- Equity REITs lost 5.7% in September while the Russell 1000 dipped 0.6%, as the 10-year Treasury yield closed at 5.27%, versus 4.18% when 2025 ended.
- Year to date, REITs have returned 7.9% versus 12.3% for the Russell 1000, led by lodging/resorts at 37.6% and data centers at 28.0%.
- Mortgage REITs fell 13.7% in September and are down 12.4% year to date, with commercial financing REITs off 24.0% and home financing off 8.4%.
REITs sold off in September, with the FTSE Nareit All Equity REITs Index falling 5.7% and lagging broader stocks, according to Nareit.
The Russell 1000 slipped 0.6% over the month and the broad Dow Jones market 0.7%, so REITs took a much bigger hit.
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Rates Take the Blame
Nareit points to rising bond yields and the Fed’s quarter-point rate hike. The hike was widely expected as inflation stays above target, but steadily higher yields have weighed on REITs more than on the broader market.
The 10-year Treasury ended September at 5.27%, its highest in almost a quarter century, versus 4.18% when 2025 closed. CRE Daily reported the move had put CRE lenders on alert.
Year-to-Date Scorecard
Year to date, equity REITs are up 7.9% on a total return basis, trailing the Russell 1000’s 12.3% and the 12.6% for the broad Dow Jones market.
Dividend yields offer another measure: the S&P 500 yields just 1.03%, versus 3.93% for the All Equity index and 15.68% for mortgage REITs.
Sector Breakdown
Lodging/resorts leads sectors this year with a 37.6% total return. Data centers (28.0%) and specialty REITs (23.4%) rank next.
Lodging/resorts alone finished September in the green, up 0.7%. Health care fell 3.4% and data centers 3.8%. Timberland dropped the most, 15.5%, followed by telecommunications at 8.6% and gaming at 8.5%.
Mortgage REITs Take the Brunt
Mortgage REITs fared worst in September, falling 13.7%; commercial financing names lost 13.8% and home financing ones 13.7%.
For the year, mortgage REITs are down 12.4%, split between an 8.4% loss for home financing and a 24.0% drop for commercial financing.
Why It Matters
REITs are rate-sensitive, and September showed how a bond selloff can overwhelm sector strength, with every major group except lodging losing ground. Commercial mortgage REITs are the most exposed, given their year-to-date loss of 24.0%.
The pullback is not the whole story, though, as returns remain positive for the year and several sectors are posting large gains.
What’s Next
Watch the 10-year yield and further Fed moves, which will set the tone for REIT returns in the fourth quarter.
