Residential REITs Fall 4.8 Percent as Mortgage Rates Hit 7 Percent
The S&P 500 Real Estate Sector Index dropped 2.3 percent. Residential REITs led the decline with a 4.8 percent loss.
Real estate stocks fell as the Federal Reserve raised interest rates. This was the first hike in three years. Mortgage rates followed suit. The average 30-year mortgage rate rose to nearly 7 percent. The US 10-year Treasury yield ended the week at 5.00 percent. This was a 3 basis point increase from the previous week.
The S&P 500 Real Estate Sector Index declined 2.3 percent for the week ended September 18. Residential REITs suffered the largest drop. They fell 4.8 percent. Industrial REITs performed best among the sector peers. They lost only 0.7 percent. The broader S&P 500 Index decreased by 0.1 percent.
Legal and corporate developments
Zillow faced a legal setback this week. A court denied the company a preliminary injunction. The case involved Compass and Midwest Real Estate Data. Zillow class C shares fell 10 percent. Compass shares dropped 5.4 percent. Realty Income announced a new joint venture. It will invest in net lease assets in Europe. The project covers Spain, Ireland, Poland, and the Netherlands.
Sector performance details
Life science and industrial REITs led gains. Alexandria Real Estate Equities rose 4.2 percent. EastGroup Properties increased 2.2 percent. Stag Industrial gained 1.2 percent. Rexford Industrial REIT grew 0.9 percent. Pebblebrook Hotel Trust climbed 1.1 percent. Digital Realty formed a joint venture in Turkey. It will develop data centers with Rönesans Infrastructure.
Major decliners in housing
Several stocks posted significant losses. Fermi slid 9.5 percent. Opendoor Technologies fell 8.2 percent. Armour Residential REIT dropped 7.1 percent. Essential Properties Trust lost 7.1 percent. Medical Properties Trust ended the week down 6.6 percent. The higher mortgage rates pressured the housing market. These figures are reported by GN auto markets and housing mortgage rate data.
