DEFINITION of 'PHLX Housing Sector Index - HGX'

An index that tracks approximately 20 companies that work directly in the construction market of the United States. The Philadelphia Stock Exchange (PHLX) Housing Sector Index (HGX) is comprised of companies in the building and prefabrication of residential homes, mortgage insurers and suppliers of building material. The HGX was created in January of 2002, and commenced trading on July 17 of the same year with an initial value of 250.

The HGX is calculated as the modified capitalization of the HGX divided by a base market divisor. Similar to the Dow divisor, the HGX divisor changes with stock splits and issues.

BREAKING DOWN 'PHLX Housing Sector Index - HGX'

This index is often referred to as the "Philadelphia Housing Sector Index" and is used to track the strength of the housing market such as home sales and residential real estate values. Essentially, if home prices are up, more construction contracts are signed. This means more revenue for home builders and and an increase in their corresponding shares, which should lift the index up.

Although the index began with an initial value of 250, in February of 2006 the index was subject to a 2-for-1 split. When comparing the value of the index today to the base value, this split needs to be taken into consideration.

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