NEW YORK (TheStreet) -- U.S. real estate funds broke out this week, jumping 7.7% as housing starts, building permits and homebuilder confidence improved in the most recent reporting periods.
The average global or international real estate fund we track climbed 2.8% for the week ending Sept. 17. Put together, domestic and foreign funds grew 6% during the period.
Housing starts in August rose to an annual rate of 598,000 from 589,000 in July, building permits increased to 579,000 annually from July's 564,000 reading, and the National Association of Home Builders/Well Fargo index is showing homebuilder confidence for September, while still dour, rose to the highest level in 16 months.
The best-performing fund remains the Direxion Daily Real Estate Bull 3X Shares (DRN), up an Earth-shattering 25%. It's 300% leveraged to the daily performance of the MSCI US REIT Index.Another real estate investment trust, or REIT, that focuses on retail hints at two reasons why this sector is on the mend. First, Kimco Realty (KIM), up 17.7% for the five trading days under review, is selling $250 million in 10-year debt to buy locations from over-leveraged owners who are forced to sell. Second, a Kimco executive for the central U.S. region said Thursday that the ability to get tenants has "improved fairly dramatically since January" and that his company is "getting good-quality retailers" including Ross Stores (ROST) and TJX Cos. (TJX). Vornado Realty Trust (VNO), up 13%, is also maneuvering to secure distressed buying opportunities.
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