Home-price gains continued to climb in March, putting continued pressure on buyers as mortgage rates have also recently risen to their highest levels in years. Is it time to invest in REIT ETFs?
According to the Wall St. Journal, “The S&P CoreLogic Case-Shiller National Home Price Index, which measures average home prices in major metropolitan areas across the nation, rose 6.5% in March, identical to the year-over-year increase reported in February. The 10-city index gained 6.5% over the year, up slightly from 6.4% the prior month. The 20-city index gained 6.8%, unchanged from the previous month. “
Affordability challenges and the shortage of inventory are negatively impacting home sales.
US Home Prices Rise: Time to Invest in REITs?
“As we continue to operate in a rising rate environment, investors are considering how to capitalize on these dynamics and generate meaningful returns. One way to do so is by utilizing REIT ETFs, which unlike other real assets provide long term fixed cash flow and the shorter duration end of the market provides lower volatility and lower sensitivity to rising rates,” Martin Kremenstein, Head of NuShares, Nuveen’s ETF business, said in a note.
Investors interested in gaining broad exposure to the dividend-paying REITs can look at ETF options like the Vanguard REIT ETF (NYSEArca: VNQ), iShares Dow Jones US Real Estate Index Fund (NYSEArca: IYR) and Schwab US REIT ETF (NYSEArca: SCHH), among others. Additionally, for those interested in the potential growth of small-cap REITs, investors can look to the targeted IndexIQ US Real Estate Small Cap ETF (NYSEArca: ROOF).