Daily Recap: REITs Climb 7% in Q3, Homebuilders Surge 23%

September 30, 2019 | Hoya Capital

Daily Recap: REITs Climb 7% in Q3, Homebuilders Surge 23% Uncategorized Sep 30 Written By A volatile third quarter for US equity markets came to a close with modest gains across the major averages. The S&P 500 (SPY) and Nasdaq (QQQ) each secured gains of roughly 1% for the quarter while the small-cap Russell 2000 (IWM) fell by 3%. Powered by the tailwinds of lower interest rates and a continuation of the 'Goldilocks' economic environment of low inflation and steady - but modest - economic growth, real estate and housing-related equities continue to lead this year's gains.

The broad-based real estate ETFs (VNQ and IYR) gained roughly 7% on the quarter, led by the data center, manufactured housing, healthcare, and apartment REIT sectors. The mall and hotel REIT sectors were the lone real estate categories in negative territory for the quarter. The Hoya Capital Housing Index , the benchmark that tracks the performance of the US housing industry, finished the quarter higher by roughly 7.5% with strong gains from the Homebuilders and Home Improvement Retail categories.

As discussed in our recently weekly update, August's housing data completed the "perfect month" with better-than-expected results on Housing Starts, Building Permits, Homebuilder Sentiment, and New, Existing, and Pending Home Sales. ower mortgage rates have been largely behind the recent resurgence in the single-family markets. The 30-Year fixed mortgage remains more than 100 basis points lower on a year-over-year basis. Top individual performers in the housing sector over the last quarter included Restoration Hardware (RH), At Home Group (HOME), Meritage Homes (MTH).

KB Homes (KBH), and MDC Holdings (MDC). The economic calendar this coming week is highlighted by employment and PMI data. While the consumer has shown signs of resilience, the US manufacturing and industrial sector has slowed more significantly over the last year following a strong reacceleration through 2018. Sometimes forgotten is that industrial and manufacturing production already had a significant contraction during ...