Buy 5 Real Estate Mutual Funds Going Into Second-Half 2017

Although the recent homebuilder confidence index was disappointing, the overall sentiment for the real estate sector remains positive and is likely to improve over the rest of the year. Moreover, existing and new home sales as well as housing completions data were encouraging. Also, sales of building materials experienced strong year-over-year increase last month.

Following these gains, the addition of real estate mutual funds to one’s portfolio might be a suitable investment option. These are convenient ways of playing the real estate market because of their low initial investment requirements. Investors willing to hold long-term positions would do well to consider these funds as they add stability and bring steady returns to a portfolio.

NAHB Index Above 50

The NAHB/Wells Fargo builder sentiment index declined marginally from 69 in May to 67 in June. Though the NAHB sentiment index declined, it remained above the 50 mark, indicating improvement in the sector. Any level above 50 indicates that builders’ views about sale conditions are optimistic.

Further, despite falling to a fourth-month low, homebuilder sentiment index managed to remain near its highest levels since June 2005. According to the NAHB chairman Granger MacDonald, homebuilder confidence levels remained “consistently sound this year,” which reflected steady recovery in the housing market.

Home Sales Remain Upbeat

According to National Association of Realtors (NAR) sales of existing homes increased 1.1% to a seasonally adjusted annual rate of 5.62 million in May, higher than consensus estimate of 5.54 million. It was also above April’s downwardly revised rate of 5.56 million and reached the third-highest settlement in the last one year.

As per the U.S. Census Bureau and the U.S. Department of Housing and Urban Development, new-home sales in May were recorded at a seasonally adjusted annual rate of 610,000 against the consensus estimate of 596,000. The figure increased 2.9% from the revised April rate of 593,000. Further, the median sales price of new home sales increased from $310,200 in April to $345,800 in May, reaching its best level ever.