Real estate stocks lose out in May, health care REITs notable laggards

May 30, 2026 - 23:56

Real estate stocks ended May in negative territory, falling short of the broader market's gains. While the S&P 500 climbed more than 5% during the month, the real estate sector posted average losses, with health care real estate investment trusts emerging as notable laggards.

Investors rotated away from property-focused equities amid rising interest rate uncertainty and shifting expectations for Federal Reserve policy. Higher borrowing costs continued to weigh on property valuations and deal activity, making real estate stocks less attractive compared to the tech-driven rally in the broader index.

Health care REITs, which own hospitals, senior housing, and medical office buildings, were hit particularly hard. Analysts pointed to concerns over operating expenses, slower rent growth in certain sub-sectors, and lingering worries about occupancy rates in senior living facilities. Some of the largest health care REITs saw their share prices drop by mid-single digits or more over the month.

Other segments within real estate, such as industrial and data center REITs, fared better but still could not offset the overall weakness. The divergence between real estate and the broader market highlights a cautious outlook among property investors, who are waiting for clearer signals on interest rates and economic growth before committing more capital.