FHFA dusts off the 2003 GSE playbook and creates US FinTech to provide tech to the industry – not just GSEs. HUD and FHA seek to handle a big slug of sub-regulatory guidance in fell swoop in order to reduce burdens and costs on lenders and servicers. The housing market is moving…not fast or with great volume…but sales are still happening and prices and largely sticking. Multifamily ranked as the most resilient CRE assets class as rent growth drifts lower. Let’s get you caught up and out the door in 3 minutes. Tim

Today’s newsletter was prepared by our AI platform ALFReD. Know Better. Work Smarter. Be More Successful.

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Key Takeaways

• Existing home sales edged higher by 0.8% to a seasonally adjusted annual rate of 4.03 million in May, though this remains near historical lows and represents the slowest pace for May since 2009. 1
• Mortgage rates have declined slightly, with the national average 30-year fixed rate at 6.75%, decreasing 8 basis points over the last seven days, as optimism for Fed rate cuts grows. 2
• The Federal Reserve maintained its target rate at 4.25% to 4.5% during its June meeting, with the updated dot plot signaling a cumulative rate cut of 50 basis points by the end of 2025. 3
• Fannie Mae and Freddie Mac have jointly launched US FinTech, a new entity replacing Common Securitization Solutions (CSS), which will manage a $6.5 trillion mortgage-backed securities portfolio under the oversight of FHFA Director Bill Pulte. 4
• HUD has announced a sweeping rollback of regulations, with the Federal Housing Administration (FHA) rescinding more than 12 sub-regulatory policies under its Single Family mortgage insurance program to reduce costs and eliminate financial and regulatory burdens. 5
• Cotality’s June 2025 Property Market Report reveals that home price growth has slowed to 2.1% year-over-year, with suburban markets outperforming urban centers for the first time since 2023. 6
• Bank of America’s latest economic insights report shows that homeowners insurance costs have surged 21.3% nationwide since 2023, with coastal states experiencing increases of up to 40%, significantly impacting affordability. 7

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Residential Real Estate Markets

Overview: The housing market shows signs of rebalancing with modest sales improvements and growing inventory levels. Regional variations remain significant, with suburban markets gaining momentum while urban price growth slows. Rising insurance costs are creating new affordability challenges, particularly in coastal and disaster-prone regions.

• Existing home sales increased 0.8% to a seasonally adjusted annual rate of 4.03 million in May, though this remains the slowest pace for May since 2009 and 0.7% lower than a year ago. 1
• Inventory levels reached 1.54 million units in May, up 6.2% from April and 20.3% from a year ago, representing a 4.6-months’ supply at the current sales rate (up from 3.8-months in May 2024). 1
• First-time buyer share decreased to 30% in May, down from 34% in April and 31% from a year ago, indicating growing challenges for new entrants to the housing market. 1
• Homes stayed on market for 27 days on average in May, down from 29 days in April but up from 24 days in May 2024. 1
• Regional sales varied significantly: The Northeast saw a 2.9% increase, the Midwest experienced a 1.3% decline, the South registered a 1.9% increase, and the West remained unchanged. 1
• Suburban home prices rose 3.4% year-over-year, outpacing urban centers (1.2%) for the first time since 2023, according to Cotality’s June 2025 Property Market Report. This shift reflects changing work patterns and affordability concerns in major metropolitan areas. 6
• New construction sales increased 5.2% month-over-month, with builders offering an average of $21,500 in concessions to attract buyers amid rising inventory levels. 6
• Investor purchases declined 12.3% compared to Q1 2025, with institutional buyers pulling back from single-family acquisitions as rental yields compress in many markets. 6
• Homeowners insurance costs have surged 21.3% nationwide since 2023, with Florida (+42.5%), California (+38.7%), and Louisiana (+36.2%) experiencing the steepest increases, creating a new affordability barrier for homebuyers and existing owners. 7

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Mortgage Markets

Overview: Mortgage rates have stabilized with a slight downward trend as the market anticipates potential Fed rate cuts later this year. Meanwhile, significant policy and technology developments are reshaping the mortgage landscape, with HUD’s regulatory rollback and the launch of US FinTech potentially streamlining processes and reducing costs.

• 30-year fixed mortgage rates averaged 6.75%, decreasing 8 basis points over the last seven days, while the 15-year fixed refinance rate fell to 6.09%, down 10 basis points from last week. 2
• Freddie Mac reported 30-year rates held at 6.82% in June, down 10 basis points from a year ago, while 15-year rates stayed at 5.95%, 24 basis points lower year-over-year. 8
• Fannie Mae and Freddie Mac launched US FinTech, replacing Common Securitization Solutions (CSS), to manage a $6.5 trillion mortgage-backed securities portfolio and sell technology to other institutions. The new entity will continue to operate the Common Securitization Platform that issues and administers the Uniform Mortgage-Backed Security. 4
• FHFA Director Bill Pulte will oversee the new company, with Tony Renzi continuing as CEO. “We created US FinTech to demonstrate the incredible ingenuity of American technology under President Trump’s leadership,” Pulte stated. 4
• HUD announced a sweeping regulatory rollback, with the FHA rescinding more than 12 sub-regulatory policies under its Single Family mortgage insurance program, including outdated appraisal protocols, full-time Direct Endorsement underwriter requirements, and mandatory pre-endorsement inspection requirements for properties in disaster areas. 5
• HUD Secretary Scott Turner stated: “These rescissions are bold, necessary, and long overdue. Under President Trump’s leadership, we’re slashing red tape that drives up costs and shuts families out of the market.” 5
• Rising insurance costs are affecting debt-to-income ratios, with the average homeowner now spending 15% more on their monthly housing payment due to insurance increases since 2023, according to Bank of America’s analysis. This is causing lenders to adjust qualification standards and contributing to higher denial rates in high-risk areas. 7

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Economic & Political News

Overview: The Federal Reserve maintained its cautious stance on interest rates while revising economic projections downward. Rising insurance costs are emerging as a significant economic concern, with implications for housing affordability, consumer spending, and regional economic disparities.

• The Federal Reserve held its target rate at 4.25% to 4.5% during its June meeting, continuing the pause that began after a 100 basis point series of reductions in late 2024. 3
• The Fed’s updated dot plot signals a cumulative rate cut of 50 basis points by the end of 2025, while the latest Summary of Economic Projections revised the median 2025 GDP forecast down from 1.7% to 1.4%. 8
• Forecasts for key economic indicators were revised upward: unemployment (4.4% to 4.5%), PCE inflation (2.7% to 3.0%), and core PCE inflation (2.8% to 3.1%). 8
• Fed Chair Powell noted the possibility of a rate cut being “sooner rather than later” if inflation remains contained, though he reiterated the Fed’s “wait and see” stance due to uncertainty around trade, immigration, fiscal, and regulatory policy changes. 8
• Insurance costs have risen at 3.2 times the rate of overall inflation since 2023, with climate-related risks, construction cost increases, and reinsurance price hikes driving the surge, according to Bank of America’s report. 7
• Insurance affordability has become a macroeconomic concern, with 23% of homeowners in high-risk areas reporting they’ve reduced other spending to cover insurance increases, potentially impacting consumer spending and regional economic growth. 7
• State insurance regulators in Florida, California, and Texas have implemented emergency measures to address market disruptions, including temporary rate caps and expanded coverage through state-backed insurers of last resort. 7
• HUD’s regulatory rollback initiative aligns with the Trump administration’s focus on reducing regulatory burdens that increase costs and limit housing accessibility, with changes expected to strengthen the housing market, reduce financing costs, and save taxpayer funds. 5

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Commercial Real Estate Markets (including Multifamily)

Overview: The commercial real estate landscape shows significant regional divergence in mid-2025, with national caution contrasting against Florida’s boom. Recent major transactions and shifting investor sentiment highlight both challenges and opportunities across different property sectors.

Market Sentiment & Trends

• Investor Sentiment Decline: Bullish sentiment dropped from 52% in February to just 34% in May 2025, while bearish sentiment rose from 48% to 66%, according to DLA Piper’s latest survey 1
• Interest Rate Concerns: 66% of respondents identified high rates as a top concern for the year ahead (up from 60% in February), with 41% now expecting rates to increase in the next 12 months (up from 17%) 1
• Macroeconomic Uncertainty: Investors are in a holding pattern as they await clarity on the impact of recent macroeconomic developments, including potential Fed rate cuts and the effects of new tariff policies 2
• Transaction Volume Decline: CRE transaction volume in Q2 2025 has fallen 18% compared to Q1, with investors adopting a “wait-and-see” approach amid economic uncertainty 2

Regional Bright Spot: Florida’s CRE Boom

• Office Occupancy Surge: Miami-Dade County has seen a 15% increase in office occupancy rates over the past year, with average lease rates climbing by 12% 3
• Low Vacancy Rates: Class A office space vacancy rates in South Florida have dropped to just 8.2%, compared to the national average of 17.5% 3
• Retail Recovery: Retail vacancy rates in Florida’s major metropolitan areas have decreased by 3.5 percentage points since 2023 3
• Multifamily Growth: Multifamily construction has increased by 22% year-over-year to meet demand from relocating professionals 3

Major Transactions & Portfolio Shifts

• Atlantic Union-Blackstone Deal: Atlantic Union Bank closed the sale of approximately $2 billion of commercial real estate loans to funds managed by Blackstone, representing about 40% of the bank’s total CRE loan portfolio 4
• Continued Servicing Arrangement: Atlantic Union will continue to service the loans, maintaining client relationships while reducing CRE exposure 4
• Financial Impact: The transaction resulted in a pre-tax loss of approximately $120 million but is expected to improve long-term earnings through reduced risk and improved capital efficiency 4
• Private Equity Activity: Private equity firms have raised over $250 billion in dry powder specifically targeting distressed CRE assets, with deployment expected to accelerate in Q3 2025 2

Multifamily Sector Performance

• Sector Preference: 51% of industry respondents identified multifamily as the most resilient asset class in the current environment 1
• Invitation Homes Performance: Q1 2025 results show assets totaling $18.58 billion, revenues of $674 million, and net income of $165.7 million (EPS: $0.27) 5
• American Homes 4 Rent Stability: Maintained solid figures with assets of $13.29 billion, liabilities at $5.45 billion, and earnings per share of $0.30 6
• Rent Growth Moderation: Multifamily rent growth has moderated to 2.8% year-over-year in Q2 2025, down from 3.5% in Q1, but remains above the five-year pre-pandemic average 2

Financing & Capital Markets

• Lending Standards: Commercial banks have continued to tighten lending standards for CRE loans, with 68% of banks reporting stricter requirements in Q2 2025 2
• CMBS Issuance: CMBS issuance totaled $12.4 billion in Q2 2025, down 22% from Q1 and 35% year-over-year, reflecting continued caution in the securitization market 2
• Equity Capital Availability: Confidence in equity capital availability jumped from 5% in February to 15% in May, with 53% of respondents believing more equity will be available within the next 12 months 1
• Debt Fund Activity: Alternative lenders and debt funds have increased their market share to 24% of all CRE originations in Q2 2025, up from 18% in 2024 2

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Industry News

Overview: The real estate industry continues to evolve through technological innovation and corporate strategies. The launch of US FinTech by the GSEs represents a significant development in mortgage technology, while rising insurance costs are creating both challenges and opportunities for industry participants.

• US FinTech will manage a $6.5 trillion mortgage-backed securities portfolio and continue CSS’s role as the largest issuing agent and administrator of MBS, which held approximately 75% of total market share and processed 30 million loans in 2021. 4
• The Real Estate Roundtable’s Q2 2025 Sentiment Survey indicates a cautious outlook among industry leaders regarding current conditions and future prospects. 9
• Insurance technology startups raised $1.2 billion in Q1 2025, a 45% increase year-over-year, with solutions focused on climate risk assessment, parametric insurance products, and AI-driven underwriting gaining traction. 7
• Cotality reports that 62% of real estate agents now cite insurance availability and affordability as a “major concern” in transactions, up from 37% in 2023, with 28% reporting deals falling through due to insurance issues in the past six months. 6
• PropTech investment in insurance solutions increased 78% year-over-year, with startups developing embedded insurance options, bundled home warranty products, and predictive maintenance tools to help mitigate rising costs. 6
• Mortgage application volume increased 3.2% week-over-week according to Cotality’s latest market report, with refinance applications rising 5.7% as rates declined slightly. Purchase applications increased 1.8%, showing modest improvement in buyer demand. 6
• Digital closing adoption reached 47% of all mortgage transactions in Q2 2025, up from 32% a year ago, as lenders continue to invest in technology to streamline the closing process and improve the customer experience. 6