New York, Jan 17, 2026, 14:41 EST — Market closed.
- U.S. real estate shares closed Friday on a positive note, as key REIT ETFs climbed roughly 1.2% to 1.3%
- The 10-year Treasury yield climbed to roughly 4.23% on Friday, weighing on rate-sensitive stocks
- Investors now shift focus to a holiday-shortened week and the Fed’s policy meeting scheduled for late January
U.S. real estate stocks climbed late in the week despite rising interest rates. The Real Estate Select Sector SPDR Fund (XLRE) closed Friday up 1.2% at $42.21. Vanguard Real Estate ETF (VNQ) also advanced 1.2%, finishing at $92.62, while iShares U.S. Real Estate ETF (IYR) added 1.3% to end at $98.31.
This is key because a lot of investors see REITs — real estate investment trusts that hold property and usually distribute most of their earnings — as income plays. When long-term Treasury yields climb, those dividends lose some appeal, and borrowing expenses tend to increase.
Friday brought a clear headwind. The benchmark 10-year Treasury yield rose roughly 6.7 basis points to around 4.227% — remember, a basis point equals one-hundredth of a percentage point — after President Donald Trump hinted he might retain economic adviser Kevin Hassett in his current post, dimming speculation about a Fed move. 1
Investors held back from major moves before the long weekend and the start of earnings season, shifting some funds into safer areas. Real estate stood out as one of the top-performing sectors in the S&P 500 for the week. Bruce Zaro, a strategist at Granite Wealth Management, described mid-January as “pretty choppy.” 2
Federal Reserve Vice Chair Philip Jefferson indicated on Friday he’s comfortable with the current policy stance as the Fed heads into its next meeting, saying the central bank is “well positioned” to make adjustments depending on new data. The Fed’s policy rate currently ranges between 3.50% and 3.75%, following a series of quarter-point cuts. Markets are pricing in only a slim chance of another rate cut at the January meeting, Reuters reported. 3
In real estate, rate-sensitive “bond proxy” stocks—those prized mainly for their dividends, similar to bond coupons—showed resilience. American Tower climbed 1.1% to $183.57, Simon Property was up 1.4% at $184.92, and Realty Income increased 1.1% to $61.42.
Logistics landlord Prologis gained 0.3%, closing at $133.21, while data center operator Equinix held steady around $801.78. These names carry weight as key holdings in major real estate portfolios and sector funds.
Prologis will report fourth-quarter earnings on Jan. 21 at 12:00 p.m. ET, a key event investors watch closely for clues on industrial demand and rent trends. 4
The setup isn’t straightforward. Should yields continue creeping up—or if rate forecasts swing wildly amid political chatter and uncertainty over Fed succession—real estate stocks could quickly lose backing as investors push for a wider gap between REIT dividends and Treasury yields.
Trading picks back up Tuesday following Monday’s U.S. market holiday, with eyes on the Fed’s Jan. 27-28 meeting. Investors will be watching closely for clues on whether officials will hold rates steady or hint at potential cuts. 5
