Real estate and REIT stocks fell sharply after the Federal Reserve's latest policy meeting. While the central bank held rates steady, the revelation that three FOMC members dissented in favor of a rate hike spooked investors. This hawkish dissent signals a growing possibility of future rate hikes to combat persistent inflation, which would increase borrowing costs and pressure property valuations.
The broader market also sold off, but the interest-rate sensitive real estate sector was hit particularly hard as rising bond yields make REIT dividends less attractive to investors.