4 Real Estate Mutual Funds To Buy As Housing Bounces Back

Americans seem to ignore rising mortgage rates and are buying homes at the fastest pace in a decade. Sales of existing condos, coops, townhomes and single-family houses have all scaled higher.

Meanwhile, housing starts declined in the month of January while homebuilders’ confidence slipped this month. But a closer look reveals that the housing recovery is on track. This is obvious from the substantial increase in the forward looking indicator, building permits. In such a situation, selecting real estate mutual funds makes for a wise investment option. 

Existing Homes Sales Hit 10-Year High

Existing home sales, which make up the major portion of U.S. home sales, were back with a bang in January, scaling a 10-year high. Buyers brushed aside fears of rising rates in the face of Fed policy tightening, which is likely to speed up this year, as well as higher home prices.

Existing home sales in January were up 3.3% sequentially and 3.8% year over year to a seasonally adjusted annual rate of 5.69 million units, following a downward revision of 5.51 million units in the previous month. Sales surpassed market expectations of 5540 thousand units. Probably, the risk of faster rate hikes drove potential buyers into the market.

This indicator is thought to be a good measure of demand in the real estate sector. Existing home sales is an economic indicator of both the number and prices of existing single family houses, condos and co-op sales over a one-month period.

Building Permits, Homebuilder Confidence High

In January, housing starts declined by 2.6% to a seasonally adjusted annual rate of 1,246,000. However, this reading was higher than the consensus estimate of 1,225,000. Additionally, it represents a 10.5% increase from January’s reading of 1,128,000. More importantly, last December’s figure was upwardly revised from the initial estimate of 1,226,000 to 1,279,000.

Moreover, building permits increased 4.6% to a seasonally adjusted annual rate of 1,285,000, significantly higher than the consensus estimate of 1,217,000. This was the highest witnessed since Nov 2015. This substantial increase for the forward looking indicator implies that the sector is likely to experience better times in the months ahead.