4 Mutual Funds To Tap The Growing Housing Market

The American housing market is growing at a decent pace courtesy of several factors such as record low mortgage rates and a solid domestic economy. As more prospective homebuyers join the club to look at potential new homes, let us take a look at a couple of mutual funds from the real estate and home building sector which could benefit ahead.

Monthly New Residential Sales Up

Sales of new single-family houses in July were more than expected, per a joint statement by the U.S. Census Bureau, and the U.S. Department of Housing and Urban Development. A total of 635,000 homes were sold in July, higher than the estimated 609,000.

Mortgage Rates Still Low

Among the factors pushing the sale of new homes, low mortgage rates and increasing income are prominent. Lower rates are undoubtedly making it easier for homebuyers to afford a home. In addition, millennial homebuyers are entering the housing market as well, driving demand for new homes.

According to a recent survey by real estate data and analytics firm CoreLogic along with RTi Research of Norwalk, CT, 26% millennials plan to buy a home within the next one year and 29% aim to rent compared to only 8% millennials who expect to sell a home.

Although home prices increased 3.6% on an annualized basis in July, low mortgage rates make new home investment appear lucrative.

Decent Job Market Pushes Homebuyers

Per the latest report by the Labor department, an impressive total of 130,000 jobs were added in August. This is indicative of an expanding U.S. economy despite rising trade tensions and fears of a global slowdown.

The job scenario has been especially good, thanks to the unchanged unemployment rate of 3.7% and decent wage growth. Average hourly earnings rose 0.4% in August and 3.2% on an annualized basis. Labor force participation increased as well.

In fact, a solid job market makes it easier for homebuyers to consider buying a home.

Our Choices

We have, therefore, selected four mutual funds that invest in real estate and home building companies. All of these funds carry a Zacks Mutual Fund Rank #1 (Strong Buy) or 2 (Buy). Moreover, these funds have encouraging year-to-date returns. Additionally, the minimum initial investment is within $5,000.

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Disclosure: Zacks.com contains statements and statistics that have been obtained from sources believed to be reliable but are not guaranteed as to accuracy or completeness. References to any specific ...

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