Alex Pettee, CFA
Weekly Outlook: Real Estate Is Red-Hot
U.S. equity markets climbed to fresh record-highs this past week amid relief over a peaceful transfer of political power and on economic data showing continued momentum behind the critical U.S. housing sector.
Corporate earnings season is also off to a strong start, lifting the S&P 500 to gains of nearly 2%. The "stay-at-home" trade returned this week with the Nasdaq 100 surging more than 4%.
Real estate equities delivered another solid week ahead of the start of REIT earnings season. Equity REITs and Mortgage REITs finished broadly higher while Homebuilders surged more than 10%.
Housing Starts, Building Permits, and Existing Home Sales each climbed to the strongest rate in over 14 years in December as the residential real estate sector continues to be the stabilizing force behind the economic recovery.
Prison REITs plunged after the federal government decided not to renew a lease on a correctional facility in Pennsylvania, underscoring a highly uncertain future for private prisons with Democrats now owning the "trifecta" of political power.
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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.