Published
2 hours ago
on
February 14, 2026
| 1,999 views
-->
By
Julia Wendling
Graphics & Design
- Athul Alexander
How Do Interest Rates Impact the Real Estate Market?
Key Takeaways
- Real estate performance has historically strengthened during periods of falling interest rates.
- Lower rates reduce financing costs and improve real estate valuations, supporting returns.
- With rate cuts expected into mid 2026, real estate could benefit from a renewed tailwind.
Interest rates play a central role in real estate returns. When borrowing costs fall, real estate investment trusts (REITs) often see improved performance as financing becomes cheaper and income-producing assets become more attractive relative to fixed income.
This visualization, created in partnership with Inigo, provides visual context to the relationship between REIT performance and interest rates.
The Historical Trend
Since 2016, periods of easing or stable rates have generally coincided with rising REIT values. When rates declined sharply in 2020, REIT performance rebounded quickly following the initial shock, and gains accelerated again during the low-rate environment of 2021.
| Year | Average Federal Funds Effective Rate (%) | All REITs (index) |
|---|---|---|
| 2016-01-01 | 0.34 | 100.00 |
| 2017-01-01 | 0.65 | 112.78 |
| 2018-01-01 | 1.41 | 118.75 |
| 2019-01-01 | 2.40 | 131.01 |
| 2020-01-01 | 1.55 | 152.97 |
| 2021-01-01 | 0.09 | 143.22 |
| 2022-01-01 | 0.08 | 186.45 |
| 2023-01-01 | 4.33 | 167.30 |
| 2024-01-01 | 5.33 | 161.03 |
| 2025-01-01 | 4.33 | 179.40 |
| 2025-07-01 | 4.33 | 178.81 |
Even as the economy navigated the COVID-19 pandemic, REIT performance rose by 21 percent between the first quarter of 2020 and the second quarter of 2022, when the Fed began raising rates after pandemic-era cuts.
Why the Next Rate Cuts Matter
After a rapid tightening cycle between 2022 and 2023, elevated rates weighed on real estate valuations. However, recent data shows REIT performance improving as expectations shift toward easing monetary policy.
With the Federal Reserve expected to continue cutting rates into mid 2026, reaching a median outlook of 3.25 to 3.50 percent by year end, borrowing conditions could become more supportive. For investors, this environment has historically provided a meaningful boost to real estate returns, reinforcing the close relationship between interest rates and REIT performance.
Explore the data behind emerging global property risks.
You may also like
-
Real Estate2 days ago
6 Trends Reshaping U.S. Property Insurance
From climate volatility to economic and technological shifts, a wide range of forces are reshaping property risk in the U.S.
-
Environment4 months ago
Ranked: The 10 Most Powerful U.S. Hurricanes (1900-2025)
Hurricanes are a defining force in the U.S. climate, capable of leaving behind profound environmental, social, and economic devastation.
-
Environment5 months ago
Mapped: Which U.S. Cities Saw Record-Breaking Temperatures in 2024?
Global temperatures are climbing—but how is this trend playing out across the United States, and which regions are being hit the hardest?
-
Environment6 months ago
Ranked: The Most Expensive U.S. Wildfire Events, So Far
Wildfire events are growing increasingly frequent and destructive around the world as human-driven climate impacts continue to escalate.
-
Environment6 months ago
Mapped: The United States of Drought
Drought grips much of the U.S., affecting over 60 million people today.
-
Healthcare6 months ago
The $58B Weight Loss Drug Market in One Chart
Weight loss drugs have surged in popularity in recent years, transforming the pharmaceutical landscape. Which brands are dominating this space?
-
Healthcare7 months ago
Ranked: Which Areas Receive the Most Pharma R&D?
The pharmaceutical industry has made enormous strides in treating—and even curing—a wide range of diseases and conditions. Which areas are seeing the most R&D in 2025?
-
Healthcare7 months ago
The $5.6T Pharmaceutical Industry in One Chart
Pharma giants don’t just make medicine—they shape the future of healthcare. Who are the world’s major players?
-
Crime7 months ago
6 Fraud Trends Reshaping Risk in 2025
The fraud and financial crime landscapes are evolving rapidly. What are the key threats shaping risk in 2025?
-
Cryptocurrency7 months ago
Ranked: The 10 Biggest Digital Heists
Some of the largest digital heists didn’t rely on brute-force hacking, they exploited the weakest link in security: human trust.
-
Crime7 months ago
The Most Costly Financial Crimes in 2024
As cybersecurity threats escalate, which financial crimes are causing the most harm? The FBI has the data.
-
Crime7 months ago
Mapped: U.S. Financial Crime Activity by State
Suspicious activity has been rising in the U.S., but is it spread evenly throughout all 50 states? Certainly not.
-
Crime8 months ago
Ranked: America’s Most Common Financial Crimes
As technology and AI become more widespread, fraud and other suspicious activity are rising across America. Which types are the most common?
-
Economy8 months ago
Tracking the $3.1 Trillion Financial Crime Pandemic
From money laundering to fraud, financial crime acts as a drain on the economy, totaling an incredible $3.1 trillion.
-
Politics9 months ago
Which Types of Government Rule the World?
Over half the global population is ruled by non-centrist types of government, including autocracies and left or right wing parties.
-
Politics9 months ago
Breaking Down the $524 Billion Investment Needed to Rebuild Ukraine
Ukraine will require an estimated $524B over the next decade to recover from the Russia-Ukraine war. Which sectors have been most impacted?
-
Politics9 months ago
Are Tariffs Causing U.S. Inflation Fears?
Amid tariff increases, consumers’ expectations for U.S. inflation in the next five years have reached their highest level since March 1991.
-
Politics9 months ago
Ranked: Executive Orders by President in the First 100 Days
In his first 100 days, President Trump has issued far more executive orders than any other president in history.
Subscribe
Please enable JavaScript in your browser to complete this form.Join 375,000+ email subscribers: *Sign Up