5 Mutual Funds To Ride On A Booming Housing Market

The outlook for the real estate sector is positive on the back of upbeat new construction data and encouraging homebuilder sentiment. New residential construction rose in January after housing starts reached the highest level in more than a year. Additionally, building permits reached its best levels in more than 10 years.

Following these gains, the addition of real estate mutual funds to one’s portfolio will be a suitable investment option. 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.

New Residential Construction Rebounded Strongly

Per the Census Bureau and Housing and Urban Development Department, new residential construction came in favorable in January. Housing starts rose by a staggering 9.7% to 1.326 million last month, after declining in the preceding month. Housing starts increased last month settling at the biggest level since October 2016 and the second highest since the end of the Great Recession.

This metric was also higher than the consensus estimate of 1.232 million. Both privately owned housing starts for single-family and multifamily moved higher. Starts rose across several major geographical regions. Particularly, notable was a jump of 45.5% in the Northeast and 10.7% in the West.

Moreover, building permits increased from 1.300 million in December to 1.396 million in January, its best settlement since June 2007. This was also higher than the estimated level of 1,292 million and represents a 7.4% year-over-year increase.

Permits for multi-family residences shot up 26.5% to 530,000 in January, managing to boost overall building permits despite a fall in single-family permits. A tight labor market contributed to this stunning new residential construction data. Although, apprehensions remained over the impact of an increase in mortgage rates on this momentum, solid homebuilder sentiment mitigated some of the fear.

NAHB Index Remains Well Above 50

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