Bill Gross has been investing in real estate investment trusts, also known as REITs. The Federal Reserve's commitment to fighting inflation through increasing rates could have a big impact on the residential real estate market, the Pimco founder said on CNBC's " Halftime Report " on Tuesday, calling it a "caution" to the housing market. Specifically, if the central bank continues hiking rates, "the ability to equitize some of your housing, which is moving down in price, is going to be severely limited." Nevertheless, he described the state of residential real estate as being "a little bit better" than commercial, and the Bond King has spotted an opportunity in mortgage REITs with yields of 14% to 16%. He identified Annaly Capital Management and AGNC Investment Corp as two he likes, adding that he bought some of the former earlier in the day. "They depend upon the 30-year mortgage moving down … from 6% to close to 5%," he said of REITs. "Ultimately if that spread narrows between 30-year mortgages and 10-year Treasurys, that 14%, 15%, 16% is a pretty good return." Generally, REITs are companies that own or finance income-producing real estate, or real estate-related assets, across property sectors. In particular, AGNC invests in agency residential mortgage-backed securities, while Annaly invests in and finances residential and commercial assets. AGNC offers a dividend yield of 14%, while Annaly's yield comes in at about 16%, according to FactSet. Gross noted that both Annaly and AGNC are "volatile" but said the spreads have widened "so much." "As long as the dividends are captured and continued, and I think they will be, that type of yield covers a lot of price depreciation," Gross said. Earlier this year, Gross predicted the Fed would be unable to raise its benchmark interest rate above 2.5% without cracking the economy. He's now calling on the central bank to put an end to the increases. Last week, the Fed said it will hike interest rates to as high as 5.1% in 2023 before calling it quits.