REITs continue to decline in June

U.S. REITs fell 7.4 percent in June, according to the FTSE Nareit Equity REITs Index. Year-to-date, the index is down 20.2 percent. The drop came amid a broader market slump, with the S&P 500 Index falling 8.4 percent in June.

REITs are weighed down by inflation, rate hikes by the Federal Reserve and concerns about slowing economic growth. The Fed increased the target federal funds rate by 0.75 basis points in June, and many expect another hike of 0.75 basis points at the end of July. Despite high inflation and rising interest rates, as well as ongoing supply-chain issues, U.S. employment remains strong, indicating the economy may not tip into recession, according to the latest weekly economic briefing from Oxford Economics.

Every property subsector recorded a decline in the past month, according to Nareit. The biggest drops in June were among hotel REITs (–19.7 percent), regional mall REITs (–16.8