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What to watch for in real estate next week

What to watch for in real estate next week

The week ahead

Earnings season is pretty much over. Only five companies will report next week; nobody related to real estate is reporting.

Next week is not all that heavy data-wise, although we will get the S&P Case-Schiller Home Price Index and Pending Home Sales. The Case-Schiller data will be from March, which should begin the seasonally strong period.

Schedule of upcoming economic releases

Tuesday 5/28

  • Case-Schiller Home Price Index
  • Richmond Fed Manufacturing Index
  • Consumer Confidence
  • Dallas Fed Manufacturing Activity

Wednesday 5/29

Thursday 5/30

  • Initial Jobless Claims
  • Bloomberg Consumer Comfort
  • Second Revision to Q1 GDP
  • Pending Home Sales

Friday 5/31

  • Personal Income
  • Personal Spending
  • PCE Deflator
  • National Association of Purchasing Managers Index
  • University of Michigan Consumer Confidence

Schedule of Upcoming Earnings Releases

  • None

Implications for mortgage REITs

The recent sell-off in the bond market has been negatively affecting the mortgage REIT space as the mortgage REITs have underperformed the S&P 500 by a sizable amount. Annaly (NLY) is down 9% since May 1st, American Capital (AGNC) is down 17%, and even adjustable rate REIT Hatteras (HTS) is down 6%, while the S&P 500 is up 4.2% for the month. In a rapidly rising interest rate environment, REITs that invest in adjustable rate mortgages should outperform those that invest in 30-year fixed rate mortgages.

Implications for home builders

The last home builder to report was Toll Brothers (TOL), who reported good earnings. The Homebuilder ETF (XHB) has slightly outperformed the S&P 500. Increasing home prices are generally good for home builders, so people will focus on the Case-Schiller numbers on Tuesday and also Pending Home Sales on Thursday.

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