The real estate sector has held firm on its bullish terrain, showing remarkable resilience compared to the broader market. The Real Estate Select Sector SPDR Fund ETF NYSE:XLRE is consolidating near its highs, just 2.7% off its 52-week peak, setting the stage for a potential breakout in the final quarter of this year. While the broader market was under selling pressure midweek, with the SPY ETF down nearly 1% on Wednesday, XLRE showed relative strength, ending the day up almost 1%. Buoyed by the momentum of the past few months, the year-to-date increase is 10.6%.
Change from headwind to tailwind
Over the past year, the real estate sector has been plagued by rising borrowing costs, weighing on real estate values and REIT stock performance. However, the Fed’s recent rate cuts and signals for further rate cuts have turned this headwind into a tailwind for the sector. REITs have struggled in a high interest rate environment, but are now benefiting from lower borrowing costs.
The momentum in the sector is clear, with XLRE up over 20% over the past six months and net fund flows up 14.51% over the past three months, suggesting increased investor confidence. Masu. This shift follows a long period of consolidation that lasted more than a year, but the recent bull run shows that real estate bulls are now in control.
In a positive indicator for the sector, RE/MAX Holdings’ September housing report showed that although home sales were down 13.3% from August (seasonal pattern), the median sales price was 420,000,000 yen, up 4.6% year over year. He pointed out that it is stable at $9,000. RE/MAX President Amy Lessinger emphasized that rising housing inventory will provide buyers with more options, and lower mortgage rates could spark increased activity heading into 2025. He added that there is.
3 real estate stocks with potential for this bullish trend
Why XLRE is a smart choice for passive real estate exposure
Real Estate Select Sector SPDR Fund Current Status
XLRE
Real Estate Select Sector SPDR Fund
$44.07 -0.35 (-0.79%)
(As of October 25, 2024 Eastern Time)
52 week range $31.99
▼
$45.58
Dividend yield 3.11%
Total assets under management: $8.09 billion
Real Estate Select Sector SPDR Fund NYSE: XLRE provides broad exposure to real estate stocks excluding mortgage REITs, including top holdings such as Prologis (9.91%) and American Tower (9.24%). With a dividend yield of 3.09% and a low expense ratio of 0.09%, it is an attractive choice for investors looking for exposure to a variety of sectors.
The ETF has a rating of “medium buy,” and analysts expect further upside based on the consensus price target. Consolidation near recent highs suggests a potential fourth-quarter breakout, especially if the overall market stabilizes near highs amid further rate cuts. For investors seeking passive exposure to the real estate sector’s recovery, XLRE offers a balanced approach with minimal risk in stock selection.
Fed interest rate cuts could further boost real estate income performance
Today’s real estate income
○
real estate income
$61.31 -2.00 (-3.16%)
(As of October 25, 2024 Eastern Time)
52 week range $45.03
▼
$64.88
Dividend yield 5.15%
PER 56.77
Target price $63.94
Realty Income NYSE: O Known as the “Monthly Dividend Company,” Realty Income specializes in triple-net leases, where tenants pay real estate costs such as taxes and maintenance. This REIT has a dividend yield of 4.92% and has an impressive history of increasing its dividend for 108 consecutive quarters.
Real estate revenue has increased 12% year-to-date and nearly 20% over the past six months, outpacing many of its peers. Our focus on free-standing commercial real estate in the US, UK and Spain results in reliable income generating assets. As the Federal Reserve moves to lower interest rates, real estate income is well-positioned to benefit from the changing economic environment, making it an attractive option for income-seeking investors.
Real estate momentum increases EQR’s appeal to investors
Today’s Housing Equity
EQR
stock housing
$74.67 -1.39 (-1.83%)
(As of October 25, 2024 Eastern Time)
52 week range $52.57
▼
$78.83
Dividend yield 3.62%
PER29.75
Target price $75.97
Equity Residential NYSE: EQR focuses on luxury apartment properties in dynamic urban markets such as New York, San Francisco, and Seattle, and is expanding to cities such as Denver, Dallas, and Atlanta. EQR, which boasts a dividend yield of 3.56% and a year-to-date return of 24%, will continue to perform well in 2024, driven by solid rental demand.
EQR’s portfolio of more than 80,000 apartments is tailored for long-term renters, providing stability and diversification in an uncertain market. As the real estate sector gains momentum, EQR’s short-term strength makes it attractive for investors looking to capitalize on recent momentum.
Similar to XLRE, EQR is also holding firm above the rising major moving averages and is just 3.7% away from its 52-week high. From a technical perspective, the company appears poised to break out of its 52-week high, but note that the company is scheduled to announce its third-quarter results on Wednesday, October 30th, after the market closes. It is important to do so.
Hear this before considering Real Estate Select Sector SPDR Fund.
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