Daily Recap: REITs Flat | Retail Miss | Happy Homebuilders
Updated: Oct 17, 2019
With earnings season kicking into high gear this week amid a backdrop of continued trade and monetary policy uncertainty, US equity markets have been surprisingly tranquil through the first three days of the week. The S&P 500 (SPY) traded in a tight range today, ending the day lower by 0.2% while the Nasdaq (QQQ) finished off by 0.3%. Real estate equities were mixed on the day with the broad-based REIT ETF (VNQ) ended the day higher by 0.1%, led by the timber, student housing, and apartment REIT sectors while the cell tower sector lagged. The 10-Year yield finished lower by 2 basis points, pressured by a miss on retail sales data this morning, one of the final major reports before the Fed's October meeting.
The Hoya Capital Housing Index, the benchmark that tracks the performance of the US housing industry, finished the day at another new closing high, gaining 0.7% on the day. Seven of the eight industry groups finished in positive territory on the day, led by the homebuilding sector following a very strong read on Homebuilder Sentiment this morning. Top individual performers on the day within the housing sector included Louisiana-Pacific (LPX), Redfin (RDFN), Realogy (RLGY), Toll Brothers (TOL), ReMax (RMAX), and Taylor Morrison (TMHC).
Today, we published our Real Estate Earnings Preview. Below we compiled the notable earnings that we’re watching across the residential and commercial real estate sectors, which we will update throughout earnings season in our Real Estate Weekly Review.
Retail Sales fell on a month-over-month basis for the first time in seven months in September, but the internal numbers were better than the headline print. Total retail sales fell 0.3% from the prior month, but remain higher by 4.1% from the same period last year on a seasonally-adjusted annualized basis. We saw some mean reversion in this month's data with the strongest performing segments this year - including e-commerce and autos - pressuring September's data. While not falling off a cliff, Brick & Mortar retail sales have continued to decelerate after reaching the strongest rate since 2012 last year. This year's store wave of announced closings certainly won't help and we forecast continued deceleration into year-end in the categories most affected by this year's closings.
With the slower-reacting data finally beginning to see the positive effects of lower mortgage rates, the more forward-looking housing market indicators continue to point to a solid back-half of 2019. Ahead of the closely-watched housing starts data tomorrow and existing home sales data next week, homebuilder sentiment climbed to the highest level since February 2018. All three subcomponents showed notable acceleration since last month, headlined by the 54 print in buyer traffic, which was the first read over breakeven 50 since last October. All four regional indexes ticked higher on a three-month average, led by continued strength in the West and South regions.
Housing Starts & Building Permits data is released tomorrow and we'll have full coverage here on iREIT Marketplace. Starts and Permits are each coming off their best months in more than 12 years, powered by the tailwinds of significantly lower mortgage rates and strong demographic-driven demand.It'll be a fairly busy week of economic data with Retail Sales and Homebuilder Sentiment data released on Wednesday and Housing Starts & Building Permits released on Thursday. Starts and Permits are each coming off their best months in more than 12 years, powered by the tailwinds of significantly lower mortgage rates and strong demographic-driven demand.
For an in-depth analysis of all real estate sectors, be sure to check out all of our quarterly reports: Apartments, Homebuilders, Student Housing, Single-Family Rentals, Manufactured Housing, Cell Towers, Healthcare, Industrial, Data Center, Malls, Net Lease, Shopping Centers, Hotels, Office, Storage, Timber, and Real Estate Crowdfunding.
Hoya Capital is excited to announce that we’ve teamed up with iREIT to cultivate the premier institutional-quality real estate research service on Seeking Alpha! While we'll continue providing our free sector reports, iREIT subscribers will now get exclusive access to our expanded real estate coverage including:
Expanded REIT Rankings Reports With Exclusive Content
Real-Time Economic Analysis & Commentary
Hoya Capital "Real Estate Robo Investor" ETF Model Portfolios
All of iREIT's Existing Offerings Including REIT Ratings, Model Portfolios & Much More
Disclosure: An investor cannot invest directly in an index and index performance does not reflect the deduction of any fees, expenses or taxes. The information presented does not reflect the performance of any fund or other account managed or serviced by Hoya Capital Real Estate. 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 the sole source of suitability for investment. Please consult with your investment, tax or legal adviser regarding your individual circumstances before investing. Visit our website for a complete definition of all indexes cited in this report. Investing involves risk and loss of principal is possible.