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Must-know outlook for homebuilders and REITs like Annaly

Must-know outlook for homebuilders and REITs like Annaly (Part 1 of 6)

Why this week’s key releases could affect REITs and homebuilders

Finally we get some economic data after two very boring weeks

We finally have some data after two very light data weeks. Most of the numbers will probably not be market-moving, but they’re important data points. We will get durable goods, consumer confidence, and the second revision to first quarter GDP. After some weak numbers in April, some of the Street economists took down their estimate for Q1 GDP to negative. We’ll see if this plays out.

GDPEnlarge Graph

 

Economic data this week

Monday, May 26

  • Markets closed

Tuesday, May 27

  • Durable goods
  • FHFA House Price index
  • Case-Shiller Home Price Index
  • Markit US PMI
  • Markit Services PMI
  • Consumer confidence
  • Richmond Fed
  • Dallas Fed

Wednesday, May 28

  • MBA Mortgage Applications

Thursday, May 29

  • Initial jobless claims
  • Bloomberg Consumer Comfort
  • Q1 GDP (second revision)
  • Pending home sales

Friday, May 30

  • Personal income
  • Personal spending
  • Chicago Purchasing Managers
  • University of Michigan Confidence

Earnings reports this week

Wednesday, May 28

  • Toll Brothers (TOL)

Friday, May 30

  • Chimera Investment (CIM)

Impact on mortgage REITs

Mortgage REITs like American Capital Agency (AGNC) and Annaly (NLY) will focus on data that will move the bond market. The durable goods number and GDP will matter the most, but tapering is baked in the cake at this point and we’re probably looking at late 2015 before rates start going up.

Impact on homebuilders

Most homebuilders have already reported Q1 earnings, so there isn’t much left except for Toll Brothers (TOL). The builders will focus on GDP, consumer confidence, and pending home sales. We’ll also get a read on the luxury end of the homebuilding market when Toll Brothers reports. For the most part, the luxury end of the market is the only party that has been performing well—entry-level and even move-up buyers have been struggling.

Impact on commercial REITs

The most important data for the commercial REITs will be the earnings from retailers, which will begin next week and affect the mall REITs like Simon Property (SPG) and General Growth Properties (GGP). Office REITs like Brookfield Office Properties (BPO) and Vornado Realty Trust (VNO) will probably focus more the regional Fed reports, which highlight labor market conditions.

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