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.
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