Forward charge on real estate shares in August
As the US economy emerges from the pandemic, the real estate spirit animal could be the iconic Wall Street bull, leaping over all obstacles in its path.
Real estate stocks rose more and more in August despite the end of a nationwide moratorium on evictions and uncertainty over how the Delta variant would affect everything from retail spending to returning to the office.
All real estate indices and exchange traded funds tracked by The Real Deal have gained in value this month, as have many individual companies, matching or exceeding growth in broader markets.
Residential brokerage Compass had its best month since its IPO in April, gaining 18.6% in August, while homebuilder Toll Brothers – facing supply chain disruptions and rising costs materials like all builders – climbed 7.3%. Mall owner Simon Property Group closed up 4.5% on Friday, and international industrial owner Prologis closed up 4.4% for the month.
The Real Estate Select Sector Index, which is the share price performance of publicly traded real estate companies, rose 1.9% in August to $ 47.68, while the Nasdaq Composite index rose by 3 , 5% overall.
Pushing the industry forward, the housing market remained hot as consumers and builders experienced a wave of price inflation. Partly behind the inflated prices is the Federal Reserve, which, after supporting corporate debt through bond purchases, predicted this week that it would reduce those ambitions, if not entirely again.
Home prices have risen in 94% of U.S. markets, with the median price of single-family homes rising at least 10% since June of last year. The asking rents for these houses have increased again, by 13%, since last July.
This means more profits for homeowners as well as the country’s huge residential mortgage market. Spending on the housing market accounted for 17.5% of gross domestic product in 2020, according to the Congressional Research Service. Real spending on housing has increased since then, with the national GDP growing at an annual rate of 6.5% in the second quarter of this year, the Commerce Ministry estimated. The S&P Homebuilders ETF rose 2.7% in August to $ 78.10.
Real estate investment trusts – large owners who share the profits with investors – delivered mixed returns this month. The iShares Cohen & Steers REIT ETF rose 1.6% despite the Delta variant potentially keeping consumers away from shopping, at least in physical stores, while flagship companies Apple and Google have delayed the return of their products. employed in the office until January, at least. .
Companies that mainly own office buildings, including SL Green, Boston Properties, Paramount Group and Vornado Realty, fell this month, however.
While the price of the S&P Retail ETF was little changed, there was cause for optimism among retailers and their owners as strong second quarter earnings demonstrated that as vaccination rates increase, more Americans are reverting to pre-Covid shopping habits.
Major stock indexes edged down on Tuesday following news that consumer confidence fell this month to its lowest level since February, while markets still ended the month at record highs. Employment figures to be released by the Labor Department on Friday will show how much the labor market rebounded in August, with a Wall Street Journal survey putting the expected number of hires at 720,000. That figure, though that lower than the gains made in the previous two months, would indicate that the economy was moving in the right direction.