Keepin' It Real 

Economics, Housing, & Commercial Real Estate Analysis

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  • Alex Pettee, CFA

Summary

  • U.S. equity markets pulled-back Friday but finished the week with strong gains amid a strong start to corporate earnings season and data showing continued momentum behind the critical US housing sector.

  • Ending the week with gains of 1.9%, the S&P 500 finished lower by 0.3% today while the Dow Jones Industrial Average gave back 179-points and the tech-heavy Nasdaq slipped 0.3%.

  • Real estate equities finished their second-straight week of solid gains on the upside with the broad-based Equity REIT ETFs gaining 0.2% today with 10 of 19 property sectors in positive territory.

  • Existing Home Sales were stronger-than-expected in December, reaching the fastest sales rate in 14 years as the U.S. housing sector continues to lead the broader economic recovery.

  • No homes for sale. Inventory of existing homes dipped 23% from last year, representing 1.9-months of supply at the current sales pace, the lowest in the survey's history, driving a 12.9% jump in home prices.

Real Estate Daily Recap

U.S. equity markets pulled-back Friday but finished the week with strong gains amid a strong start to corporate earnings season and economic data showing continued momentum behind the critical U.S. housing sector. Ending the week with gains of 1.9%, the S&P 500 ETF (SPY) finished lower by 0.3% today while the Dow Jones Industrial Average (DIA) gave back 179 points and the tech-heavy Nasdaq 100 (QQQ) slipped 0.3%. Real estate equities finished their second-straight week of solid gains on the upside with the broad-based Equity REIT ETF (VNQ) gaining 0.2% today with 10 of 19 property sectors in positive territory while Mortgage REITs (REM) gained 0.3%.

While the major indexes were all lower on the day, Mid-Cap 400 (MDY) and Small-Cap 600 (SLY) indexes finished higher to finish the week essentially in-line with the large-cap S&P 500. Three of the eleven GICS equity sectors finished higher on the day, led to the upside by the Commerical Real Estate (XLRE), Utilities (XLU), and Communications (XLC) sectors. Homebuilders were leaders again today following another strong slate of housing data, lifting the Hoya Capital Housing Index to fresh record-highs.

We'll publish a full analysis and commentary of this week's economic data in our Real Estate Weekly Outlook report published on Saturday morning.

Housing Continues to Lead Recovery

On that point, the National Association of Realtors reported this morning that Existing Home Sales were stronger-than-expected in December, reaching the fastest sales rate in 14 years. Existing Sales rose by 22.2% from last year and 0.7% from the prior month to 6.76 million. The median existing-home price was $309,800, 12.9% higher than in December 2019. The positive momentum has shown few signs of slowing, according to data from Redfin (RDFN), which reported that their measure of pending home sales was up 32% year over year while their Redfin Homebuyer Demand Index was up 50% from pre-pandemic levels in January and February of 2020—the highest level on record.

Ironically, one of the emerging constraints on the further upside for New and Existing Home Sales is the simple lack of homes available to sell. On the existing sales side, the NAR reported that inventory of existing homes dipped 23.0% from last year, representing 1.9-months of supply at the current sales pace, the lowest in the survey's history. The inventory of new homes for sale is now lower by 11.2% from last year while the Months' Supply of new homes stands at just 4.1 months, down from a recent peak of 7.4 months late 2018. Redfin noted that 40% of homes that went under contract had an accepted offer within the first two weeks after listing, selling for 99.3% of asking price.

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The REIT Forum is now the exclusive home to Hoya Capital premium research. Visit our website and join our email list for quick access to our real estate research library: HoyaCapital.com where we have links all of our real estate sector reports and daily recaps. You can also follow our real-time commentary on Twitter, LinkedIn, and Facebook.

Disclosure: A complete list of holdings and Real Estate and Housing Index definitions and holdings are available at HoyaCapital.com. Hoya Capital Real Estate advises an Exchange Traded Fund listed on the NYSE. Hoya Capital is long all components in the Hoya Capital Housing 100 Index.

Additional Disclosure: It is not possible to invest directly in an index. Index performance cited in this commentary does not reflect the performance of any fund or other account managed or serviced by Hoya Capital Real Estate. Data quoted represents past performance, which is no guarantee of future results. Information presented is believed to be factual and up-to-date, but we do not guarantee its accuracy.

Summary

  • U.S. equity markets remained near record-highs Thursday following better-than-expected employment and housing data while recent coronavirus data indicates that the pandemic has finally shown signs of waning.

  • Following gains of 1.4% yesterday, the S&P 500 finished fractionally higher today while the Dow Jones Industrial Average declined by 12-points. The tech-heavy Nasdaq 100 gained 0.8%.

  • After leading the gains yesterday, real estate equities were mostly lower today as the broad-based Equity REIT ETFs finished lower by 0.5% today with 16-of-19 property sectors in negative territory.

  • Housing Starts climbed to the strongest rate in nearly 15 years in December as the red-hot U.S. housing industry has exhibited few signs of cooling into the winter months.

  • Net Lease REIT Store Capital (STOR) announced that it collected 91% of rents in January while fellow net lease REIT Broadstone (BNL) announced that it received an investment-grade credit rating of BBB from S&P.

Real Estate Daily Recap

U.S. equity markets remained near record-highs Thursday following better-than-expected employment and housing data while recent coronavirus data indicates that the pandemic has finally shown signs of waning. Following gains of 1.4% yesterday, the S&P 500 ETF (SPY) finished fractionally higher today while the Dow Jones Industrial Average (DIA) declined by 12-points. The tech-heavy Nasdaq 100 (QQQ) gained 0.8%. After leading the gains yesterday, real estate equities were mostly lower today as the broad-based Equity REIT ETF (VNQ) finished lower by 0.5% today with 16 of 19 property sectors in negative territory while Mortgage REITs (REM) gained 1.3%.

Three of the eleven GICS equity sectors finished higher on the day, led to the upside by the Technology (XLK) sector following strong earnings and a dividend hike from Intel (INTC). Despite the encouraging pandemic data, this week has seen a return of the "stay-at-home" trade with mega-cap technology stocks gaining while the Mid-Cap (MDY) and Small-Cap (SLY) indexes have underperformed. Homebuilders, perhaps the ultimate of "stay at home" winners, delivered another day of strong gains following better-than-expected housing data, lifting the Hoya Capital Housing Index to fresh record-highs.

On that point, Housing Starts climbed to the strongest rate in nearly 15 years in December as the red-hot U.S. housing industry has exhibited few signs of cooling into the winter months. Private housing starts were 5.2% higher than last year while Building Permits jumped 17.3% year-over-year - each above consensus estimates. The gains during the pandemic have been powered entirely by a surge in single-family home construction, which were 12.0% higher than last year. Starts on multifamily units, meanwhile, were lower by 40.0% from last year amid an ongoing "suburban revival."

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Join our Mailing List on our Website

The REIT Forum is now the exclusive home to Hoya Capital premium research. Visit our website and join our email list for quick access to our real estate research library: HoyaCapital.com where we have links all of our real estate sector reports and daily recaps. You can also follow our real-time commentary on Twitter, LinkedIn, and Facebook.

Disclosure: A complete list of holdings and Real Estate and Housing Index definitions and holdings are available at HoyaCapital.com. Hoya Capital Real Estate advises an Exchange Traded Fund listed on the NYSE. Hoya Capital is long all components in the Hoya Capital Housing 100 Index.

Additional Disclosure: It is not possible to invest directly in an index. Index performance cited in this commentary does not reflect the performance of any fund or other account managed or serviced by Hoya Capital Real Estate. Data quoted represents past performance, which is no guarantee of future results. Information presented is believed to be factual and up-to-date, but we do not guarantee its accuracy.

  • Alex Pettee, CFA

Summary

  • U.S. equity markets climbed to record-highs Wednesday on the first-day of the Biden Administration amid a strong start to corporate earnings season while housing data continues to show robust strength.

  • Following gains of 0.8% yesterday, the S&P 500 finished higher by 1.4% today while the Dow Jones Industrial Average gained 258 points and the tech-heavy Nasdaq 100 jumped 2.3%.

  • Real estate equities led the gains today as the broad-based Equity REIT ETF finished higher by 1.9% today with 17 of 19 property sectors in positive territory.

  • Homebuilders led the way today on solid homebuilder sentiment and mortgage market data and on predictions that the Biden Administration's policies will be particularly supportive for homeownership and new home construction.

  • Prison REIT Geo Group (GEO) dipped after the federal government decided not to renew a lease on a correctional facility in Pennsylvania, underscoring a highly uncertain future for private prisons.

Real Estate Daily Recap

U.S. equity markets climbed to record-highs Wednesday on the first day of the incoming Biden Administration amid a strong start to corporate earnings season while housing market data continues to show robust strength. Following gains of 0.8% yesterday, the S&P 500 ETF (SPY) finished higher by 1.4% today while the Dow Jones Industrial Average (DIA) gained 258 points and the tech-heavy Nasdaq 100 (QQQ) jumped 2.3%. Real estate equities led the gains today as the broad-based Equity REIT ETF (VNQ) finished higher by 1.9% today with 17 of 19 property sectors in positive territory while the Mortgage REIT ETF (REM) finished higher by 1.2%.

Ten of the eleven GICS equity sectors finished higher on the day, led to the upside by the Communications (XLC) and Technology (XLK) sectors on a post-earnings surge from Netflix (NFLX). Thus far, nearly 90% of S&P 500 companies have reported better-than-expected earnings according to data from FactSet. Homebuilders led the Hoya Capital Housing Index to another day of strong gains on solid homebuilder sentiment and mortgage market data and on positive sentiment that the Biden Administration's policies will be particularly supportive for first-time homeownership and new home construction.

This morning, the NAHB reported that its Homebuilder Sentiment Index - a leading indicator of housing activity - remained strong with a reading of 83 in January, the fourth-strongest month on record. Just as the housing industry was a primary beneficiary of the initial round of fiscal stimulus, we believe that a fresh round of relief will provide added support to shore up some of the less robust sub-segments of the housing market, particularly the Class B and C urban apartment markets which have seen an uptick in unpaid rents in recent months amid the "third wave" of economic shutdowns in several coastal cities.

To Continue Reading, Click Here To Visit Seeking Alpha!


Join our Mailing List on our Website

The REIT Forum is now the exclusive home to Hoya Capital premium research. Visit our website and join our email list for quick access to our real estate research library: HoyaCapital.com where we have links all of our real estate sector reports and daily recaps. You can also follow our real-time commentary on Twitter, LinkedIn, and Facebook.

Disclosure: A complete list of holdings and Real Estate and Housing Index definitions and holdings are available at HoyaCapital.com. Hoya Capital Real Estate advises an Exchange Traded Fund listed on the NYSE. Hoya Capital is long all components in the Hoya Capital Housing 100 Index.

Additional Disclosure: It is not possible to invest directly in an index. Index performance cited in this commentary does not reflect the performance of any fund or other account managed or serviced by Hoya Capital Real Estate. Data quoted represents past performance, which is no guarantee of future results. Information presented is believed to be factual and up-to-date, but we do not guarantee its accuracy.

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Hoya Capital Real Estate ("Hoya Capital") is an SEC-registered investment advisory firm that provides investment management services to ETFs, individuals, and institutions, focusing on portfolio and index management of publicly traded securities in the real estate industry. It is not possible to invest directly in an index. Index performance cited in this website or commentary does not reflect the performance of any fund or other account managed or serviced by Hoya Capital Real Estate. Nothing on this site nor any published commentary by Hoya Capital is intended to be investment, tax, or legal advice or an offer to buy or sell securities. Information presented is believed to be factual and up-to-date, but we do not guarantee its accuracy and should not be considered a complete discussion of all factors and risks. Data quoted represents past performance, which is no guarantee of future results. Investing involves risk. Loss of principal is possible. Investments in companies involved in the real estate and housing industries involve unique risks, as do investments in ETFs, mutual funds, and other securities. Hoya Capital has no business relationship with any company discussed/mentioned. Hoya Capital never receives compensation from any company discussed/mentioned. Hoya Capital, its affiliate, and/or its clients and/or its employees may hold positions in securities or funds discussed on this website and our published commentary. A complete list of holdings and other important disclosures and definitions are available by clicking the links below.

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