Home Sales Rose in September During Brief Decline in Mortgage Rates

According to data from the National Association of Realtors, sales of existing homes increased 7% in September. 

Lawrence Yun, the association’s chief economist, linked the rise in sales to the brief drop in mortgage interest rates in August, according to CNBC.  Mortgage rates for 30-year fixed rates fell under 3% in August before rising again last month. 

The data is based on closed sales, meaning that the rise was likely due to contracts signed in July and August. Home sales were 2.3% lower than last year. 

The rise was largely composed of buyers who had already owned homes in the past, with first-time homebuyers making up only 28% of sales, a six-year low. 

The low supply of homes for sale continues to push home prices up. At the end of September, the supply of homes for sale was at 1.27 million units, down 13% since last year. The median price of homes sold in September was up 13.3% from last year, with a median price of $352,800. 

Additionally, the majority of homes being sold are on the higher end of the market. Sales of homes priced above $1 million are 30% higher this year, while homes priced between $100,000 and $250,000 are 23% lower. 

Newly constructed homes were 24% lower in September, and prices for new homes are up 20% due to supply chain issues and higher labor costs. 

Investing in Real Estate With ETFs

ETFs are a good way for investors to gain indirect exposure to the ongoing real estate boom. 

Some real estate ETFs have exposure to a broader swatch of the market, such as the iShares Mortgage Real Estate ETF (REM). REM is an index fund that offers exposure to residential and commercial real estate as well as mortgage finance and savings associations. 

Other funds, such as the Schwab US REIT ETF (SCHH) or the ALPS Active REIT ETF (REIT)focus specifically on REITs. 

REITs, or real estate investment trusts, are companies that own, operate, or finance income-generating real estate. REITs give individual investors exposure to the real estate market without needing to buy, manage, or finance properties directly.  

REITs appeal to investors seeking immediate income because REITs must distribute at least 90% of their income to investors. 

The ALPS Active REIT ETF is different from the majority of funds invested in REITs, as it is one of only six actively managed funds in its niche.

REIT is an actively managed ETF that provides exposure to common equity securities of U.S. REITs as well as a small selection of real estate operating companies that are not structured as REITs. 

REIT is managed by GSI Capital Advisors and has an expense ratio of 0.68%. Nicholas Tannura, CIO of GSI Capital Advisors, and Julia Pence, a portfolio manager at GSI Capital Advisors, serve as the fund’s managers. 

For more news, information, and strategy, visit the ETF Building Blocks Channel.