Home prices are finally coming back down to earth with national appreciation hitting its lowest level since 2012. Florida sellers are discovering their properties aren’t quite the gold mines they thought they were. Meanwhile, mortgage lenders are having an existential crisis about profitability while rates flirt with 7% and higher. Commercial real estate is having a bit of an identity crisis right now – delinquencies are climbing yet premium properties are still selling fast and breaking pricing records left and right. Let’s get you caught up and out the door in 3 minutes. Tim 

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Key Takeaways

• Home price growth hits decade low: National year-over-year price appreciation slowed to just 2.0% in April 2025, marking the lowest growth rate since spring 2012, with single-family attached homes posting their first annual decline (-0.08%) since 2012. 1
• Commercial mortgage stress emerges: Delinquency rates increased across all major capital sources in Q1 2025, with CMBS delinquencies surging 0.64 percentage points to 6.42%, signaling heightened stress in refinancing-constrained market segments. 2
• Mortgage rates approach 7%: The ICE 30-year fixed mortgage rate hit 6.95% on May 22, the highest level since mid-January, as 10-year Treasury yields reached 4.58% amid concerns over fiscal policy and tariff impacts. 3
• Fed Governor warns on tariff inflation: Federal Reserve Governor Lisa Cook expressed concern that tariffs could reverse recent inflation progress, complicating monetary policy decisions and potentially impacting labor markets. 4
• HUD reverses mortgage default rules: The Trump administration’s HUD walked back “unnecessarily burdensome” borrower default engagement requirements scheduled for July 1, providing lenders with greater procedural flexibility. 5
• Regional housing markets normalize: Federal Reserve Eighth District states show house price appreciation returning to pre-pandemic levels of 4-5% annually, though inventory remains severely constrained at just 33-99% of 2017 levels across the seven-state region. 6
• Lender profitability crisis deepens: Large independent mortgage banks are outperforming depositories by $500-$1,000 per loan due to lower overhead and greater fulfillment productivity, while many banks lack visibility into mortgage division profitability. 7

Residential Real Estate Markets

Overview: The housing market is experiencing its most significant slowdown in over a decade, with price growth hitting historic lows while regional variations reveal stark contrasts between markets. Supply conditions are gradually improving, though severe inventory constraints persist in many areas.

Price Performance & Market Dynamics

• National price growth collapses to 2.0% year-over-year in April 2025, the slowest appreciation since spring 2012, down from nearly 3% just two months earlier due to widespread consumer uncertainty about finances, jobs, and tariff impacts. 1
• Single-family attached homes decline for first time since 2012, posting -0.08% annual price drop while detached homes maintain modest 2.46% growth, highlighting divergence in market segments reflecting changing buyer preferences and affordability constraints. 1
• Federal Reserve Eighth District shows normalization, with house price appreciation returning to pre-pandemic levels of 4-5% annually across seven states, though this represents a significant moderation from recent years’ volatility. 6

Regional Market Variations

• Florida leads price declines at -0.8% year-over-year, with median sales price dropping below national median to $390,000, removing it from top 20 most expensive markets for first time in years. Cape Coral shows largest decline at -7% annually. 1
• Texas, Hawaii, and Washington D.C. also negative, posting -0.7%, -2%, and -0.6% respectively, while Wyoming enters top 5 states for highest price growth, demonstrating dramatic geographic shifts in market performance. 1
• Northeast and Midwest show resilience, particularly in affordable areas surrounding expensive metropolitan centers, though New York and Vermont reversed course in April with prices furthest from their peaks. 1

Inventory & Supply Conditions

• 37 of 100 largest markets have normalized inventory, with Denver surpassing Texas and Florida for largest surplus, boasting 90% more homes for sale compared to 2017-2019 April average, largely from slowing sales volumes. 3
• New listings improve but remain constrained, running 15% below 2017-2019 averages through first four months of 2025, representing improvement from -22% deficit averaged early last year as gradual normalization accelerates. 3
• Severe regional inventory shortages persist, ranging from just 33% in Illinois to 99% in Tennessee compared to May 2017 levels, with Tennessee’s faster price appreciation coinciding with most robust supply increase in the region. 6

Mortgage Markets

Overview: The mortgage industry faces a deepening profitability crisis amid rising commercial delinquencies and policy uncertainty. Independent mortgage banks are significantly outperforming traditional depositories, while regulatory changes and technology adoption create new competitive dynamics.

Industry Profitability & Performance

• Independent mortgage banks outperform by $500-$1,000 per loan compared to depositories due to lower corporate overhead and superior fulfillment productivity, creating critical competitive advantages that are reshaping industry dynamics. 7
• Many banks lack mortgage division profitability visibility, particularly when saleable loans are combined with portfolio activity or legacy asset income in financial reporting, obscuring performance metrics and delaying critical decision-making during margin compression. 7

Mortgage Market Conditions

• 30-year fixed mortgage rates hit 6.95%, highest since mid-January, as 10-year Treasury yields reached 4.58% amid concerns over fiscal policy changes and tariff implementations affecting future Treasury issuance. 3
• Rate volatility challenges lenders and borrowers, with purchase applications showing sensitivity to rate movements and refinancing activity remaining constrained, while futures pricing suggests rates around 6.7% in mid-November. 3

Policy & Regulatory Changes

• HUD reverses “unnecessarily burdensome” default guidance scheduled for July 1, providing mortgage servicers greater procedural flexibility after determining ML 2024-24 provisions were too onerous for industry compliance. 5
• COVID-era loss mitigation practices end September 2025, though cases already in pipeline will be allowed to proceed, while new guidance expands acceptable methods for meeting reasonable effort requirements with defaulted borrowers. 5
• Bipartisan progress on limiting credit trigger leads gains momentum as legislators consider Fair Credit Reporting Act changes to ban the practice that has long frustrated industry participants and confused borrowers. 7

Economic & Political News

Overview: Federal Reserve officials are grappling with tariff-driven inflation concerns while labor markets show unexpected resilience. International organizations are downgrading growth forecasts amid trade tensions and policy uncertainty.

Federal Reserve & Inflation Concerns

• Fed Governor Cook warns tariffs could reverse inflation progress, expressing concern that price increases tied to trade policy changes may prevent further progress toward 2% target despite core inflation reaching 2.5% and headline at 2.1% in April. 4
• Broad tariff policies could fundamentally change economic equation, moving beyond traditional Fed view of tariffs as one-off price occurrences, with recent post-pandemic inflation experience potentially making firms more willing to raise prices persistently. 4
• Survey-based inflation measures point to significant spike over next year, though market-based measures indicate more muted expectations further out, creating complex environment for Fed policymakers balancing employment and price stability mandates. 4

Labor Market Resilience

• Job openings unexpectedly rise to 7.4 million in April, surpassing economist expectations and providing evidence of continued employer demand despite broader economic headwinds and policy volatility affecting market sentiment. 8
• Labor market strength contrasts with economic uncertainty, though Cook expects Trump’s trade policies could take toll on employment over time while economy currently appears in relatively good shape for Fed dual mandate considerations. 8

Commercial Real Estate Markets (Including Multifamily)

CRE Market Performance Overview

Commercial real estate markets show mixed signals with rising delinquencies across all capital sources, while premium assets continue to attract strong investor demand and record pricing.

Key Market Data:

• CMBS delinquencies jumped to 6.42% in Q1 2025, up 0.64 percentage points from Q4 2024 – the largest increase among all capital sources 1
• Bank and thrift delinquencies rose to 1.28% (up 0.02 percentage points), while life insurance companies hit 0.47% (up 0.04 percentage points) 1
• GSE delinquencies remain low with Fannie Mae at 0.63% and Freddie Mac at 0.46%, both up just 0.06 percentage points 1
• Market-rate properties dominate transactions while affordable housing showed growth at 7% of total deal volume 2

CRE Financing Activity Overview

Debt markets remain active with significant acquisition and refinancing transactions closing, demonstrating continued liquidity for quality sponsors and assets.

Recent Financing Deals:

• $225.3 million Sun Belt refinancing completed by TruAmerica Multifamily and Oaktree Capital for 1,324-unit portfolio across Florida and Arizona with five-year floating-rate terms 3
• $20.5 million acquisition loan arranged by JLL for Fontana Multifamily Portfolio – two newly built California apartment communities totaling 96 units purchased for $30.5 million 4
• Competitive loan terms available for quality assets, with the Sun Belt refinancing featuring full-term interest-only payments and flexible prepayment options 3

Notable CRE Transactions Overview

Premium multifamily assets continue to command record pricing, while strategic acquisitions expand geographic footprints in growth markets.

Transaction Highlights:

• Record Lincoln Park pricing – 516 W Arlington sold for $10.35 million ($739,000 per unit) in just 16 days, setting new neighborhood record for the 14-unit, 2022-built property 5
• Monday Properties expands to North Carolina through joint venture acquisition of The Summit on 401, a 291-unit Fayetteville apartment community, marking the firm’s first NC multifamily investment 6
• Limited supply drives pricing in Lincoln Park due to few developable sites, resulting in stronger performance metrics including better absorption and consistent rent growth 5

Market Intelligence Overview

Transaction analysis reveals continued investor preference for market-rate properties, while affordable housing gains momentum as LIHTC compliance periods expire.

Subsector Performance:

• Affordable housing represents 7% of transactions by top multifamily brokerages, showing increased activity as Low-Income Housing Tax Credit properties approach compliance period endings 2
• Luxury multifamily accounts for 5% of deals with notable transactions including the $370 million acquisition of 20 Exchange Place, a 767-unit Manhattan Financial District tower 2
• Market-rate properties dominate volume as investors focus on stable cash flows and lower regulatory risk compared to other subsectors 2

Industry News

Overview: The real estate industry is experiencing significant technology adoption disparities, customer retention challenges, and continued transaction activity in multifamily markets. Major refinancings and acquisitions demonstrate selective capital availability for quality assets.

Technology & Operational Trends

• Independent mortgage banks actively experiment with AI tools like Microsoft Copilot for meeting transcription and policy search, while traditional banks remain hesitant due to regulatory and cybersecurity concerns leading to prolonged committee reviews rather than pilot programs. 7
• Early AI adopters like Rocket and Better explore automation for improving efficiency and sales productivity through “top-of-funnel” applications, creating competitive advantages that may force broader industry adoption among slower-moving institutions. 7

Customer Retention Challenges

• Few lenders track payoff behavior with sufficient precision to understand whether customers refinance elsewhere, return for new loans, or disappear from ecosystem, representing critical gap in customer lifecycle management as acquisition costs rise. 7
• Servicing identified as biggest untapped opportunity, representing built-in engagement engine when executed properly but significant missed opportunity when handled as merely backend function rather than core borrower journey component. 7

Major Transactions & Market Activity

• TruAmerica and Oaktree complete $225.3 million refinancing of four-property, 1,324-unit portfolio across Florida and Arizona markets, demonstrating continued debt market liquidity and investor confidence in Sun Belt fundamentals despite broader headwinds. 10
• Monday Properties enters North Carolina multifamily market through joint venture acquisition of 291-unit Summit on 401 in Fayetteville, marking strategic expansion into emerging Southeastern markets with stable military base demand drivers. 11
• Subtext announces 845-bed student housing development near University of Arkansas, marking company’s first Arkansas venture with August 2027 completion and Kayne Anderson Real Estate equity partnership highlighting institutional confidence in sector. 12