After getting clobbered during the stock market correction of late 2018, ETFs tied to the real estate market have rebounded with a fury. What a difference six months makes!

The Federal Reserve has played a role in this. After it had gradually boosted short-term interest rates since December 2015, it changed course at its March 2019 meeting and left the federal funds rate unchanged at 2.5 percent. That, along with expectations of no further immediate rate hikes, has instilled confidence in the real estate sector.

One of the beneficiaries is the Real Estate Select Sector SPDR Fund (XLRE), which tracks 32 real estate companies within the S&P 500. It has jumped 19 percent year-to-date. Top holdings such as ProLogis, Public Storage and Simon Property Group have helped propel this fund.

Known for high dividend yields, real estate investment trusts (REITs) are a natural draw for income-seeking investors and retirees. By law, REITs must distribute at least 90 percent of their taxable income to shareholders via dividend payments. The annual yield for the REIT-focused XLRE fund is 3.24 percent versus just 1.86 percent for the SPDR S&P 500 ETF (SPY). 

Niche segments within the real estate market are being pushed higher, too. 

The iShares Residential Real Estate ETF (REZ), which concentrates its holdings on apartment REITs, has jumped 17.7 percent. Likewise, the strong performance for U.S. real estate equities has spread internationally and the iShares Global REIT ETF (REET) is ahead by 15.5 percent the year.

Lower interest rates have been a boon to the homebuilding sector. Today, the rate on 30-year U.S. mortgages is near 4 percent and is almost one whole percentage point lower compared to November 2018.

The SPDR S&P Homebuilders ETF (XHB) has soared 21 percent this year. While falling mortgage rates have helped homebuilders and some home buyers, rising property prices are still constricting home affordability among many consumers.

Median home prices in this year's first quarter were unaffordable to individuals making the average wage in 71 percent of U.S. counties, according to the Q1 2019 U.S. Home Affordability Report produced by ATTOM Data Solutions.

Nevertheless, the affordability situation has improved in many markets. For example, 51 percent of the 473 counties analyzed for the report were more affordable in this year's first quarter than their historic affordability averages. Some of those places include highly populated areas such as Cook County, Ill.; Miami-Dade County, Fla.; Santa Clara, Calif.; Middlesex, Mass. and Suffolk County, N.Y.

In summary, real estate investors accustomed to receiving steady dividends are getting much more than that these days in the form of dazzling market returns. And if the current cycle of moderate interest rate levels continues, ETFs linked to homebuilders and REITs should remain in good shape.

Ron DeLegge is founder and chief portfolio strategist at ETFguide.