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REITs Fall Last Week: Has Real Estate Rally Finally Lost Steam?

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REITs continue to fall

As treasury yields continued to climb upwards last week, correlated sectors like banking, savings and loans, and insurance performed well. Savings and loans stocks in the Financial Select Sector SPDR ETF (XLF) stood out, as they rose 2.51% in the past five trading sessions as of June 26.

During the same period, banking stocks rose 0.91%. Out of the 21 banking stocks within XLF, only three stocks closed the week in red.

Meanwhile, US REITs continued to correct, and REITs in XLF fell 2.40% last week. XLF is composed of 23 REITs, and 22 of those stocks closed the week in red. Macerich (MAC) was the only REIT stock in green but rose a meager 0.39% last week.

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This trend was not just limited to stocks in XLF. It was seen in the overall real estate sector. The iShares Mortgage Real Estate Capped ETF (REM) fell 6.03% last week, while the iShares U.S. Real Estate ETF (IYR) fell 3.35%. For mortgage REIT investors, the markets will turn inhospitable as the Fed begins to move toward normalcy.

REM tracks an index composed of US REITs that hold residential and commercial mortgages. IYR tracks the US real estate sector as a whole.

Moving averages analysis of subgroups

Savings and loans stocks for Hudson City Bancorp (HCBK) and People’s United Financial (PBCT) traded above their 20-day, 50-day, and 100-day moving averages and closed the week at $10.14 and $16.59, respectively.

Among the banking stocks, Bank of New York Mellon closed at $42.98, and State Street Corporation closed at $78.98, slightly below their respective 20-day moving averages of $43.29 and $79.19, respectively.

After repetitive weeks in red, all REITs are trading below their 50-day and 100-day moving averages. Plum Creek Timber (PCL), Host Hotels & Resorts (HST), and American Tower Corporation (AMT) closed the week above their 20-day moving averages.

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