility, the Direxion Daily Homebuilders & Supplies Bull 3X Shares (Ticker: NAIL) seeks to deliver 300%, before fees and expenses, of the daily performance of the Dow Jones U.S. Select Home Construction Index*.
NAIL offers leveraged exposure to:
- U.S. homebuilders
- Building materials producers and suppliers
- Home improvement retailers
- Furnishings and fixture manufacturers
However, leveraged ETFs are powerful tools that require precision. Due to daily compounding, NAIL is best suited for short-term strategies and should be closely monitored—especially during periods of heightened volatility like today’s tariff-driven environment.
*Definitions and Index Descriptions
An investor should carefully consider the Fund’s investment objective, risks, charges, and expenses before investing. The Fund’s prospectus and summary prospectus contain this and other information about the Direxion Shares. To obtain the Fund’s prospectus and summary prospectus call 866-476-7523 or visit our website at direxion.com. The Fund’s prospectus and summary prospectus should be read carefully before investing.
Leveraged and Inverse ETFs pursue daily leveraged investment objectives which means they are riskier than alternatives which do not use leverage. They seek daily goals and should not be expected to track the underlying index over periods longer than one day. They are not suitable for all investors and should be utilized only by sophisticated investors who understand leverage risk and who actively manage their investments.
The Dow Jones U.S. Select Home Construction Index (DJSHMBT) measures U.S companies in the home construction sector that provide a wide range of products and services related to homebuilding, including home construction and producers, sellers and suppliers of building materials, furnishings and fixtures and also home improvement retailers. One cannot directly invest in an index.
Direxion Shares Risks – An investment in the Fund involves risk, including the possible loss of principal. The Fund is non-diversified and includes risks associated with the Fund's concentrating its investments in a particular industry, sector, or geography which can increase volatility. The use of derivatives such as futures contracts and swaps are subject to market risks that may cause prices to fluctuate over time.
Leverage Risk - The Fund obtains investment exposure in excess of its net assets by utilizing leverage and may lose more money in market conditions that are adverse to its investment objective than a fund that does not utilize leverage. A total loss may occur in a single day even if the Index does not lose all of its value. Leverage will also have the effect of magnifying any differences in the Fund’s correlation with the Index and may increase the volatility of the Fund.
Daily Index Correlation Risk - A number of factors may affect the Fund’s ability to achieve a high degree of correlation with the Index and therefore achieve its daily leveraged investment objective. The Fund’s exposure to the Index is impacted by the Index’s movement. Because of this, it is unlikely that the Fund will be perfectly exposed to the Index at the end of each day. The possibility of the Fund being materially over- or under-exposed to the Index increases on days when the Index is volatile near the close of the trading day.
Homebuilding Industry Risk - Companies within the homebuilding industry may be significantly affected by the national, regional and local real estate markets, changes in government spending, zoning laws, interest rates and commodity prices.
Consumer Discretionary Sector Risk — Companies in the consumer discretionary sector are tied closely to the performance of the overall domestic and international economy, including the functioning of the global supply chain, interest rates, competition and consumer confidence.
Industrials Sector Risk — Stock prices of issuers in the industrials sector are affected by supply and demand both for their specific product or service and for industrials sector products in general.
Additional risks of the Fund include Effects of Compounding and Market Volatility Risk, Market Risk, Counterparty Risk, Rebalancing Risk, Intra-Day Investment Risk, Other Investment Companies (including ETFs Risk), Cash Transaction Risk, and Passive Investment and Index Performance Risk. Please see the summary and full prospectuses for a more complete description of these and other risks of the Fund.