Real estate stocks edge down, while major market averages gain marginally (NYSEARCA:XLRE)

Real estate stocks fell in the week ending June 21 after mixed economic data and the latest housing market update, while the major market averages rose marginally.

Selected Real Estate Sector Fund SPDR Fund ETF (NYSEARCA:XLRE) I finish Shortened vacation week 0.13% Lower at $38.48. The fund posted gains in two of the four sessions, as markets see it Inflation data for May Encouraging, but realize that the process of slowing inflation may take longer.

Currently, the Fed is keeping interest rates steady. But central banks across Europe are continuing to cut interest rates. The Swiss National Bank cut its key interest rate by 25 basis points for the second time this year, after becoming the first major economy to begin an easing cycle in March. The European Central Bank followed this up by cutting interest rates of its own.

“Markets also received a 3D housing market update that painted a picture of a sector that remains impacted by rising interest rates,” Wells Fargo said, adding that most of this week's disappointing data was concentrated in interest rate-sensitive sectors.

Housing starts fell 5.5% month-over-month in May to 1.277 million, well below expectations of 1.373 million, from 1.352 million in April. Building permits fell 3.8% to 1.386 million, missing expectations of 1.450 million, from 1.440 million the previous month. Existing home sales came in at 4.11 million in May, compared to expectations of 4.08 million and 4.14 million in April.

Despite the decline in sales, home prices rose. The national median sales price reached $419,300, an all-time high compared to records dating back to 1999. “It's a bit of a strange phenomenon,” said Lawrence Yun, chief economist for the National Association of Realtors. “Home sales activity has been down, prices are at record highs and homes appear to still be receiving multiple offers.”

The FTSE Nareit index of all REITs fell 0.28% From last week, while the Dow Jones Total Returns for All REITs declined marginally by 0.03%. Meanwhile, the broader S&P 500 index advanced 0.61% To close at 5,464.6 points.

Feelings

The second-month NAHB/Wells Fargo Housing Market Index fell to 43 in June, versus 45 expected, from 45 in May, as mortgage rates continue to hover in the 7% range combined with rising construction financing costs. The index represents the sentiment of home builders.

“Maybe the Fed's rate-cutting policy, which was expected to happen, but didn't happen — it was delayed and delayed — may be causing a delay in the home sales recovery,” Yoon said.

Alpha's quantitative rating system seeks to rate the SPDR Fund ETF's selected real estate sector as A He sellsWith a score of 1.99 on a scale of 5. The fund's momentum is rated D+, expenses A, dividends C-, risk D+ and liquidity A+. Meanwhile, SA analysts assign it a He buys evaluation.

REITs are very popular among investors, especially those seeking higher returns in the stock market. The ETF holds all the REITs in the S&P 500, offering a mixed technical picture with the potential for significant gains following Fed easing. XLRE's top 5 holdings are profitable but overvalued, while the REIT sector offers growth potential in various sub-sectors, the SA Sungarden Investment Publishing author said.

Real estate is among the five defensive sectors that JP Morgan analysts are optimistic about. The sector was among the three worst performing sectors in the first quarter. In the second quarter this changed. These sectors have so far led to a 10% performance rebound on a quarterly basis, analysts said.

The fund witnessed net inflows of $27.02 million This week, from $4.06 million Last week, data from information solutions provider VettaFi show up.

XLRE is trading 3% Above the 200 day simple moving average, however ~4% A decrease from the beginning of the year.

Sub-sector performance