Real estate stocks slump as Iran conflict pushes Treasury yields up, muddles path to rate cuts

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Daenin Arnee

Real estate stocks slumped this week as the Iran conflict pushed up Treasury yields, muddling the path to interest rate cuts.

A conflict in the Middle East erupted [https://seekingalpha.com/article/4879812-what-moved-markets-this-week] after Iranian Supreme Leader Ayatollah Ali Khamenei was killed, triggering war escalations between the U.S. and Israel vs. Iran and uncertainty within oil supply chains.

The yield on the 10-year note [https://seekingalpha.com/symbol/US10Y/historical-price-quotes] (US10Y) rose by 18 basis points to close the week at 4.13%.

Iran war pushed up the government bond yields, boosted economic uncertainty, and further muddled the Federal Reserve's path towards interest rate cuts, according to [https://www.capitaliq.spglobal.com/apisv3/spg-webplatform-core/news/article?id=99397697&KeyProductLinkType=14&utm_campaign=top_news_1&utm_medium=top_news&utm_source=news_home] a report by S&P Global Market Intelligence.

The launch of the military campaign has triggered higher oil prices and a rise in near-term inflation expectations, according to the report released on Friday.

"The length of this [war] really determines where everything is going," Molly Brooks, a US rates strategist with TD Securities, told Market Intelligence.

For now, the economic fundamentals do not support a significant decline in longer-term interest rates, the report noted, adding that the labor market has not meaningfully weakened and inflation remains above the Fed's 2% target.

The S&P 500 index declined 2.02% week-over-week to close at 6,740.02.

The S&P 500 Real Estate Index Sector (SP500-60 [https://seekingalpha.com/symbol/SP500-60]) was down 2.30% from the prior week to 271.94 points, while the accompanying State Street Real Estate Select Sector SPDR ETF (XLRE [https://seekingalpha.com/symbol/XLRE]) declined 2.17% to $42.89.

The Dow Jones REIT Indx Equity REIT Total Return Index (REIT:IND [https://seekingalpha.com/symbol/REIT:IND]) fell 2.08%, while the FTSE Nareit All Equity REITs index dipped 2.09%.

WEEKLY WINNERS & LOSERS

Among largecap stocks, CBRE Group (CBRE [https://seekingalpha.com/symbol/CBRE]) led the weekly losers, retreating 7.33% from the prior week to $136.83.

The stock extended losses from last week, when Goldman Sachs lowered its price target on CBRE on the back of the company's fourth-quarter earnings call.

Prologis (PLD [https://seekingalpha.com/symbol/PLD]) followed, with a 5.63% week-over-week decline to $134.54. The industrial REIT presented at two conferences: 47th Annual Raymond James Institutional Investor Conference [https://seekingalpha.com/article/4877626-prologis-inc-pld-presents-at-47th-annual-raymond-james-institutional-investor-conference] and Citi's Miami Global Property CEO Conference [https://seekingalpha.com/article/4877127-prologis-inc-pld-presents-at-citis-miami-global-property-ceo-conference-2026-transcript].

For the gainers, CoStar Group (CSGP [https://seekingalpha.com/symbol/CSGP]) led, adding 8.40% week-over-week to $48.38. This week the real estate services company disclosed [https://seekingalpha.com/news/4560914-costar-group-insiders-including-ceo-buy-shares-after-stock-slides] insider purchases in the wake of the stock's recent slide. Shares were bought by President and CEO Andrew Florance; Frederick Saint, president of the company's Marketplaces unit; and Director Rachel Glaser.

KE Holdings (BEKE [https://seekingalpha.com/symbol/BEKE]) (+1.34% W/W to $16.67) and Crown Castle (CCI [https://seekingalpha.com/symbol/CCI]) (+0.99% W/W to $90.43) were the other notable gainers. This week, Bernstein SocGen Group initiated coverage on Crown Castle with an outperform rating and a price target of $102.00.

SL Green Realty (SLG [https://seekingalpha.com/symbol/SLG]) led the midcap gainers of the week, advancing 5.16% to $38.75. The office REIT announced [https://seekingalpha.com/news/4559317-sl-green-names-president-sells-madison-ave-building-updates-on-q1-activity] on Monday a promotion of its chief investment officer to the post of president, the close of the sale of a Manhattan building, and an update on its office leasing activity in the first two months of the year.

Fermi (FRMI [https://seekingalpha.com/symbol/FRMI]) (-19.66% to $8.01) and Compass (COMP [https://seekingalpha.com/symbol/COMP]) (-10.77% to $8.70) were the top losers in the category.

Smith Douglas Homes (SDHC [https://seekingalpha.com/symbol/SDHC]) (-10.83% to $14.00), Empire State Realty (ESBA [https://seekingalpha.com/symbol/ESBA]) (-10.74% to $5.40), Two Harbors Investment (TWO [https://seekingalpha.com/symbol/TWO]) (-10.36% to $9.26), Claros Mortgage Trust (CMTG [https://seekingalpha.com/symbol/CMTG]) (+9.62% to $2.62), and Arbor Realty Trust (ABR [https://seekingalpha.com/symbol/ABR]) (+9.58% to $8.69) were the significant smallcap movers of the week.

Here is a look at the subsector performances for the week:
[S&P, Nareit]
Percentage-wise price change across real estate indices

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