By Kevin Grewal, Editorial Director at www.SmartStops.net
NEW YORK ( TheStreet) -- Over the past few months, the real estate sector has been outperforming analysts' expectations and pleasantly surprising investors. The recovery has also boosted exchange-traded funds that track the sector.
Investors should keep in mind, however, that there are plenty of signs to indicate that these gains are not sustainable or representative of the real health of the sector.
Most recently, the National Association of Realtors reported that existing-home sales increased 10.1% in October over the previous month, on a seasonally adjusted basis. On the surface, this is great news, because home sales traditionally increase in the first half of the year and decline in the second half.However, this deviation from history has likely been caused by the $8,000 first-time homebuyer tax credit implemented by the Obama Administration. The credit was originally set to expire on Nov. 30, and some experts say that deadline caused many people to rush to complete purchases that they wouldn't have made without the tax credit. The influx of home buyers has pushed supply and demand closer to equilibrium levels, which has had a positive effect on home prices. The S&P Case-Schiller index, which measures housing prices in 20 major U.S. metropolitan areas, rose by 0.3% to a reading of 144.96 in September. This was the fourth straight monthly increase. However, there are sources of concern in the latest S&P Case-Shiller report. Of the 20 cities measured, only 11 indicated month-over-month increases. In previous months, larger numbers of cities reported higher prices. Also, on a year-over-year basis, overall prices are still down slightly more than 9%.
Select the service that is right for you!COMPARE ALL SERVICES
Jim Cramer and Stephanie Link actively manage a real portfolio and reveal their money management tactics while giving advanced notice before every trade.
- $2.5+ million portfolio
- Large-cap and dividend focus
- Intraday trade alerts from Cramer
- Weekly roundups
Access the tool that DOMINATES the Russell 2000 and the S&P 500.
- Buy, hold, or sell recommendations for over 4,300 stocks
- Unlimited research reports on your favorite stocks
- A custom stock screener
- Upgrade/downgrade alerts
Jim Cramer's protege, David Peltier, identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.
- Diversified model portfolio of dividend stocks
- Alerts when market news affect the portfolio
- Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
All of Real Money, plus 15 more of Wall Street's sharpest minds delivering actionable trading ideas, a comprehensive look at the market, and fundamental and technical analysis.
- Real Money + Doug Kass Plus 15 more Wall Street Pros
- Intraday commentary & news
- Ultra-actionable trading ideas
Our options trading pros provide daily market commentary and over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.
- 100+ monthly options trading ideas
- Actionable options commentary & news
- Real-time trading community
- Options TV