Economics, Housing, & Commercial Real Estate Analysis

Keepin' It Real 

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  • Alex Pettee, CFA

Real Estate Daily Recap: Another Down Day for REITs, But Homebuilders & Home Improvement End Higher


The Hoya Capital US REIT Index finished the day lower by 1.0% following a 2.5% decline yesterday, dragged down by the healthcare, apartment, and net lease REIT sectors. The manufactured housing and mall REIT sectors were the lone segments in positive territory for the day. The 'REIT Rejuvenation' this year has been largely driven by declining long-term interest rates and inflation expectations, which of course has been a double-edged sword as rates have marched higher in recent weeks. The 10-year yield climbed to the highest level since March this week, which appears to have set off some programmatic selling. This slow creep higher in interest rates threaten to derail the 'Goldilocks' conditions that had powered REIT outperformance early this year. The S&P 500 finished the day lower by 0.2% but is still within about 1% of all-time record highs. The Nasdaq finished higher by 0.4%. At 2.59%, the 10-Year Yield finished the day flat on the day and remains roughly 65 basis points lower than it's peak last October.

The Hoya Capital US Housing Index finished the day lower by 0.4%, led to the upside by the Home Improvement Retail and Homebuilder sectors. JP Morgan (JPM), Corelogic (CLGX), Watsco (WCO), Beacon Roofing (BECN), and Regions Financial (RF) were among the top-performers on the day.

The Residential REIT sectors was again the relative underperformer on the day. Restoration Hardware (RH), Tempur Sealy (TPX), Zillow (Z), Eagle Materials (EXP), and Wayfair (W) were each down at least 2.5% on the day. Sleep Number (SNBR) reported earnings this afternoon and is lower in the post-market trading after missing on revenue estimates.

Retail Sales data is released tomorrow, while Housing Starts and Permits data is released on Friday while New Home Sales data is released next Tuesday.

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.


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