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Hoya Capital Real Estate, LLC

Invest@HoyaCapital.com

(833) HOYA-CAP

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. Nothing on this site is intended to be investment advice or an offer to buy or sell securities. The risks of investing in real estate securities are similar to those associated with direct investments in real estate, including falling property values, lack of liquidity, limited diversification, and sensitivity to certain economic factors such as interest rate changes and market recessions. No representation or warranty is made as to the efficacy of any particular strategy or fund, or the actual returns that may be achieved. An investor cannot invest directly in an index and index performance does not reflect the deduction of any fees, expenses or taxes. Data quoted represents past performance, which is no guarantee of future results. The views and opinions in the preceding commentary are as of the date of publication and are subject to change without notice. The information presented does not reflect the performance of any fund or other account managed or serviced by Hoya Capital, and there is no guarantee that investors will experience the type of performance reflected. There is no guarantee that any historical trend illustrated herein will be repeated in the future, and there is no way to predict precisely when such a trend will begin. There is no guarantee that any trend cited in this market commentary will be realized. This material represents an assessment of the market environment at a specific point in time, should not be relied upon as investment advice, is not intended to predict or depict performance of any investment and does not constitute a recommendation or an offer for a particular security. We consider the information in this presentation to be accurate, but we do not represent that it is complete. It should not be relied upon as investment advice or as the sole source of suitability for investment. Please consult with your investment, tax or legal adviser regarding your individual circumstances before investing.

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The Easy Way To Invest In Real Estate

Economics, Housing, & Commercial Real Estate Analysis

Keepin' It Real 

Apartment REITs
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Data Center REITs
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  • Alex Pettee, CFA

Snapping 6-Month Skid, Existing Home Sales Beat Expectations


Consistent with the trends in the starts and permitting data, new and existing home sales data has been generally weak over the last six months following a strong start to 2018. Existing Home Sales stabilized in November, rising to a Seasonally-Adjusted Annualized Rate of 5.32 million, topping estimates of 5.20 million. This was the first month since April that EHS data topped consensus estimates, snapping a six month skid of missed expectations. Despite the beat, existing sales remain lower by 7.0% on a SAAR basis and 2.6% lower on a TTM basis. New Home Sales, however, remain higher by 5.2% on a TTM basis.


We continuing to reiterate that weak trends in existing home sales are not necessary a cause for alarm at this point. By historical standards, new home sales remain at mid-1990s levels and even lower after adjusting for population growth. The growth in existing home sales have slowed since 2015, but this rate remains healthy by historical standards. Too many existing home sales (as we saw from 2003-2006) indicate that either mortgage standards have gotten overly loose or short-term housing flipping activity has increased. At around 7% per year, the turnover rate of existing homes is roughly in line with pre-2000 levels. New home sales remains the key indicator to watch to accurately gague the overall health of the single family housing industry.


Of note over the last several months, however, is that new and existing home inventory is no longer receding, turning positive on a year over year basis for the first time since May 2015. The tight supply of existing homes has been blamed for moderate home sales activity and there is hope that a slight loosening of conditions may lead to increased transaction activity. Looser conditions in the single family markets are also expected to slow the pace of home price appreciation, which has risen at more than double the rate of inflation since 2012. In November, however, EHS inventory declined for the second straight month following a steady rise througout the summer. At 3.9 months, EHS supply in November 2018 is consistent with November 2017 at 3.9 months.


#homesales #inventory

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