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Must-know: Realist Real Estate Roundup 8/11–8/15

Must-know: Realist Real Estate Roundup 8/11–8/15 (Part 1 of 6)

Must-know: FOMC minutes will dominate the week ahead

FOMC minutes will dominate the week ahead

This week doesn’t have too much data that will move the bond market. However, the Federal Open Market Committee (or FOMC) minutes will be interesting. We also get housing starts and building permits this week.

Housing Starts - LTEnlarge Graph

There are no earnings related to real estate, but we’ll hear from home improvement retailers Home Depot (or HD) and Lowe’s (or LOW).

Economic data this week

Monday, August 18, 2014

  • NAHB Housing Market Index

Tuesday, August 19, 2014

  • Consumer Price Index (or CPI)
  • Housing starts
  • Building permits

Wednesday, August 20, 2014

  • Mortgage Bankers Association (or MBA) mortgage applications
  • FOMC minutes

Thursday, August 21, 2014

  • Initial Jobless Claims
  • Bloomberg Consumer Comfort
  • Markit Manufacturing Purchasing Manager’s Index (or PMI)
  • Philadelphia Fed
  • Existing Home Sales
  • Index of Leading Economic Indicators

Friday, August 22, 2014

  • No economic data

Earnings reports this week

Tuesday, August 19, 2014

  • The Home Depot (or HD)

Wednesday, August 20, 2014

  • Lowe’s (or LOW)

Impact on mortgage REITs

Mortgage real estate investment trusts (or REITs), like American Capital Agency (or AGNC) and Annaly (NLY), will focus on data that will move the bond market. The most important data point will be the FOMC minutes.

The primary guess in the bond market these days is determining when the Fed will start hiking rates. The minutes will provide insight into the Fed’s thinking and the mechanics of conducting monetary policy with a $4 trillion balance sheet.

Impact on homebuilders

Builders will focus housing starts and building permits. For the most part, 2014 is in the books as far as the builders are concerned. We’re heading into the seasonally slow period of fall and early winter. Homebuilder analysts will focus on the geographies that are experiencing the most growth.

They will use that data to determine, in part, which builders should experience the most growth going forward. The National Association of Home Builders (or NAHB) Housing Market Index will also be useful in gauging sentiment in the building sector.

Impact on commercial REITs

The most important data for commercial REITs will the FOMC minutes. Their funding rates are determined by short-term rates and the design of the bond market. This data will interest mall REITs like Simon Property Group (SPG) and General Growth Properties (GGP). It’s important to note that retailers will start to report next week. The mall REITs will be interested in these reports.

Office REITs, like Brookfield Office Properties (BPO) and Vornado Realty Trust (VNO), will be interested in the Index of Leading Economic Indicators. It helps forecast job growth.

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