CREFC Sentiment Index Falls to Three-Year Low Amid Economic Concerns

NEW YORK, Oct. 5, 2026 /CourierPR/ -- The CRE Finance Council (CREFC) today released its Third-Quarter 2026 (3Q26) Board of Governors (BOG) Sentiment Index survey results. The index fell 17.5% to 83.3 from 101.0 in the previous quarter, its lowest reading since the third quarter of 2023 (82.7), well below the survey's 4Q17 baseline of 100.0 and 34% below the record high of 126.6 set in the fourth quarter of 2024. The decline was broad-based, with all nine core questions weakening quarter-over-quarter. The interest rate and economic outlook questions posted the largest declines and together accounted for roughly 30% of the drop, with the remaining seven questions contributing the balance.

Conducted from September 21-28, 2026, the survey captured a market adjusting to a 10-year Treasury yield at 5%, roughly a full percentage point above its level a year earlier, even as the federal funds rate sits a quarter point lower. Neutral remained the most common answer on seven of the nine core questions, but the share of negative responses increased on eight of the nine.

Demand-side readings weakened further, with borrower demand turning net negative and investor demand losing its positive tilt. Twenty-four percent of respondents expect stronger borrower demand for CRE and multifamily financing over the next 12 months versus 35% expecting weaker demand, the first net-negative reading since the fourth quarter of 2022. Investor demand expectations are evenly split, with 30% expecting more demand and 30% expecting less. Most respondents (65%) still expect unchanged liquidity, but the share expecting a contraction rose to 24% from 5%.

Key Highlights from 3Q26 Index Core Questions: - Economic Outlook: Economic expectations deteriorated sharply. Sixty-two percent now expect the U.S. economy to perform worse over the next 12 months, up from 24% in the second quarter of 2026 and the highest share since the first quarter of 2025. Thirty-five percent expect the same and 3% expect improvement, down from 18%. - Federal Policy: Policy optimism faded rather than reversing. Only 11% expect a positive impact from federal legislative and regulatory actions, down from 26%, while 65% expect a neutral impact (47% in the second quarter of 2026). The negative share edged down to 24% from 26%. - Interest Rate Impact: Rates are the weakest core reading for a second consecutive quarter, and by a wide margin. Ninety-two percent expect mortgage and cap rates to weigh negatively on CRE finance businesses, up from 53% in the second quarter of 2026 and the most negative rates reading since the third quarter of 2022 (98%). Five percent are neutral and 3% expect a positive impact. - CRE Fundamentals: Expectations turned net negative for the first time since the first quarter of 2025. Thirty percent expect fundamentals (occupancy, rents, NOI) to worsen, up from 11%, while 22% expect improvement (37% in the second quarter of 2026) and 49% expect no change. - Transaction Activity: Investor demand expectations are no longer net positive for the first time since the second quarter of 2023. Thirty percent expect increased demand for CRE and multifamily assets over the next 12 months, down from 42%, while 30% expect less demand (11% in the second quarter of 2026) and 41% expect no change. - Financing Demand: Borrower demand expectations turned net negative for the first time since the fourth quarter of 2022. Twenty-four percent expect increased demand for CRE and multifamily financing, down from 45%, while 35% expect less demand (13% in the second quarter of 2026) and 41% expect no change. - Market Liquidity: The negative tail widened. Sixty-five percent expect no change in CRE debt market liquidity (71% in the second quarter of 2026), while 24% expect a contraction, up from 5%, and 11% expect improvement, down from 24%. - CMBS and CRE CLO Outlook: Views turned net negative. Thirty-two percent expect CMBS and CRE CLO demand and spread trends to weigh on performance, up from 13% in the second quarter of 2026, while 22% expect a positive impact (37% in the second quarter of 2026) and 46% are neutral. - Overall Industry Sentiment: The negative share nearly quintupled. Thirty-eight percent are negative on CRE finance businesses over the next 12 months, up from 8% in the second quarter of 2026 and the largest negative share since the first quarter of 2025, while 51% are neutral (68%) and 11% are positive (24%).

The survey consists of nine equally weighted core questions and five topical questions, which are not factored into the BOG Index. Ninety-three percent of the BOG responded to the 3Q26 survey.