Happy President’s Day. Texas is leading in home buyer migration, builder confidence is rising, and a surge in commercial/multifamily borrowing signaling market resilience. Mortgage rates continue to inch up, impacting affordability, while the commercial real estate sector anticipates robust growth in 2025 despite potential headwinds. Economic indicators suggest persistent inflationary pressures, potentially delaying Fed rate cuts and influencing market dynamics across all real estate sectors.

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Residential Real Estate

1. Texas Overtakes Florida as U.S. Migration Leader The Lone Star State is shining bright, leading the nation in home buyer migration with a net influx of 137,582 in 2023. This surge, primarily driven by millennials and Gen X, underscores Texas’s growing appeal due to robust job opportunities and relative affordability. The shift signals potential long-term impacts on housing demand and market dynamics in the state 1.
2. Home Builder Confidence Rises for Third Straight Month Optimism is building in the construction sector. The National Association of Home Builders/Wells Fargo Housing Market Index climbed to 48 in February, up from 44 in January. This marks the third consecutive monthly increase, reflecting growing confidence among builders. The trend suggests potential increases in new home construction, which could help alleviate inventory shortages in many markets 2.
3. Existing Home Sales Drop 1.7% in January The National Association of Realtors reports a 1.7% decline in existing home sales for January, with the seasonally adjusted annual rate falling to 4.00 million units. Despite this dip, the median existing home price reached a new record of $379,100. This combination of decreased sales and rising prices points to ongoing inventory challenges and affordability concerns in the housing market 3.

Mortgage Markets

1. 30-Year Fixed Mortgage Rates Inch Up to 6.94% The benchmark 30-year fixed mortgage rate has seen a slight increase, rising by 2 basis points to 6.94%. This uptick reflects ongoing market reactions to inflation concerns and anticipated Federal Reserve policies. Prospective homebuyers and refinancers should monitor these rates closely as they directly impact affordability and monthly payments 4.
2. Jumbo Mortgage Interest Rates on the Rise Borrowers in the high-end market face higher costs as jumbo mortgage rates climb to 7.00%, a 2 basis point increase over the past week. This rise particularly affects those seeking loans for luxury properties or in high-cost areas, potentially influencing buying decisions in premium real estate markets 4.
3. Home Builders Offer Rate Buydowns to Attract Buyers In response to the high-rate environment, home builders are continuing to offer mortgage rate buydowns, especially on newly constructed homes. This strategy aims to make homeownership more accessible by reducing the initial interest burden on buyers. It’s a trend worth watching for those considering new construction purchases 5.
4. Consumer Complaints in Mortgage Services Highlight Payment Process IssuesRecent data from the Consumer Financial Protection Bureau (CFPB) shows that “Trouble during payment process” remains a major issue in mortgage services. This trend reflects ongoing challenges in real estate financing and could impact both residential and commercial mortgage markets, potentially leading to increased scrutiny of lending practices and servicing standards 6. (Note that even if the CFPB is wound down the laws they enforce are still in force and will be taken up by states and other federal agencies)

Commercial Real Estate (Including Multifamily)

1. Commercial/Multifamily Borrowing Surges in Q4 2024 The Mortgage Bankers Association (MBA) reports a significant increase in commercial and multifamily mortgage loan originations in the fourth quarter of 2024. Compared to Q3 2024, there was a 55% increase in originations for retail properties, a 43% increase for office properties, and a 22% increase for multifamily properties. This surge indicates a potential turning point in the commercial real estate market, with investors showing renewed confidence across various sectors 7.
2. Forecast: Commercial/Multifamily Lending to Reach $583 Billion in 2025 The MBA projects a 16% increase in commercial and multifamily mortgage borrowing and lending for 2025, reaching an estimated $583 billion. Multifamily lending alone is expected to rise to $361 billion. This forecast suggests a robust recovery in the commercial real estate sector, driven by stabilizing market conditions and abundant capital ready for deployment 8.
3. Federal Real Estate Reduction Strategy Impacts Office Market The Department of Government Efficiency (DOGE) is targeting federal leases, potentially shaking the commercial real estate market’s recovery. This strategy aims to reduce the federal government’s real estate footprint, which could significantly impact office markets in areas with high concentrations of federal agencies, such as Washington, D.C. The move highlights the ongoing challenges faced by the office sector as it adapts to changing work patterns and government policies 9.

Economic News & Data

1. Inflation Surge May Delay Fed Rate Cuts January’s Consumer Price Index (CPI) came in hotter than expected, potentially pushing back the timeline for Federal Reserve rate cuts. This development suggests that mortgage rates could remain elevated longer than previously anticipated, impacting affordability and market dynamics throughout 2025 4.
2. Federal Reserve Presidents to Speak on Economic Outlook Keep your ears open today as several Federal Reserve Presidents are scheduled to speak, potentially offering insights into future monetary policy decisions. These speeches could provide valuable clues about the direction of interest rates and overall economic strategy, with significant implications for the real estate and mortgage markets 5.
3. Experts Forecast 3.5% Home Price Growth for 2025 Despite the current high mortgage rate environment, industry experts are projecting a 3.5% increase in home prices for 2025. This forecast suggests continued resilience in the housing market, balancing affordability challenges with persistent demand. It’s a positive sign for homeowners but may present ongoing hurdles for first-time buyers 10.

That wraps up today’s Daily Dose of Real Estate News. The addition of the Commercial Real Estate section highlights the interconnected nature of various real estate sectors and their collective impact on the broader market. Stay tuned for more updates, and remember to leverage this information to better serve your clients and navigate the ever-changing real estate landscape. Have a productive day!