The index, which tracks sentiment across 12 quarters, fell three points from the previous quarter and 18 points year-over-year. A record 45% of surveyed investors reported that current market conditions have deteriorated over the past year, while only 26% believe the landscape has improved. Jeffrey Tesch, CEO of RCN Capital, attributed this pessimism to a convergence of challenges, including escalating renovation costs, downward pressure on rental rates, and the ongoing conflict in Iran.

High borrowing costs remain the primary hurdle, with 55% of investors identifying financing as their biggest obstacle. With 73% of respondents expecting interest rates to remain stagnant or rise through the end of the year, relief appears unlikely. Consequently, purchase activity has slowed significantly, as 32% of investors have opted to pause acquisitions entirely for 2026. Despite these pressures, a shift in market perception has emerged regarding home prices; over 60% of investors now anticipate price increases over the next six months, likely driven by persistent inventory shortages.