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US Housing Market Resumes Growth Journey: 4 Funds to Tap
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Remote working and low mortgage rates have been fueling housing demand since the coronavirus outbreak. But supply constraints continue to be a constant hurdle to the growth trend. Demand for homes in the suburbia is still strong and with resurgence in cases, especially fears of the delta variant, people continue to move out from the urban locations.
Per The Wall Street Journal report, Florida currently accounts for one in five new infection cases in America and has recorded 73,181 cases over the week ending Jul 25, according to the Centers for Disease Control and Prevention (CDC). The highly contagious delta variant is one of the major factors behind the spike. Every state in the United States has reported an increase in new cases, deaths and hospitalizations in the past week. Hence those reanalyzing options to migrate to the suburbs are sure to make some big-ticket purchases on housing.
Existing Home Sales Resurface
In June, Americans took some pandemic-driven home purchasing decisions. Per the National Association of Realtors’ (NAR) report on Jul 22, existing-home sales rose 1.4% to 5.86 million. Last month’s jump signals a rebound and a 22.9% year-over-year increase. Sales in the Northeast increased 2.8% last month, and the Midwest and West recorded a 3.1% and 1.7% rise, respectively.
Housing Starts Accelerate
Earlier last week, the U.S. Census Bureau and the U.S. Department of Housing and Urban Development jointly reported that housing starts jumped 6.3% at a seasonally adjusted annual rate of 1.643 million. June’s reported figure surpassed consensus estimates of 1.593 million. The metric continued to grow after rebounding in May, though the figures for the month have been downwardly revised to 1.546 million.
Mortgage Rate Stays Below 3%
The Federal Reserve’s interest rates cuts and quantitative easing have brought down borrowing costs and made housing more affordable for Americans. The 30-year fixed mortgage rate dropped from 3.82% in March and bottomed at 2.85% last December. In fact, per the Freddie Mac report, the 30-year rate has been significantly below 3% since the end of May, and that for the week ending Jul 22 stands at 2.78%.
4 Top Fund Picks
Looking at last month’s report, the U.S housing market is surely not at its high recorded during the initial pandemic months. However, the rush to suburbia is surely boosting demand in this industry. While plunge in inventory and dearth of supplies keep prices high, the historically-low mortgage rate still pushes homebuyers to pick their safe shelters beyond jam-packed cities. Hence, we have screened out four Zacks Mutual Fund Rank #1 (Strong Buy) mutual funds, which have encouraging year-to-date (YTD) returns. Additionally, the minimum initial investment is within $5000. We expect these funds to outperform peers in the future.
The question here is: why should investors consider mutual funds? Reduced transaction costs and diversification of portfolio without several commission charges that are associated with stock purchases are primarily the reasons for parking money in mutual funds (read more: Mutual Funds: Advantages, Disadvantages, and How They Make Investors Money).
Fidelity Advisor Real Estate Income Fund Class A (FRINX - Free Report) aims for higher-than-average income. As a secondary objective, the fund seeks capital growth. FRINX invests majority of its assets in common stocks of REITs as well as securities of companies principally engaged in the real estate industry and other real estate-related investments.
This Zacks sector – Real Estate product has a history of positive total returns for more than 10 years. Specifically, the fund has returned 8.7% and 7.2% over the past three and five years, respectively. To see how this fund performed compared to its category, and other #1 and 2 Ranked Mutual Funds, please click here.
FRINX has an annual expense ratio of 1.01%, which is below the category average of 1.08%.
Fidelity Real Estate Investment Portfolio (FRESX - Free Report) fund aims for above-average income and long-term capital growth, which is consistent with reasonable investment risk. This non-diversified fund invests primarily in common stocks. The majority of FRESX’s assets are invested in securities of companies, principally engaged in the real estate industry and other real estate-related investments.
This Zacks sector – Real Estate product has a history of positive total returns for more than 10 years. Specifically, the fund has returned 9.8% and 6.1% over the past three and five years, respectively. To see how this fund performed compared to its category, and other 1 and 2 Ranked Mutual Funds, please click here.
FRESX has an annual expense ratio of 0.74% versus the category average of 1.08%.
MFS Global Real Estate Fund Class R6 (MGLRX - Free Report) looks for total returns. The fund invests majority of assets in U.S. equity securities and foreign real estate-related investments of any size.
This Zacks sector – Real Estate product has a history of positive total returns for more than 10 years. Specifically, the fund has returned 12.2% and 9.3% over the past three and five years, respectively. To see how this fund performed compared to its category, and other 1 and 2 Ranked Mutual Funds, please click here.
MGLRX has an annual expense ratio of 0.90%, which is below the category average of 1.21%.
Neuberger Berman Real Estate Fund Class R6 (NRREX - Free Report) aims for total return. Additionally, the fund gives importance to capital appreciation and current income. Majority of this non-diversified fund’s assets are invested in equity securities of real estate investment trusts and real estate companies.
This Zacks sector – Real Estate product has a history of positive total returns for more than 10 years. Specifically, the fund has returned 14.8% and 9.6% over the past three and five years, respectively. To see how this fund performed compared to its category, and other 1 and 2 Ranked Mutual Funds, please click here.
NRREX has an annual expense ratio of 0.76%, which is below the category average of 1.08%.
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US Housing Market Resumes Growth Journey: 4 Funds to Tap
Remote working and low mortgage rates have been fueling housing demand since the coronavirus outbreak. But supply constraints continue to be a constant hurdle to the growth trend. Demand for homes in the suburbia is still strong and with resurgence in cases, especially fears of the delta variant, people continue to move out from the urban locations.
Per The Wall Street Journal report, Florida currently accounts for one in five new infection cases in America and has recorded 73,181 cases over the week ending Jul 25, according to the Centers for Disease Control and Prevention (CDC). The highly contagious delta variant is one of the major factors behind the spike. Every state in the United States has reported an increase in new cases, deaths and hospitalizations in the past week. Hence those reanalyzing options to migrate to the suburbs are sure to make some big-ticket purchases on housing.
Existing Home Sales Resurface
In June, Americans took some pandemic-driven home purchasing decisions. Per the National Association of Realtors’ (NAR) report on Jul 22, existing-home sales rose 1.4% to 5.86 million. Last month’s jump signals a rebound and a 22.9% year-over-year increase. Sales in the Northeast increased 2.8% last month, and the Midwest and West recorded a 3.1% and 1.7% rise, respectively.
Housing Starts Accelerate
Earlier last week, the U.S. Census Bureau and the U.S. Department of Housing and Urban Development jointly reported that housing starts jumped 6.3% at a seasonally adjusted annual rate of 1.643 million. June’s reported figure surpassed consensus estimates of 1.593 million. The metric continued to grow after rebounding in May, though the figures for the month have been downwardly revised to 1.546 million.
Mortgage Rate Stays Below 3%
The Federal Reserve’s interest rates cuts and quantitative easing have brought down borrowing costs and made housing more affordable for Americans. The 30-year fixed mortgage rate dropped from 3.82% in March and bottomed at 2.85% last December. In fact, per the Freddie Mac report, the 30-year rate has been significantly below 3% since the end of May, and that for the week ending Jul 22 stands at 2.78%.
4 Top Fund Picks
Looking at last month’s report, the U.S housing market is surely not at its high recorded during the initial pandemic months. However, the rush to suburbia is surely boosting demand in this industry. While plunge in inventory and dearth of supplies keep prices high, the historically-low mortgage rate still pushes homebuyers to pick their safe shelters beyond jam-packed cities. Hence, we have screened out four Zacks Mutual Fund Rank #1 (Strong Buy) mutual funds, which have encouraging year-to-date (YTD) returns. Additionally, the minimum initial investment is within $5000. We expect these funds to outperform peers in the future.
The question here is: why should investors consider mutual funds? Reduced transaction costs and diversification of portfolio without several commission charges that are associated with stock purchases are primarily the reasons for parking money in mutual funds (read more: Mutual Funds: Advantages, Disadvantages, and How They Make Investors Money).
Fidelity Advisor Real Estate Income Fund Class A (FRINX - Free Report) aims for higher-than-average income. As a secondary objective, the fund seeks capital growth. FRINX invests majority of its assets in common stocks of REITs as well as securities of companies principally engaged in the real estate industry and other real estate-related investments.
This Zacks sector – Real Estate product has a history of positive total returns for more than 10 years. Specifically, the fund has returned 8.7% and 7.2% over the past three and five years, respectively. To see how this fund performed compared to its category, and other #1 and 2 Ranked Mutual Funds, please click here.
FRINX has an annual expense ratio of 1.01%, which is below the category average of 1.08%.
Fidelity Real Estate Investment Portfolio (FRESX - Free Report) fund aims for above-average income and long-term capital growth, which is consistent with reasonable investment risk. This non-diversified fund invests primarily in common stocks. The majority of FRESX’s assets are invested in securities of companies, principally engaged in the real estate industry and other real estate-related investments.
This Zacks sector – Real Estate product has a history of positive total returns for more than 10 years. Specifically, the fund has returned 9.8% and 6.1% over the past three and five years, respectively. To see how this fund performed compared to its category, and other 1 and 2 Ranked Mutual Funds, please click here.
FRESX has an annual expense ratio of 0.74% versus the category average of 1.08%.
MFS Global Real Estate Fund Class R6 (MGLRX - Free Report) looks for total returns. The fund invests majority of assets in U.S. equity securities and foreign real estate-related investments of any size.
This Zacks sector – Real Estate product has a history of positive total returns for more than 10 years. Specifically, the fund has returned 12.2% and 9.3% over the past three and five years, respectively. To see how this fund performed compared to its category, and other 1 and 2 Ranked Mutual Funds, please click here.
MGLRX has an annual expense ratio of 0.90%, which is below the category average of 1.21%.
Neuberger Berman Real Estate Fund Class R6 (NRREX - Free Report) aims for total return. Additionally, the fund gives importance to capital appreciation and current income. Majority of this non-diversified fund’s assets are invested in equity securities of real estate investment trusts and real estate companies.
This Zacks sector – Real Estate product has a history of positive total returns for more than 10 years. Specifically, the fund has returned 14.8% and 9.6% over the past three and five years, respectively. To see how this fund performed compared to its category, and other 1 and 2 Ranked Mutual Funds, please click here.
NRREX has an annual expense ratio of 0.76%, which is below the category average of 1.08%.
Want key mutual fund info delivered straight to your inbox?
Zacks' free Fund Newsletter will brief you on top news and analysis, as well as top-performing mutual funds, each week. Get it free >>