Real Estate ETFs Plunge On Case Shiller Report (VNQ, IYR, ICF, RWR)
Real Estate ETFs do not react well to negative Case-Shiller Home Prices Report
The Case-Shiller Home Prices reports turned in record low numbers since the onset of the housing crisis, as the national composite fell nearly 4% while the 10-city and 20-city composites dropped 1.1%.
Today’s report definition clarified: “The S&P/Case-Shiller Home Price Indices are the leading measures for the US residential housing market, tracking changes in the value of residential real estate both nationally as well as in 20 metropolitan regions. Read more at http://www.housingviews.com/“
From The Report: “Data through December 2011, released today by S&P Indices for its S&P/Case-Shiller Home Price Indices, the leading measure of U.S. home prices, showed that all three headline composites ended 2011 at new index lows.”
Real Estate ETFs have not taken the negative news well, naturally, as real estate ETFs including the Vanguard REIT ETF (NYSEARCA:VNQ), the iShares Dow Jones US Real Estate ETF (NYSEARCA:IYR), the iShares Cohen & Steers Realty Majors Index Fund ETF (NYSEARCA:ICF), and the SPDR Dow Jones REIT ETF (NYSEARCA:RWR), have all declined more than .5% so far.
The Vanguard REIT ETF (NYSEARCA:VNQ) which tracks the performance of publicly traded Real Estate Investment Trusts (REITS), has declined .5% so far today, while the iShares Dow Jones U.S. Real Estate Index Fund ETF (NYSEARCA:IYR), which tracks the Dow Jones U.S. Real Estate Index, has also declined .61% today. The iShares Cohen & Steers Realty Majors Index Fund ETF (NYSEARCA:ICF), which tracks the Cohen & Steers Realty Majors Index, has registered a .61% decline so far today as well, while the SPDR Dow Jones REIT ETF (NYSEARCA:RWR), which tracks the Dow Jones U.S. Select REIT Index, has declined .72% today.
Bottom Line: Each of these ETFs likely declined because of the negative Case-Shiller reports released today, which indicated record low home prices since the onset of the housing crisis in 2008. Since each of the above four ETFs have significant volume (over $1.5 million), it is likely that the negative Case-Shiller reports had a profound impact on the real estate ETF world as many traders were spooked by disappointing real estate numbers.
At the end of the day, it appears that the largest single lag on the US economic recovery appears to be the housing sector, which simply refuses to recover as supply continues overwhelm demand. So long as the housing market does not recover, it is likely that the US economic recovery will remain fragile.
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