Weekly Review: Real Estate Outperforms As Rent Inflation Heats Up
The ongoing trade spat between the US and China sent the S&P 500 and Nasdaq lower by more than 2%, the worst week of 2019 for the major averages.
Domestic-focused real estate equities generally outperformed on the week, lifted by inflation data that suggested that ‘Goldilocks’ economic conditions persist. Trade disputes, however, threaten to upset this delicate balance.
CPI data came in cooler-than-expected. Besides housing costs, inflationary pressures remain muted. At 3.8%, rent rose at the fastest rate since mid-2017, powered by tight supply and strong household formations.
Strong earnings results from Zillow and Invitation Homes were highlights of the final week of peak earnings season across the REIT and housing sectors. Results were generally better-than-expected.
Labor markets remain relentless. JOLTs data showed that job openings rebounded better-than-expected in March, the biggest gain in a year. There are 1.3 million more openings than unemployed Americans.