Keepin' It Real 

Economics, Housing, & Commercial Real Estate Analysis

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  • Alex Pettee, CFA

Worst Week For REITs Of 2019 As REIT Rejuvenation Loses Steam

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  • After surging out of the gate in the first quarter, the high-flying REIT sector trended sideways in the second quarter, finishing roughly flat despite the continued retreat in interest rates.

  • The major benchmark equity indexes, meanwhile, delivered solid gains in the second quarter, adding 3-5% and pushing 2019 on the S&P 500 and Nasdaq to 17% and 20%, respectively.

  • The broad REIT indexes finished the week lower by more than 3%, the worst week of 2019, weighed down by a 4% drop in the heavily-weighted cell tower REIT sub-sector.

  • Pending Home Sales beat estimates as the positive effects of sharply lower mortgage rates are beginning to be felt. New Home Sales missed estimates in May following two strong months.

  • Following several quarters of moderation, home price appreciation appears poised to accelerate into year-end. Apartment and single family rent growth has also picked up to the strongest rate since 2016.

Despite the continued retreat in interest rates, the REIT rejuvenation has lost steam over the last quarter. After surging more than 15% in the first quarter of this year, REITs have trended sideways over the past three months with the major REIT indexes finishing the week lower by roughly 3%. It was the worst week of the year for the Vanguard Real Estate ETF (VNQ), weighed down by the retail and cell tower REIT sectors.

If you enjoyed this report, be sure to "Follow" our page to stay up-to-date on the latest developments in the housing and commercial real estate sectors. For an in-depth analysis of all real estate sectors, be sure to check out all of our quarterly reports: Homebuilders, Apartments, Student Housing, Single Family Rentals, Manufactured Housing, Cell Towers, Healthcare, Industrial, Data Center, Malls, Net Lease, Apartments, Shopping Centers, Hotels, Office,Storage, and Real Estate Crowdfunding.

Disclosure: An investor cannot invest directly in an index and index performance does not reflect the deduction of any fees, expenses or taxes. The information presented does not reflect the performance of any fund or other account managed or serviced by Hoya Capital Real Estate. We consider the information in this presentation to be accurate, but we do not represent that it is complete. It should not be relied upon as the sole source of suitability for investment. Please consult with your investment, tax or legal adviser regarding your individual circumstances before investing. Visit our website for a complete definition of all indexes cited in this report. Investing involves risk and loss of principal is possible.

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Hoya Capital Real Estate ("Hoya Capital") is an SEC-registered investment advisory firm that provides investment management services to ETFs, individuals, and institutions, focusing on portfolio and index management of publicly traded securities in the real estate industry. It is not possible to invest directly in an index. Index performance cited in this website or commentary does not reflect the performance of any fund or other account managed or serviced by Hoya Capital Real Estate. Nothing on this site nor any published commentary by Hoya Capital is intended to be investment, tax, or legal advice or an offer to buy or sell securities. Information presented is believed to be factual and up-to-date, but we do not guarantee its accuracy and should not be considered a complete discussion of all factors and risks. Data quoted represents past performance, which is no guarantee of future results. Investing involves risk. Loss of principal is possible. Investments in companies involved in the real estate and housing industries involve unique risks, as do investments in ETFs, mutual funds, and other securities. Hoya Capital has no business relationship with any company discussed/mentioned. Hoya Capital never receives compensation from any company discussed/mentioned. Hoya Capital, its affiliate, and/or its clients and/or its employees may hold positions in securities or funds discussed on this website and our published commentary. A complete list of holdings and other important disclosures and definitions are available by clicking the links below.

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