Keepin' It Real 

Economics, Housing, & Commercial Real Estate Analysis

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  • Alex Pettee, CFA

Short Squeeze Continues • REIT Earnings Kick-Off

Summary

  • U.S. equity markets remained near record-highs Tuesday amid a busy slate of corporate earnings and on data showing growing consumer confidence and continued strength behind the critical U.S. housing sector.

  • Following gains of 0.4% yesterday, the S&P 500 finished lower by 0.2% today and the Dow Jones Industrial Average declined by 23-points while the Nasdaq 100 finished higher by 0.2%.

  • Real estate equities were among the leaders again today as REIT earnings season kicked off. The broad-based Equity REIT ETFs gained 0.7% with 12-of-19 property sectors in positive territory.

  • REIT earnings kicked-off with a pair of strong reports. Industrial REIT Prologis (PLD) jumped 3.3% and Manufactured Housing REIT Equity Lifestyle (ELS) gained 1.1% today after reporting better-than-expected results.

  • Homebuilders finished lower today despite a strong earnings report from D.R. Horton (DHI) and data showing that home values continue to accelerate amid the ongoing surge in homebuyer demand and historically low housing inventory levels.

Real Estate Daily Recap

U.S. equity markets remained near record-highs on Tuesday amid a busy slate of corporate earnings reports and on data showing a rise in consumer confidence and ongoing strength behind the critical U.S. housing sector. Following gains of 0.4% yesterday, the S&P 500 ETF (SPY) finished lower by 0.2% today and the Dow Jones Industrial Average (DIA) declined by 23-points. Real estate equities were among the leaders again today as REIT earnings season kicked off. The broad-based Equity REIT ETFs (VNQ) gained 0.7% with 12 of 19 property sectors in positive territory while the Mortgage REIT ETFs (REM) declined by 0.3%.

Corporate earnings season is off to a strong start with S&P 500 companies beating estimates at a potentially record-setting pace thus far with major tech firms Microsoft (MSFT), Apple (AAPL), and Facebook (FB) reporting results over the next 24 hours. Four of the eleven GICS equity sectors finished in higher on the day, led by the Communications (XLC), Commerical Real Estate (XLRE), and Consumer Staples (XLP) sectors. Homebuilders and the broader Hoya Capital Housing Index finished mostly lower today despite a very strong earnings report this morning from D.R. Horton (DHI) and data showing that home values continue to accelerate amid a robust surge in homebuyer demand and historically low housing inventory levels.

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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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