
Alex Pettee, CFA
Real Estate Weekly: REIT Rally Resumes As Earnings Season Heats Up
Following the worst week of the year for REITs, the sector bounced-back on a busy week of economic data. REITs have climbed in fourteen of the seventeen weeks of 2019.
GDP data smashed through estimates in the first quarter, silencing concerns that economic growth may be stalling out following the 2018 reacceleration. A true “Goldilocks” report, inflation pressures remained muted.
GDP growth is even more impressive considering the recent drag from residential fixed investment and non-residential construction. A tailwind for REITs, supply growth has cooled even as demand remains robust.
New Home Sales topped estimates, climbing to a sixteen-month high as lower mortgage rates are translating into stronger demand. Homebuilder earnings, however, have been mixed so far this quarter.
Household formations are growing at the strongest rate since 1985, powered by rising wages and solid job growth. More households are renting, however, as the homeownership rate stalled-out in Q1.
