3 Mutual Funds To Buy On Phenomenal Housing Data

Per the latest joint report from the U.S. Census Bureau and the U.S. Department of Housing and Urban Development, housing starts and building permits for March came in at 1.32 million and 1.35 million units, respectively. While housing starts increased 1.9% in March, building permits advanced about 2.5% in the same period.

The metrics followed 7% and 5.7% respective declines in February. Such a surge has primarily been attributed to a rebound in multifamily house constructions. Under such favorable circumstances, investing in real estate mutual funds would make for a prudent investment decision.

Rebound in Multifamily House Construction Boosts Starts and Permits

Multifamily home building has surged 16.1% in the last month. This follows a decline of 28% in February. Further, multifamily permits rose 22.9% in March. Such a spike has been pivotal in driving housing starts and building permits higher last month.

Per the recent study conducted by FreddieMac, multifamily performance was mostly strong through 2017. The study also stated that the trend which began last year is likely to continue through 2018 as completions peak and supply increases slightly faster than demand. Vacancy rates are expected to continue to scale higher at the national level and in most metropolitan areas, but, the majority will remain below historical averages. Rents will continue to grow on healthy labor market and lifestyle preferences, creating demand for multifamily units.

On the contrary, single-family units which accounts for the largest portion of the housing market, declined 3.7% in March due to a shortage in housing lots amid high availability of construction materials. However, the impacts of such a decline were rather offset by a steady increase in multifamily home building.

3 Great Choices

Given such circumstances, we have highlighted three real estate mutual funds that are poised to gain significantly from a rebound in housing starts and building permits. These funds also carry a Zacks Mutual Fund Rank #1 (Strong Buy) or 2 (Buy). Moreover, these funds have encouraging three and five-year returns. Additionally, the minimum initial investment is within $5000.

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