Stimulus Talks | Dividend Boost | Home Sales Surge
U.S. equity markets finished higher Thursday as strong housing market data, potential progress on stimulus talks, and optimism about forthcoming vaccines offset the continued concerns over coronavirus-induced economic shutdowns.
Now roughly flat on the week, the S&P 500 finished higher by 0.4% today while the Dow Jones Industrial Average gained 45 points and the tech-heavy Nasdaq 100 gained 0.8%.
Real estate equities were mostly-higher on the day but remain modestly lower on the week. Equity REIT ETFs finished higher by 0.4% with 9 of 18 sectors in postive territory.
The seemingly endless wave of strong housing market data continued today with Existing Home Sales climbing to 14-year highs. Record-low supply and strong demand pushed the median home price higher by 16% from last year.
After the close today, shopping center REIT Kimco Realty (KIM) boosted its dividend to $0.16 per share, up 60% from last quarter, but still roughly half of its pre-pandemic rate. KIM is one of 66 equity REITs that reduced or suspended its dividend this year.
Real Estate Daily Recap
U.S. equity markets finished higher Thursday as strong housing market data, potential progress on stimulus talks, and optimism about forthcoming vaccines offset the continued concerns over coronavirus-induced economic shutdowns. Now roughly flat on the week, the S&P 500 ETF (SPY) finished higher by 0.4% today while the Dow Jones Industrial Average (DIA) gained 45 points and the tech-heavy Nasdaq 100 (QQQ) gained 0.8%. Real estate equities were mixed on the day but remain modestly lower on the week as the broad-based Equity REIT ETF (VNQ) finished higher by 0.4% with 9 of the 18 property sectors in positive territory. The Mortgage REIT ETF (REM) finished lower by 0.3%, but remains higher by 3.5% this week.
A reverse of the intra-day price action yesterday, stocks gained ground throughout the day, boosted by reports of potential progress on the long-delayed fiscal stimulus negotiations in Congress. Meanwhile, the race against the clock continues for the distribution of a pair of promising vaccines from Pfizer (PFE) and Moderna (MRNA) as the pandemic continued to accelerate across much of the United States. 9 of the 11 GICS equity sectors finished higher on the day, led by the Energy (XLE), Technology (XLK), and Communications (XLC) sectors. The seemingly endless wave of strong housing market data continued today with Existing Home Sales climbing to 14-year highs, pushing the Hoya Capital Housing Index higher by another 0.8%, lifted by gains from real estate tech firms Zillow (Z) and RealPage (RP).
One of the few areas of consistent strength throughout the pandemic has been the U.S. housing industry - perhaps the most critical sector of the U.S. economy - which has seemingly served as the "backbone" of the early economic recovery. A busy slate of housing data this week has indicated that the red-hot housing industry has exhibited few signs of cooling into the winter months. This morning, the National Association of Realtors reported that Existing Home Sales grew for the fifth straight month in October to a rate of 6.85 million – up 4.3% from the prior month and 26.6% from one year ago. Housing inventory declined as the supply of homes dipped to just 2.5 months – a record low – at the current sales pace. Record-low supply and strong demand pushed the median home price higher by 16% from last year.
This follows data on Tuesday which showed that the NAHB Homebuilder Sentiment Index - a leading indicator of housing activity - climbed to 90 in November to fresh record-highs, up 5 points from last month's prior record-high of 85. On Wednesday, the Census Bureau reported that Housing Starts in October were 14.2% higher than last year, powered by a surge in single-family construction amid an ongoing "suburban revival. The ongoing strength in the U.S. housing industry has been powered by a confluence of near-term factors (record-low mortgage rates and the "work from home" effects) and long-term tailwinds (historically low supply and strong demographic-driven demand) that have converged over the last six months to generate a highly favorable environment for the housing industry.
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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.