3 Mutual Funds To Buy On Robust 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 April came in at 1.24 million and 1.3 million units, respectively. While housing starts increased 6% in April, building permits advanced about 1% in the same period.

Homebuilding for March was revised up to 1.17 million units, instead of a decline to 1.14 million units reported initially. Such a surge has primarily been attributed to growth in both multi- and single-family house constructions. Under such favorable circumstances, investing in real estate mutual funds would make for a prudent investment decision.

Starts and Permits Nudge Higher

Single-family home building surged 6.2% last month. This provided the major boost to new homebuilding as well as sales. Further, multifamily home construction rose 2.3% to 359,000 in April. Such a spike was pivotal in driving housing starts higher last month.

Meanwhile, multi-family units single-handedly boosted the building permits in April. Permits for the construction of multi-family homes rebounded 8.9% to 514,000 units in the last month.

Homebuilder Confidence at a 7-Month High

Per the report dated May 15 by the National Association of Home Builders (NAHB), homebuilders’ confidence rose to its highest settlement since October. The rise came on the back of declining mortgage rates, moderating home prices as well as higher home sales.

The Housing Market Index (HMI) reading gained three points to 66 in May from 63 in April. Notably, any reading of more than 50 signals improving conditions.

3 Best Choices

Given such circumstances, we have highlighted three real estate mutual funds that are poised to gain from such factors. 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.

We expect these funds to outperform their peers in the future. Remember, the goal of the Zacks Mutual Fund Rank is to guide investors to identify potential winners and losers. Unlike most of the fund-rating systems, the Zacks Mutual Fund Rank is not just focused on past performance, but also on the likely future success of the fund.

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