Keepin' It Real 

Economics, Housing, & Commercial Real Estate Analysis

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  • Alex Pettee, CFA

Real Estate Daily Recap: REITs and Homebuilders Climb as Strong Earnings Season Continues

For the second straight day, the Hoya Capital US REIT Index finished the day higher by 0.5% ahead of the all-important Fed meeting tomorrow. The cell tower, data center, and timber REIT sectors led the gains on the day while the manufactured housing and student housing REITs lagged. The S&P 500 finished lower by 0.2% while the Nasdaq finished lower by 0.4%. The 10-year yield finished higher by 1 basis point to end the day at 2.06%.

The Hoya Capital US Housing Index finished the day higher by 0.9% to finish at new record-highs following strong earnings from Trex (TREX), Restoration Hardware (RH) and DR Horton (DHI). The Homebuilding and Homebuilding Products sectors were the winners on the day, each climbing more than 2% on the day.

We're finally seeing the positive effects of lower mortgage rates on the home sales data. Forward-looking indicators had suggested an acceleration for many months. Pending Home Sales Index back to the highest level (and first time we've seen positive Y/Y growth) since Dec-2017.

Income & Spending data was better-than-expected this morning. Personal Incomes (nominal) rose by 4.9% on a Y/Y basis, the strongest rate since last December. Real Disposable Income rose 3.3% while Real DPI per Capita rose 2.6%.

Home Prices appreciation has roughly matched the growth in Disposable Personal Income Per Capita since 1995. DP Income/Capita is set to rise faster than Home Prices in 2019 for the first year since 2011. Despite strong growth over past 5 years, Home Price Appreciation is not too far out-of-line with nominal income growth since 1995. Even with affordability concerns, this suggests further upside potential for rents and home values.

For an in-depth analysis of all real estate sectors, be sure to check out all of our quarterly reports: Homebuilders, Apartments, Student Housing, Single Family Rentals, Manufactured Housing, Cell Towers, Healthcare, Industrial, Data Center, Malls, Net Lease, Apartments, Shopping Centers, Hotels, Office, Storage, Timber, and Real Estate Crowdfunding.

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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Hoya Capital Real Estate, LLC

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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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