Alex Pettee, CFA
Real Estate Daily Recap: REITs Dip 2.5% on Rate Fears, Housing Mixed Led By Real Estate Insurance
The Hoya Capital US REIT Index finished the day lower by nearly 2.5% as interest rates continued to creep higher, threatening the 'Goldilocks' conditions that had powered REIT outperformance early this year. All REIT sectors were lower on the day with malls, healthcare, and net lease REITs each down roughly 3% or more. Prologis (PLD) kicked off earnings season on a strong note, beating estimates, but still finished lower on the day.
The S&P 500 finished the day higher by 0.1% and is still within about 1% of all-time record highs. The Nasdaq finished higher by 0.3%. At 2.59%, the 10-Year Yield finished the day higher by 4 basis points but remains roughly 65 basis points lower than it's peak last October.
The Hoya Capital US Housing Index finished the day lower by 0.2%, led to the upside by the Real Estate Insurance and Home Furnishings sectors. The strongest performers on the day were Progressive (PGR), Restoration Hardware (RH), Overstock (OSTK), M&T Bank (MTB), and At Home (HOME).
The Residential REIT and Home Improvement Retail sectors were the relative underperformers on the day. Ventas (VTR), Welltower (WELL), Essex (ESS), HCP (HCP), and Mid-America (MAA) were all down by more than 3% on the day.
Homebuilder Sentiment data, released today, was in-line with estimates of 63, rising to a six month high. Housing Starts and Permits data is released on Friday while New Home Sales data is released next Tuesday.
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