Beware Faults in Homebuilding ETF

This column was originally published on RealMoney on Nov. 3 at 3:21 p.m. EDT. It's being republished as a bonus for TheStreet.com readers.

When I first started writing for RealMoney, a reader asked me if there was an exchange-traded fund for the homebuilding sector. There wasn't then, but there is now.

In the past few weeks, PowerShares has priced a basket of narrowly focused ETF products, including PowerShares Dynamic Building & Construction Portfolio(PKB Quote). (At this point, it is clear to me that PowerShares is making a greater commitment to differentiation than the other ETF providers. I'll review more of the PowerShares ETFs in future columns.)

Every investor, professional and do-it-yourselfer has at least one or two blind spots. The homebuilding sector is definitely one of mine, which is why I am writing about it first. I just don't understand how demand for new houses can perpetually increase, which is one of the reasons I've avoided investing in this sector. ...