Keepin' It Real 

Economics, Housing, & Commercial Real Estate Analysis

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  • Alex Pettee, CFA

Reopening Rotation • Dividend Boosts • House Hunters

Summary

  • U.S. equity markets rebounded Tuesday on dovish commentary from Fed Chair Powell, who signaled that the Central Bank will remain accommodative despite the recent rise in growth and inflation expectations.

  • Snapping a five-day losing streak, the S&P 500 finished higher by 0.1% today while the Dow Jones Industrial Average was higher by 15 points.

  • Real estate equities were broadly again higher today following another wave of strong earnings and dividend boosts as the broad-based Equity REIT ETFs finished higher by 0.6%.

  • Three more equity REITs - SBAC, WRI, and KIM - boosted their dividend yesterday afternoon, bringing the total so far this year to 26. Storage REITs surged today after a trio of impressive results yesterday afternoon.

  • Home Depot (HD) pulled back today after providing a conservative outlook for 2021 despite an impressive quarter that saw comparable sales surge 25% as households continue to spend heavily on their homes.

Real Estate Daily Recap

U.S. equity markets rebounded Tuesday on dovish commentary from Fed Chair Powell, who signaled that the Central Bank will remain accommodative despite the recent rise in growth and inflation expectations. Snapping a five-day losing streak, the S&P 500 ETF (SPY) finished higher by 0.1% today while the Dow Jones Industrial Average (DIA) was higher by 15 points. Real estate equities were broadly again higher today following another wave of strong earnings and dividend boosts as the broad-based Equity REIT ETFs (VNQ) finished higher by 0.6% with 12-of-19 property sectors in positive territory while the Mortgage REIT ETFs (REM) declined by 0.7%.

The recently high-flying technology sector was under pressure again today amid an ongoing "reopening trade" that has seen investors rotate out of the COVID-winners into some of the more value-oriented sectors including REITs and financials. Eight of the eleven GICS equity sectors finished in positive territory today, led to the upside by the Energy (XLE), Utilities (XLU), and Communications (XLC) sectors. Within the Hoya Capital Housing Index, a strong day from residential REITs and homebuilders was offset by a pullback from the home improvement retailers and property technology firms.

On that note, Home Depot (HD) pulled back roughly 3% today despite an impressive quarter that saw comparable sales surge 25% as households continue to spend heavily on their homes. HD commented that "the housing environment remains strong as increased demand for single-family homes has driven housing turnover and home price appreciation," which was confirmed again today by the Case Shiller Home Price Index, which showed a continued acceleration in home values. However, while commentary suggested that the firm expects the strength to continue in 2021, the home improvement retailer held back on issuing formal full-year guidance due to the pandemic-related uncertainty. We'll hear results from Lowe's (LOW) tomorrow morning.

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Disclosure: A complete list of holdings and Real Estate and Housing Index definitions and holdings are available at HoyaCapital.com. Hoya Capital Real Estate advises an Exchange Traded Fund listed on the NYSE. Hoya Capital is long all components in the Hoya Capital Housing 100 Index.

Additional Disclosure: It is not possible to invest directly in an index. Index performance cited in this commentary does not reflect the performance of any fund or other account managed or serviced by Hoya Capital Real Estate. Data quoted represents past performance, which is no guarantee of future results. Information presented is believed to be factual and up-to-date, but we do not guarantee its accuracy.

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