Keepin' It Real 

Economics, Housing, & Commercial Real Estate Analysis

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  • Alex Pettee, CFA

Tech Earnings • Homebuilders Lead • Rent Collection Updates

Summary

  • U.S. equity markets remained near record-highs Thursday following better-than-expected employment and housing data while recent coronavirus data indicates that the pandemic has finally shown signs of waning.

  • Following gains of 1.4% yesterday, the S&P 500 finished fractionally higher today while the Dow Jones Industrial Average declined by 12-points. The tech-heavy Nasdaq 100 gained 0.8%.

  • After leading the gains yesterday, real estate equities were mostly lower today as the broad-based Equity REIT ETFs finished lower by 0.5% today with 16-of-19 property sectors in negative territory.

  • Housing Starts climbed to the strongest rate in nearly 15 years in December as the red-hot U.S. housing industry has exhibited few signs of cooling into the winter months.

  • Net Lease REIT Store Capital (STOR) announced that it collected 91% of rents in January while fellow net lease REIT Broadstone (BNL) announced that it received an investment-grade credit rating of BBB from S&P.

Real Estate Daily Recap

U.S. equity markets remained near record-highs Thursday following better-than-expected employment and housing data while recent coronavirus data indicates that the pandemic has finally shown signs of waning. Following gains of 1.4% yesterday, the S&P 500 ETF (SPY) finished fractionally higher today while the Dow Jones Industrial Average (DIA) declined by 12-points. The tech-heavy Nasdaq 100 (QQQ) gained 0.8%. After leading the gains yesterday, real estate equities were mostly lower today as the broad-based Equity REIT ETF (VNQ) finished lower by 0.5% today with 16 of 19 property sectors in negative territory while Mortgage REITs (REM) gained 1.3%.

Three of the eleven GICS equity sectors finished higher on the day, led to the upside by the Technology (XLK) sector following strong earnings and a dividend hike from Intel (INTC). Despite the encouraging pandemic data, this week has seen a return of the "stay-at-home" trade with mega-cap technology stocks gaining while the Mid-Cap (MDY) and Small-Cap (SLY) indexes have underperformed. Homebuilders, perhaps the ultimate of "stay at home" winners, delivered another day of strong gains following better-than-expected housing data, lifting the Hoya Capital Housing Index to fresh record-highs.

On that point, Housing Starts climbed to the strongest rate in nearly 15 years in December as the red-hot U.S. housing industry has exhibited few signs of cooling into the winter months. Private housing starts were 5.2% higher than last year while Building Permits jumped 17.3% year-over-year - each above consensus estimates. The gains during the pandemic have been powered entirely by a surge in single-family home construction, which were 12.0% higher than last year. Starts on multifamily units, meanwhile, were lower by 40.0% from last year amid an ongoing "suburban revival."

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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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