REITs rose modestly in July, with data center REITs and regional mall REITs posting the strongest returns during the month.
The total returns of the FTSE Nareit All REITs Index rose 0.8 percent in July, while the S&P 500 rose 3.7 percent. The total returns of the FTSE Nareit Mortgage REIT Index gained 3.8 percent in July.
The yield on the 10-year Treasury note was 0.1 percent higher in July.
Builder confidence in the single-family 55+ housing market continued to be in positive territory in the second quarter of 2018, according to the National Association of Home Builders (NAHB) 55+ Housing Market Index (HMI) which was released today. The index increased one point to 67.
The 55+ HMI is broken down to measure two segments of the 55+ housing market: single-family homes and multifamily condominiums. Each segment of the 55+ HMI measures builder sentiment based on a survey that asks if current sales, prospective buyer traffic and anticipated six-month sales for that market are good, fair or poor (high, average or low for traffic).
“Builders and developers continue to see demand from consumers for homes in the 55+ housing sector,” said Chuck Ellison, chairman of NAHB’s 55+ Housing Industry Council and Vice President-Land of Miller & Smith in McLean, Va. “However, increases in building material costs have made it challenging to meet this demand.”
When compared to the previous quarter, among the three single-family components of the 55+ HMI, present sales increased three points to 73, sales expected in the next six months dropped three points to 77 and traffic of prospective buyers fell four points to 47.
The 55+ multifamily condo HMI dropped seven points to 57, however, it is still the second-highest reading since the inception of the index in 2008. All three 55+ condo HMI components decreased in the second quarter: Present sales fell six points to 61, sales expected in the next six months dropped seven points to 63 and traffic of perspective buyers declined 11 points to 44.
Conversely, all four components of the 55+ multifamily rental market went up in the second quarter: Present production rose six points to 65, production expected in the next six months jumped 11 points to 68, present demand for existing units increased four points to 72 and demand expected in the next six months rose seven points to 75.
“Strong economic growth and rising home owner wealth are allowing consumers to sell their current homes and buy or rent homes in 55+ communities,” said NAHB Chief Economist Robert Dietz. “However, builders need to manage rising building material costs, especially for lumber, in order to continue providing housing at competitive prices.”
For the full 55+ HMI tables, please visit nahb.org/55hmi.
Toronto-based Brookfield Asset Management Inc. and Forest City Realty Trust, Inc. (NYSE: FCE.A) said July 31 that Brookfield will acquire Forest City in an all-cash transaction valued at $11.4 billion, including debt.
Cleveland-based Forest City, founded in 1920, focuses on the ownership, development, management, and acquisition of commercial, residential, and mixed-use real estate in key urban markets. The REIT’s assets total $8 billion.
Jeff Witherell, CEO of Plymouth Industrial REIT (NYSE American: PLYM), participated in a video interview at Nareit’s REITweek: 2018 Investor Conference in New York.
Plymouth Industrial REIT held its initial public offering (IPO) in June 2017, and Witherell said the company used the proceeds to pay down some short-term debt, with the majority of the capital going toward new acquisitions. “We [also] did a preferred equity issuance in late October of last year, so between the two offerings, we have in excess of $100 million of proceeds,” he added.
Sales of newly built, single-family homes fell 5.3 percent in June to a seasonally adjusted annual rate of 631,000 units after a downwardly revised May report, according to newly released data by the U.S. Department of Housing and Urban Development and the U.S. Census Bureau.
“Uncertainty caused by tariffs and the talk of trade wars are making home buyers more cautious, and builders are taking note of this situation,” said Randy Noel, chairman of the National Association of Home Builders (NAHB) and a custom home builder from LaPlace, La. “Not only are consumers and builders concerned about the current lumber tariffs, but also the next round of proposed tariffs on a number of goods and services.”
“Though this is the lowest monthly annualized sales pace since October 2017, new home sales for the first half of 2018 are up 6.9 percent on a year-to-date basis compared to last year,” said NAHB Chief Economist Robert Dietz. “This indicates solid demand for new home construction.”
A new home sale occurs when a sales contract is signed or a deposit is accepted. The home can be in any stage of construction: not yet started, under construction or completed. In addition to adjusting for seasonal effects, the June reading of 631,000 units is the number of homes that would sell if this pace continued for the next 12 months.
The inventory of new homes for sale was 301,000 in June, which is a 5.7-month supply at the current sales pace. The median sales price was $302,100.
Regionally, new home sales rose 36.8 percent in the Northeast. Sales fell 13.4 percent in the Midwest, 7.7 percent in the South and 5.2 percent in the West.