Good news – interest rates are inching downward. Bad news – everything else. Purchases slow, inventory still increasing, properties taking longer to sell, and Zombie foreclosures are back! Mortgage Brokers increasingly turning to non-QM loans that prove more “rate resistant”. All twelve Federal Reserve Districts reported elevated levels of economic and policy uncertainty leading to business hesitancy. CMBS delinquencies nearing 6.50% (yikes). And plenty more. Let’s get you caught up and out the door in 3 minutes. Tim

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Key Takeaways

• Mortgage rates decline for first time in a month: The 30-year fixed-rate mortgage averaged 6.85%, down from 6.89% the previous week, marking the first decrease in four weeks as inventory improves and price growth slows 1
• Purchase activity hits multi-year lows despite rate improvement: Purchase rate lock volume reached multi-year lows in week 22 of 2025, down 24% from the same week in 2019 and 5% year-over-year, despite the median purchase rate holding steady at 6.75% 2
• Housing inventory surges while price growth moderates: Active listings rose 31.5% year-over-year in May 2025, reaching over 1 million listings for the first time since Winter 2019, while April’s preliminary home price appreciation of 3.0% represents the second-lowest April level on record 3 2
• Federal Reserve reports widespread economic uncertainty: All twelve Federal Reserve Districts reported elevated levels of economic and policy uncertainty leading to business hesitancy, with half of the districts experiencing slight to moderate economic declines and widespread concerns about tariff-related cost increases 4
• Zombie properties creep higher amid stable vacancy rates: Zombie properties increased to 3.3% of all homes in foreclosure during Q2 2025, up from 2.9% in the same period last year, though overall vacancy rates remained steady at 1.3% for the 13th consecutive quarter 5
• Industry consolidation accelerates: Major mergers include Alfred and Quarterra combining multifamily management operations overseeing 52,000 units worth $20 billion, and multiple other strategic acquisitions reshaping the competitive landscape 6

Residential Real Estate Markets

Overview: The housing market is experiencing a fundamental rebalancing with inventory reaching post-pandemic highs while buyer demand weakens significantly. Price growth has moderated to multi-year lows, and sellers are increasingly cutting prices as market dynamics shift toward greater balance.

Inventory & Supply Trends

• Inventory hits post-pandemic milestone: Active listings rose 31.5% year-over-year in May 2025, surpassing 1 million listings for the first time since Winter 2019, representing the 19th consecutive month of inventory growth 3
• Supply still below normal levels: Despite significant gains, inventory remains 14% below pre-pandemic norms, with West and South regions showing stronger recovery than Northeast and Midwest markets 3
• Months’ supply remains tight: Housing supply stands at 3.2 months on a non-seasonally adjusted basis, down 0.4 months from March 2025, continuing to support seller’s market conditions despite inventory improvements 2

Pricing & Market Activity

• Price growth hits multi-year lows: April 2025’s preliminary home price appreciation of 3.0% year-over-year represents the second-lowest April level on record, down from 5.7% in April 2024, with projections for modest increases to 3.5% in May and 3.7% in June 2
• Price cuts surge to 9-year high: 19.1% of home listings experienced price reductions in May, the highest share recorded for the month since 2016, reflecting growing disconnect between seller expectations and buyer willingness to pay 3
• Homes taking longer to sell: Median time on market increased to 51 days, six days longer than the previous year, indicating shift toward more balanced market conditions favoring buyers 3
• List prices remain stable: National median list price held at $440,000 with only 0.1% year-over-year increase, masking regional variations and underlying pressure from increased price reductions 3

Regional Market Variations

• Northeast and Midwest outperform: Since 2022, Northeast and Midwest metros have experienced significantly more home price appreciation growth than South and West metros, creating distinct regional market dynamics 2
• Florida condo market struggles: Year-over-year home price appreciation fell to -7% for condos and -2% for single-family detached homes in Florida, compared to national averages of -1% and 3%, respectively, reflecting insurance costs and regulatory challenges 2
• International buyer activity increases: International buyers have increased shopping activity in markets with improved inventory levels, particularly in well-supplied South and West regions 7

Mortgage Markets

Overview: Mortgage rates declined for the first time in a month, but buyer demand remains at multi-year lows despite the improvement. Distressed property trends show mixed signals, while regulatory changes and technology advances continue reshaping the lending landscape.

Interest Rates & Demand

• Rates decline after month-long increase: 30-year fixed-rate mortgage averaged 6.85%, down from 6.89% the previous week and 6.99% a year ago, marking the first decrease in four weeks 1
• 15-year rates also improve: 15-year fixed-rate mortgage declined to 5.99%, down from 6.03% the previous week and significantly lower than 6.29% from a year prior 1
• Purchase demand hits multi-year lows: Purchase rate lock volume fell 24% below the same week in 2019 and declined 5% year-over-year, despite median purchase rate holding steady at 6.75% 2
• Applications decline for third straight week: Mortgage applications decreased 3.9% for the week ending May 30, 2025, though annual comparisons show 42% increase in refinance applications and 18% increase in purchase applications 8

Distressed Properties & Market Conditions

• Zombie properties increase modestly: Zombie properties (homes vacated during foreclosure) rose to 3.3% of all foreclosures in Q2 2025, up from 2.9% last year, representing 7,329 homes nationwide or one in every 14,207 homes 5
• Overall vacancy rates remain stable: Approximately 1.3% of all homes remained vacant for the 13th consecutive quarter, totaling roughly 1.4 million properties nationwide, signaling continued post-pandemic housing market strength 5
• Regional zombie property variations: Worst concentrations found in Wichita, KS (12.1%), Peoria, IL (11.8%), and Toledo, OH (10.2%), while largest year-over-year increases occurred in North Carolina (up 52.5%), Iowa (52.1%), and Texas (51.9%) 5

Lending Trends & Alternative Products

• Shift toward non-agency loans: Brokers increasingly turning to non-QM loans that prove more “rate resistant” due to investor demand, as affordability challenges push borrowers away from traditional agency products near 7% rates 9
• FHA program concerns emerge: AEI warns that FHA’s inadequate tracking of partial claims could cost taxpayers significantly, with borrowers in 620-639 FICO score range showing 25 percentage point higher default rates than those with 28 points higher scores 2

Regulatory & Technology Developments

• New FHA restrictions implemented: FHA eliminated loan eligibility for non-permanent residents effective May 25, 2025, impacting borrowers with teaching, student, and professional visas, though conventional loans remain available 10
• COVID assistance programs modified: HUD limited homeowners to one permanent Loss Mitigation Option every two years versus previous 18-month period, tightening assistance programs expanded during pandemic 10
• Electronic HELOC standards advance: MISMO announced SMART Doc V3 eHELOC Specification to standardize electronic home equity lending processes, with 30-day public comment period running through July 5, 2025 11

Economic & Political News

Overview: The Federal Reserve’s Beige Book reveals widespread economic uncertainty across all twelve districts, with half reporting economic declines and businesses expressing concerns about tariff-related cost increases. Employment data shows continued weakness while inflation pressures from trade policy are mounting.

Federal Reserve Beige Book Findings

• Widespread uncertainty documented: All twelve Federal Reserve Districts reported elevated levels of economic and policy uncertainty leading to business hesitancy and cautious decision-making approaches 4
• Economic activity declines: Half of Districts reported slight to moderate declines in activity, three reported no change, and three reported slight growth, with overall economic activity declining slightly since previous report 4
• Manufacturing weakens broadly: Manufacturing activity declined slightly across the Federal Reserve system, while consumer spending reports were mixed with most Districts reporting slight declines or no change 4
• Anticipatory purchasing behavior emerges: Some Districts reported increases in spending on items expected to be affected by tariffs, suggesting consumers are engaging in anticipatory purchasing ahead of price increases 4

Employment & Labor Market Conditions

• Private sector hiring collapses: ADP reported only 37,000 private sector jobs added in May 2025, significantly below forecasted 110,000 and representing the lowest monthly total since March 2023 12
• Employment conditions flatten: Most Districts described employment as flat, with three reporting slight-to-modest increases and two reporting slight declines, while many noted lower employee turnover and more job applicants 4
• Hiring uncertainty widespread: All Districts reported uncertainty delaying hiring decisions, with businesses citing declining hours worked, overtime reductions, hiring pauses, and staff reduction plans 4
• Wage pressures ease: Wages continued growing at modest pace with general easing in wage pressures across Districts, though some sectors still experiencing upward pressure 4

Political & Policy Developments

• Major federal agency restructuring: HUD plans to lay off 40% of FHA staff while FHFA eliminates diversity programs and cuts over 25% of Fannie Mae and Freddie Mac workforce under Trump administration policies 10
• Budget legislation advances: Trump’s “One Big Beautiful Bill Act” passed House 215-214 and faces Senate scrutiny, with Republicans pushing for additional $500 billion in cuts to offset $1.5 trillion in tax cut extensions 10
• Housing program cuts proposed: Legislation targets federal rental and homelessness assistance programs while eliminating Fair Housing grants, affecting 5 million Section 8 recipients and FHA-insured loan programs 10

Commercial Real Estate Markets (Including Multifamily)

Market Stress Indicators

Overview: Commercial real estate is showing increased financial strain with delinquency rates climbing across all major lending sources, led by CMBS loans reaching concerning levels.

• CMBS Delinquencies Spike to 6.42% – Commercial mortgage-backed securities hit the highest delinquency rate among all investor groups in Q1 2025, up 64 basis points from Q4 2024, more than 5x higher than bank-held loans 1
• All Lender Types See Increases – Banks/thrifts rose to 1.28% (+2 bps), life companies to 0.47% (+4 bps), Fannie Mae to 0.63% (+6 bps), and Freddie Mac to 0.46% (+6 bps) 1
• Retail and Office Most Vulnerable – Properties in these sectors are experiencing the highest stress levels due to economic pressures and changing usage patterns 1

Multifamily Market Performance

Overview: The apartment sector is experiencing a significant demand slowdown with regional disparities becoming more pronounced, though construction activity remains robust.

• Absorption Rates Plummet to 45% – New apartment units now take much longer to lease, down dramatically from 75% absorption within three months during Q3 2021 peak 2
• Midwest and South Struggle Most – These regions show 12% of apartments completed a year ago still unoccupied, compared to just 2% in Northeast and 6% in West 2
• Construction Boom Continues – Over 126,000 units completed in Q4 2024, marking third consecutive quarter above 100,000 completions, potentially helping ease rent inflation 2
• Major Fort Lauderdale Deal – Grover Corlew secured $92M financing ($72.3M mortgage + $19.7M mezzanine) for 312-unit Mayla Cypress project, expected completion 2027 3

Industry News

Overview: The real estate industry is experiencing significant consolidation through major mergers and acquisitions, while investment activity remains strong in multifamily and development sectors. Technology advances and affordable housing initiatives continue driving industry evolution.

Mergers & Acquisitions

• Alfred-Quarterra multifamily merger: Alfred and Quarterra combined multifamily management operations overseeing approximately 52,000 residential units valued at over $20 billion, with Jessica Beck leading the combined entity and Brad Greiwe joining the Board 6
• Coldwell Banker Florida expansion: Coldwell Banker Premier entered Florida market through merger with Coldwell Banker Envision Real Estate, adding New Smyrna Beach agents to network of 350+ Mid-Atlantic sales associates 13
• Technology integration focus: Alfred-Quarterra merger specifically aims to address fragmented property management technologies by utilizing AI automation to streamline leasing, maintenance, and financial workflows 6

Investment & Development Activity

• Major multifamily refinancing: TruAmerica Multifamily and Oaktree Capital completed $225.3 million refinancing of four-property portfolio with 1,324 units in Florida and Arizona, featuring five-year floating-rate loan with interest-only payments 14

• Hanover launches $125M fund: Hanover Company closed $125 million Opportunities Fund targeting land and underutilized commercial properties for multifamily and industrial development, focusing on distressed office space repurposing 15

• Office-to-residential conversion strategy: Hanover’s fund specifically targets accelerated office obsolescence, planning to transform distressed office spaces and vacant land in California, Dallas, Atlanta, Boston, and Florida markets 15

Technology & Standards Development

• Valuation standards leadership: ServiceLink hired Liz Green as Senior Vice President of Valuation Solutions to navigate upcoming Uniform Residential Appraisal Report (URAR) and Uniform Appraisal Dataset (UAD) 3.6 standards transitions 16
• Electronic HELOC standardization: MISMO’s SMART Doc V3 eHELOC Specification enables seamless exchange of HELOC data and documents between trading partners while ensuring document integrity and reliability 11
• Data infrastructure improvements: Realtor.com’s comprehensive data library provides structured information for database use with multiple metrics for different geographic levels down to zip code, supporting enhanced market analysis capabilities 17

Affordable Housing Initiatives

• Colorado affordable development: Lincoln Avenue Communities broke ground on Marshall Pointe Apartments, a 260-unit affordable housing development in Arvada serving residents earning 30-70% of area median income 18
• Homeless services integration: Marshall Pointe includes specific units reserved for formerly homeless individuals supported by Family Tree services, representing LAC’s second metro Denver project with JPMorgan Chase construction financing 18
• Public-private financing model: Project demonstrates collaborative approach combining JPMorgan Chase construction financing with state and federal funding sources to deliver affordable housing solutions 18