Real estate stocks have continued to improve in May, accelerating from last month. Brokerages are still worse off than they started the year. But strength in the housing market has kept losses minimal. Portals have improved their standing since the start of the year. And news from major portals on the housing market continues to be positive. Pricing seems to be holding up, and demand is better than most people expected it to be.
Real estate stocks outpaced a positive market. Despite continued uncertainty from COVID-19, the markets improved in May.
S&P 500: The S&P continued its recovery amidst mixed signals on unemployment and COVID-19. The S&P increased almost 5% for the month. Why it matters: With large unemployment number, the market continued to improve. And real estate stocks outpaced the broader market significantly.
April 30-year Mortgage Survey: 30-year interest rates continue to reach historic lows, falling even further to 3.18%. Why it matters: Interest rates remain at historic lows. It’s more attractive for buyers to get a mortgage because low interest rates mean lower interest fees. But things are still tough. Loan forbearance accounts for 8.5% of total mortgages.
Case Shiller Index Results: In March, home prices increased roughly 1% month-over-month and almost 3% year-over-year. This continues the increases we’ve seen in prior months. But April will likely show the impact of COVID-19. Why it matters: New data indicates that prices were not significantly impacted by the pandemic. We’ll know for sure in one or two months as Case Shiller Index results come in for April and May.
Annualized existing home sales: Annualized existing home sales fell significantly from ~5.3M in March to ~4.3M in April. This is down substantially both month-over-month and year-over-year. Why it matters: March data did reflect a significant dropoff in annualized home sales. Numbers have not been this low since 2011. Data next month will likely show the start of any post-COVID shock rebound.
Brokerages posted collective gains of over 20% and clawed back over $1.4B in enterprise value. They are still down from the start of the year. But investors are pleased with the muted impact of COVID-19. And cost control measures that brokerages have put in place during the crisis have helped.
Stock price: $6.07 | Up 39.6%
Enterprise value: $4.7B | Up $351M
What happened? Reology posted a strong month despite mediocre earnings. To be clear: it’s still down considerably from its $10.59 price in January.
Stock price: $29.99 | Up 41.9%
Enterprise value: $2.9B | Up $912M
What happened? Redfin posted a very strong month thanks to its impressive earnings. Redfin is up since the start of the year .
Stock price: $10.69 | Up 16.5%
Enterprise value: $677M | Up $111M
What happened? eXp continues to recover a large portion of its year-to-date losses after posting a strong quarter.
Stock price: $27.99 | Up 6.5%
Enterprise value: $312M | Up $30.8M
What happened? Relative to other real estate brokerage companies, Re/Max posted muted gains in line with the broader market.
Stock price: $11.43 | Up 6.8%
Enterprise value: $2.95B | Up $83M
What happened? Vector Group continued its post-COVID improvement. Q1 earnings were solid; Douglas Elliman showed muted year-over-year revenue growth.
Similar to brokerages, portals saw some recovery month-over-month. Zillow has now surpassed its stock price from the start of the year.
Stock price: $57.96 | Up 33.1%
Enterprise value: $12.5B | Up $3.1B
What happened? Zillow posted a very strong month driven by Q1 earnings and real estate market strength.
Stock price: $12.25 | Up 23.6%
Enterprise value: $9.1B | Up $561M
What happened? News Corp had a very strong month, driven mostly by its non-real estate divisions.