The CRE Finance Council’s third-quarter 2026 Sentiment Index dropped sharply, signaling growing concern among industry leaders about financing conditions and the U.S. economy. The decline was widespread across the survey, with every core measure weakening. Respondents were particularly wary of borrowing costs and the economic outlook over the coming year.
Key takeaways
The results point to a broad deterioration in sentiment, led by concerns about rates and economic performance.
- The index fell 17.5% to 83.3, its lowest reading since the third quarter of 2023.
- Ninety-two percent of respondents said mortgage and capitalization rates would negatively affect CRE finance businesses, up from 53% in the second quarter.
- Sixty-two percent expect the U.S. economy to perform worse over the next 12 months, compared with 24% in the prior quarter.
Sentiment falls across the survey
The Board of Governors Sentiment Index declined from 101.0 in the second quarter to 83.3 in the third. All nine core questions registered quarter-over-quarter declines, suggesting the shift was not confined to a single concern. The reading was the lowest since the third quarter of 2023, when the index stood at 82.7.
Borrowing costs weigh on outlook
Interest-rate expectations recorded one of the largest drops. The share of respondents who expect mortgage and cap rates to weigh negatively on CRE finance businesses rose by 39 percentage points from the second quarter, reaching 92%. That was the most negative rate outlook in the survey since the third quarter of 2022.
CREFC Managing Director Raj Aidasani said members’ concerns now extend beyond the Federal Reserve’s next decision. He pointed to inflation, federal budget deficits and uncertainty about long-term borrowing costs as additional sources of concern.
Economic expectations turn more cautious
Views of the broader economy also weakened significantly. Nearly two-thirds of respondents now anticipate worse U.S. economic performance over the next 12 months, compared with roughly one-quarter in the previous survey. The 62% share is the highest since the first quarter of 2025.
Together, the rate and economic outlook results indicate that industry leaders see a more challenging environment ahead for commercial real estate finance. The survey’s broad-based decline underscores how financing costs and macroeconomic uncertainty are shaping expectations across the sector.