Keepin' It Real 

Economics, Housing, & Commercial Real Estate Analysis

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  • Alex Pettee, CFA

Vaccine Rotation | Homebuilders Surge | REIT Earnings Wrap

  • U.S. equity markets were mixed Tuesday as investors continued to rotate out of the "stay-at-home" winners and reallocate towards COVID-sensitive sectors following yesterday's positive vaccine news from Pfizer (PFE).

  • Following gains of 1.3% yesterday, the S&P 500 finished lower by 0.1% today but the Dow Jones Industrial Average gained another 262 points following yesterday's 834 point-surge.

  • Real estate equities were again among the leaders today as the Equity REIT ETFs gained 1.5% with 13 of 18 property sectors in positive territory while Mortgage REITs jumped 6%.

  • The clock is ticking for a vaccine rollout, as reported coronavirus cases continue to rise in the United States and globally, and some investors are concerned that the recent European-style lockdowns may be coming to U.S. cities over the next month.

  • Mall REITs were flat today after reports from Simon Property (SPG) and Taubman Centers (TCO). Apartment REITs added to their roughly 25% gains over the last two weeks while Homebuilders surged on strong earnings from DR Horton (DHI).

Real Estate Daily Recap

U.S. equity markets were mixed Tuesday as investors continued to rotate out of the "stay-at-home" winners and reallocate towards COVID-sensitive sectors following yesterday's positive vaccine news from Pfizer (PFE). Following gains of 1.3% yesterday, the S&P 500 ETF (SPY) finished lower by 0.1% today but the Dow Jones Industrial Average (DIA) gained another 262 points following yesterday's 834 point-surge. Technology stocks remained under pressure today as the Nasdaq 100 (QQQ) dipped another 1.7% today. Real estate equities were again among the leaders today as the broad-based Equity REIT ETF (VNQ) gained 1.5% with 13 of 18 property sectors in positive territory while the Mortgage REIT ETF (REM) jumped nearly 5%. 

"Sector rotation" has been the theme over the past two days following Pfizer's (PFE) announcement of positive trial results for its COVID-19 vaccine candidate on Monday. The clock is ticking, however, as reported coronavirus cases continue to rise in the United States and globally, and some investors are concerned that the recent European-style lockdowns may be coming to U.S. cities over the next month. 8 of the 11 GICS equity sectors finished in positive territory today, led by the Energy (XLE), and Consumer Staples (XLP), sectors. Single-family homebuilders bounced back after Monday's dip while residential REITs continued yesterday's vaccine-driven rebound, leading the Hoya Capital Housing Index to a strong day of gains. 

Homebuilders: D.R. Horton (DHI) surged more than 9% today after reporting stellar earnings results and raised its dividend as the U.S. housing industry continues to assert itself as the unexpected leader of the economic recovery. DHI, the largest single-family builder in the country, reported that net order growth surged a staggering 81% in Q4 from last year while the size of its backlog nearly doubled. The homebuilder also issued 2021 guidance that exceeded estimates, citing the extremely favorable fundamentals of record-low supply and demographic-driven demand for single-family housing. DHI joined MDC Holdings (MDC), Lennar (LEN), and KB Home (KBH) which each boosted their quarterly dividends earlier this month.

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