After the United States elected a new president, the thought of new policies, including tariffs and a view on immigration, spooked some investors out of the real estate sector. The reasons why stocks in the space pulled back recently can be attributed to both the potential cost increase from trade tariffs and the tightening supply of construction labor, which would further increase costs for homebuilders, especially.
Higher costs result in lower margins, lower earnings per share (EPS), and, of course, lower stock prices. With this in mind, investors can also consider the real estate market as a whole to potentially offset these negative effects, realizing that it is near the bottom of its cycle and could bring these stocks back to their former glory when an inevitable rebound comes around.
