The latest housing data may not evoke a sense of positivity, but nonetheless, market experts are hopeful that real estate could be poised for a summer rebound. Real estate historically shows an uptick during the summertime so a return back to normalcy following the coronavirus pandemic could certainly be of benefit to real estate-focused exchange-traded funds (ETFs).
Speaking to the latest data, according to a MarketWatch report, “sales of previously owned homes slid 9.7% in May as the coronavirus pandemic continued to weigh on the U.S. real estate market. Existing-home sales occurred at a seasonally adjusted annual pace of 3.91 million, the National Association of Realtors reported Monday.”
“It was the lowest level for existing-home sales since July 2010,” the report added. “Compared with last year, sales were down 26.6% in May.”
Despite this, market experts remain optimistic that a real estate rebound will surface this summer. In conjunction with low mortgage rates, this could spur some buying activity for prospective home purchasers.
According to the report, the number of applications for purchase-only mortgages reached an 11-year high last week. Additionally, pending sales activity is seeing an uptick as economists believe buyers were simply delaying purchases due to the coronavirus pandemic.
“Home sales will surely rise in the upcoming months with the economy reopening, and could even surpass one-year-ago figures in the second half of the year,” Lawrence Yun, chief economist for the National Association of Realtors, said in the report.
“Any disappointment should be fleeting; this is old news, and the leading indicators for home sales are soaring,” Ian Shepherdson, chief economist at Pantheon Macroeconomics, said in a research note. “The summer will be strong.”
Here are a couple of real estate ETFs to look at:
- FlexShares Global Quality Real Estate Index Fund (GQRE): seeks investment results that correspond generally to the price and yield performance, before fees and expenses, of the Northern Trust Global Quality Real Estate IndexSM. The index is designed to reflect the performance of a selection of companies that, in aggregate, possess greater exposure to quality, value, and momentum factors relative to the Northern Trust Global Real Estate Index.
- FlexShares Real Assets Allocation Index Fund (ASET): seeks investment results that correspond generally to the price and yield performance of the Northern Trust Real Assets Allocation IndexSM. The underlying index measures the performance of an optimized allocation to the underlying funds that is intended to provide exposures to certain real assets and minimize the overall volatility of an investment in the underlying funds.
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