Keepin' It Real 

Economics, Housing, & Commercial Real Estate Analysis

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  • Alex Pettee, CFA

Housing Markets Keep Rolling Into 2020

The US housing market picked up in 2020 where it left off in 2019 with signs of continued reacceleration, highlighted by Housing Starts data on Friday which surged to 13-year highs. The strong end of 2019 for home construction comes after one of the worst eight-to-twelve month periods for home construction since the financial crisis. For the US housing industry, the story of the last twelve months continues to center around the resilient demographic-led growth in household formations along with the sharp pullback of the 30-year fixed mortgage rate, which has stimulated renewed activity across nearly all segments of the housing industry.

The US Census Bureau reported that housing starts rose to a 1.61 million-unit rate in December, coming in far above estimates of 1.38 million. Helped by unseasonably warm weather in December, the monthly rate of Housing Starts jumped 40% year-over-year and ended 2019 with full-year growth of 3.2%, a rather remarkable feat given the dismal data earlier in the year. The gains were broad-based with single-family rising for the seventh consecutive month and multifamily showing continued signs of reacceleration as well. The rate of single-family starts jumped 29.6% year-over-year in December and ended 2019 with full-year gains of 1.4%. The rate of multifamily starts, meanwhile, jumped 74.6% in December and ended the year with full-year gains of 7.8%.

This report is consistent with yesterday's homebuilder sentiment data. Homebuilders are just about as confident as ever, according to data released on Monday morning from the National Association of Homebuilders (NAHB). With a reading of 75, the Housing Market Index remained near the highest level in 20 years, down one point from last month's high of 76. (Readings above 50 are positive) Among the three subcomponents, Current Sales declined two points to 84, Futures Sales remained steady at 79, and Buyer Traffic hit all-time record highs at 58, up 1 point from December.

Bottom Line Strong housing data has been very welcome news not only for the single-family homebuilders but for the housing-related industries that are feeling the "multiplier" effects of new home construction and existing home turnover. Through the first 2+ weeks of 2020, Homebuilders have jumped nearly 10%, leading the Hoya Capital Housing Index's gains of 3.3% YTD. REITs are higher by 2.0% so far this year, slightly underperforming the S&P 500's gains of 3.0%. 

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, BillboardsOffice, Storage, Timber, and Real Estate Crowdfunding.

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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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