Today’s newsletter was prepared by our AI platform ALFReD.

Key Takeaways

• Pending home sales declined 6.3% in April 2025, with all four U.S. regions experiencing month-over-month losses, as high mortgage rates continue to dampen buyer activity despite increasing inventory 1
• The average 30-year fixed mortgage rate stands at 6.99% as of May 29, 2025, up from 6.86% the previous week, with rates expected to remain stubbornly high throughout most of 2025 2 3
• Commercial real estate values are declining across all property types for the first time since 2010, with multifamily taking the hardest hit at 12.1% year-over-year and 1.5% month-over-month drops 4
• U.S. real GDP increased at an annual rate of 2.1% in the first quarter of 2025 according to the second estimate, with residential investment declining by 3.9% after two consecutive quarters of growth 5
• Initial unemployment insurance claims increased to 242,000 for the week ending May 24, 2025, continuing a trend of gradually rising jobless claims that could impact housing demand 6
• HomeServices of America’s new CEO Chris Kelly is changing the company’s acquisition strategy to focus on streamlining backend systems while preserving local brand cultures 7
• Digital mortgage lender Lower announced the acquisition of real estate portal company Movoto, integrating the home search and financing sides of the homebuying process 8

Residential Real Estate Markets

Overview: The housing market is showing signs of rebalancing with inventory rising to multi-year highs while sales activity remains constrained by high mortgage rates. Home price growth continues at a moderate pace, though luxury segments are experiencing notable weakness.

• Market Balance Shifting: The U.S. housing market has entered “balanced market territory” for the first time in nearly five years, with months supply at its highest level since 2020 9
• Inventory Growth: Active inventory climbed 29.7% year-over-year as of May 24, 2025, marking the 81st consecutive week of annual gains with over 1 million homes for sale, the highest level since December 2019 10
• Pending Sales Decline: Pending home sales fell 6.3% in April 2025, with all four U.S. regions experiencing month-over-month losses; NAR Chief Economist Lawrence Yun emphasized that “lower mortgage rates are essential to bring home buyers back into the housing market” 1
• Home Price Growth: The S&P CoreLogic Case-Shiller Index recorded a 3.4% annual gain in U.S. home prices in March 2025, with the 10-City Composite up 4.8% and the 20-City Composite rising 4.1%; New York led gains while Tampa saw price declines 11
• FHFA Price Index: U.S. house prices rose 4.0% between Q1 2024 and Q1 2025, with Rhode Island (11.4%), West Virginia (9.3%), and Connecticut (9.0%) seeing the highest annual appreciation 12
• Luxury Market Weakness: Luxury home sales sank nearly 10% in April 2025, marking the lowest level for that month since 2014, as wealthy buyers adopt a wait-and-see approach amid economic uncertainties and stock market volatility 13

Mortgage Markets

Overview: Mortgage rates continue their upward trajectory, dampening both refinance and purchase activity. The Federal Reserve’s cautious stance amid economic uncertainties suggests rates may remain elevated throughout much of 2025, while affordable housing financing faces looming maturity challenges.

• Rate Increases: The average 30-year fixed mortgage rate rose to 6.99% as of May 29, 2025, up from 6.86% the previous week and marking the highest level since January 2025 2 14
• Application Volume: Mortgage applications decreased 1.2% for the week ending May 23, 2025, with refinance applications dropping 7% while purchase activity increased 3% as buyers took advantage of improving inventory 15
• Fed Policy: The Federal Open Market Committee maintained the federal funds rate at 4.25% to 4.5% at its May meeting, with Chair Jerome Powell emphasizing a “wait-and-see” approach amid uncertainties surrounding trade, immigration, regulation, and fiscal policy changes 14
• Foreclosure Trends: Florida has experienced the largest increase in non-current loans among all states, while the national mortgage delinquency rate remains steady, highlighting regional variations in housing market stability 16
• Affordable Housing Finance: Over $10 billion in loans for fully affordable properties will mature by 2027, rising to $21.7 billion by 2030, with commercial banks dominating construction financing; rising costs and potential policy changes could affect cash flow and property management 17

Economic & Political News

Overview: Economic indicators show moderating growth with specific weakness in residential investment, while unemployment claims are rising. Tariff policies are creating volatility in mortgage rates and increasing construction costs, with housing increasingly identified as a risk to the broader economy.

• GDP Growth: U.S. real GDP increased at an annual rate of 2.1% in Q1 2025 according to the BEA’s second estimate, with residential investment declining by 3.9% after two consecutive quarters of growth 5
• Corporate Profits: Corporate profits decreased 0.8% in Q1 2025 after increasing 4.5% in Q4 2024, with financial corporations seeing the largest decline at 2.1% 5
• Rising Unemployment: Initial unemployment claims increased to 242,000 for the week ending May 24, 2025, while continuing claims rose to 1.82 million, the highest level since November 2023, suggesting a cooling labor market 6
• Tariff Impact: New home prices are projected to increase by $9,200 on average due to tariffs on imported building materials, while mortgage rates have experienced significant volatility around tariff announcements 14 18
• Economic Risk: Citi Research has identified housing as the top threat to the U.S. economy, citing slowing residential investment and rising inventory; commercial real estate values are falling across all major property types for the first time since 2010 4
• Global Real Estate: The global real estate recovery that began in late 2024 is faltering amid increasing uncertainty, with commercial real estate investment volume flat in Q1 2025 compared to a year prior, particularly in Europe and Asia-Pacific 19
• Office Conversions: Cities across the U.S. are implementing various incentives to encourage the conversion of vacant office buildings into residential units, with Chicago’s LaSalle Street Reimagined initiative and Boston’s policy changes facilitating rapid development 20

Industry News

Overview: The real estate industry continues to see strategic shifts with new leadership and consolidation trends. Companies are adapting to changing market conditions through acquisitions and operational adjustments, while multifamily development remains active despite broader market challenges.

• HomeServices Strategy Shift: HomeServices of America’s new CEO Chris Kelly is changing the company’s acquisition approach to focus on streamlining backend systems while preserving local brand cultures, noting that “there’s more that we need to be doing together on the backside” 7
• Digital Integration: Digital mortgage lender Lower has acquired real estate portal company Movoto, combining Lower’s lending platform with Movoto.com’s homebuying portal to create a more seamless experience for homebuyers 8
• Keller Williams Leadership: New CEO Christopher Czarnecki aims to bring stability to Keller Williams after several leadership changes, focusing on the company’s education platform and marketing efforts while describing himself as “a force of stability and humbleness” 21
• Multifamily Development: Capital City Real Estate and Pennington Real Estate Partners secured $48 million for a 281-unit project in Charlotte, while Rockpoint opened The Declan, a 298-unit luxury community in Weehawken, NJ, part of a larger 748-unit development plan 22 23
• REIT Performance: Health care REITs lead among publicly traded U.S. equity REITs with a 27.98x LTM FFO multiple, followed by self-storage (25.68x), manufactured homes (21.09x), and apartments (19.71x), highlighting varying impacts of economic conditions on different real estate sectors 24