REIT ETFs Sell Off On New Consumer Price Index Report

The real estate investment trust sector (REIT) declined following the Feb. 14 release of the January consumer price index (CPI), which came in at slightly less than expected but continued to show inflation issues. The two big REIT exchange-traded funds (ETFs) could not make it back above their February highs.

The daily price chart for the Real Estate Select Sector SPDR Fund XLRE holds 33 publicly traded real estate investment trusts and serves as a benchmark for how the group is doing as a whole. The daily price chart looks like this:

After rallying up to just over $42 at the beginning of February, the fund has dropped to $39.91 following the release of the CPI numbers. You can see that the 200-day moving average (the red line) continues its steady downtrend. A hopeful sign for investors is that the 50-day moving average (the blue line) turned around in December and keeps moving higher, at least for now.

Here’s how the weekly chart looks:

The fund still has a long way to go to make it back to its late 2021/early 2022 peaks, but the move upward off of the October lows seems strong. The price is back above the 200-week moving average and, in early February, briefly made it above the 50-week moving average. The question is: Can it keep the momentum going?

The iShares U. S. Real Estate Exchange Traded Fund IYR contains 82 holdings of publicly traded real estate investment trusts — a broader portfolio than the Real Estate Select Sector SPDR Fund. The daily price chart has a similar look:

It has declined from that early February peak of $96 down to the current price of $91.12 with the consumer price index now weighing on the REITs held in the fund. By remaining above both of the moving averages, the iShares U.S. Real Estate ETF continues to show strength. Past performance is no guarantee of future results.

The weekly chart is here:

Note the peak price of $112.50 in late 2021/early 2022 and the subsequent downtrend from there. Is the October low price of $75 a bottom? That remains to be seen.

Not investment advice. For educational purposes only.

Over the past five years, private market real estate investments have outperformed the publicly traded REIT market by about 50%. Check out Benzinga’s Real Estate Offering Screener to discover the latest passive real estate investments.

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