Daily Dose of Real Estate for July 9

VantageScore for the win! Pulte announces that the GSEs will now start accepting VantageScore 4.0. Multifamily construction looks to be about to fall off a big cliff. Residential housing inventory up 30% YoY and prices are softening. FHA delinquencies continue to climb while GSE and portfolio remain at historic lows. Let’s get you caught up and out the door in 3 minutes. Tim 

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Key Takeaways

• Housing Inventory Continues Strong Growth: June 2025 inventory rose 28.9% year-over-year, marking the 20th consecutive month of growth and second straight month with over 1 million active listings, though still 12.9% below pre-pandemic levels. 1
• Mortgage Rates Edge Higher: The 30-year fixed mortgage rate increased for the third consecutive day to 6.79%, reversing the previous downward trend as markets react to stronger-than-expected economic data. 2
• Fannie and Freddie Now Accept VantageScore 4.0: The GSEs have officially begun accepting VantageScore 4.0 as an alternative to FICO, potentially expanding mortgage access to millions of previously “credit invisible” consumers. 3
• Multifamily Construction Completions Hit 38-Year High: 2024 saw 503,000 multifamily units completed—the highest annual total since 1986—contributing to rental market softening and moderating rent growth. 4
• Top 10 Builders Increase Market Share: The nation’s largest homebuilders captured 37.5% of new home sales in 2024, up from 35.9% in 2023, continuing the consolidation trend in the homebuilding industry. 5
• First-Time Homebuyers Struggle While Landlords Benefit: Rising mortgage rates and home prices have pushed homeownership further out of reach for many first-time buyers, while landlords capitalize on the growing pool of renters. 6
• Tariffs and Wage Growth Complicate Fed’s Rate Decision: The Bank of Japan’s recent rate hike and concerns about U.S. tariffs’ impact on inflation are creating additional complexity for the Federal Reserve’s upcoming policy decisions. 7

Residential Real Estate Markets

Overview: The housing market continues its rebalancing with growing inventory, longer days on market, and increasing price cuts. New data shows multifamily construction at multi-decade highs, while first-time buyers struggle to enter the market and large builders consolidate their dominance.

• Inventory Growth Continues: June inventory rose 28.9% year-over-year to over 1 million active listings for the second consecutive month—the 20th straight month of growth—though levels remain 12.9% below pre-pandemic norms. 1
• Regional Inventory Differences: The West (+38.3%) and South (+29.4%) are seeing the largest inventory increases, while the Midwest (+21.3%) and Northeast (+17.6%) show more modest growth. Las Vegas (+77.6%), Washington, D.C. (+63.6%), and Raleigh (+56.4%) experienced the most significant inventory surges. 1
• Homes Taking Longer to Sell: Properties are now spending a median of 53 days on market—5 days longer than last year and in line with pre-pandemic June averages. 1
• Price Cuts Reach Record Levels: 20.7% of listings had price cuts in June—the highest share for any June since at least 2016. Denver (33.7%), Phoenix (33.2%), and Austin (32.7%) had the highest percentage of listings with price cuts. 1
• First-Time Buyers Missing in Action: First-time homebuyers’ share of purchases fell to just 26% in May—well below the historical average of 40%—due to high mortgage rates, elevated home prices, and persistent inflation. 6
• Landlords Capitalizing on Rental Demand: Institutional investors increased their single-family rental portfolios by 14% in the past year as more potential buyers remain renters. “We’re seeing a generational shift in housing tenure,” notes housing economist Danielle Hale. 6
• Multifamily Construction Hits 38-Year High: 2024 saw 503,000 multifamily units completed—the highest annual total since 1986 and a 12% increase from 2023. The South led all regions with 248,000 completions, followed by the West (127,000), Midwest (73,000), and Northeast (55,000). 4
• Rental Market Softening: The surge in new multifamily supply has contributed to moderating national rent growth of just 1.2% year-over-year. 4
• Top 10 Homebuilders Gain Market Share: The nation’s largest homebuilders captured 37.5% of new home sales in 2024, up from 35.9% in 2023. D.R. Horton maintained its position as the largest U.S. homebuilder for the 22nd consecutive year, with 87,843 closings in 2024. 5
• Energy Efficiency Standards Under Review: HUD and USDA are seeking public comments on their April 2024 determination adopting the 2021 IECC and ASHRAE 90.1-2019 energy codes as minimum requirements for covered housing programs. Comments are due by August 6, 2025. 8

Mortgage Markets

Overview: Mortgage rates have reversed course and begun edging higher while credit access expands through new scoring models. Complaints about mortgage processes are decreasing, and regulatory changes could soon allow cryptocurrency as an asset for mortgage reserves.

• Mortgage Rates Reverse Downward Trend: The 30-year fixed mortgage rate increased for the third consecutive day to 6.79%, up from 6.67% last week, as markets react to stronger-than-expected economic data and shifting Federal Reserve expectations. 2
• Rate Volatility Expected to Continue: Analysts predict continued mortgage rate volatility as markets digest conflicting economic signals. “We’re seeing rates respond to stronger economic data, which is pushing back expectations for Fed rate cuts,” notes Melissa Cohn, regional vice president at William Raveis Mortgage. 2
• VantageScore 4.0 Now Accepted by GSEs: Fannie Mae and Freddie Mac have officially begun accepting VantageScore 4.0 as an alternative to traditional FICO scores, potentially expanding mortgage access to an estimated 37 million consumers who were previously “credit invisible.” 3
• Alternative Credit Data Now Considered: VantageScore 4.0 incorporates rent, utility, and telecom payment histories, providing a more comprehensive view of borrowers’ creditworthiness. “This is a game-changer for expanding homeownership opportunities,” said VantageScore CEO Silvio Tavares. 3
• HELOC Rates Hold at 8.27%: HELOC rates remained unchanged for the third consecutive week, with the average $30,000 line of credit holding steady according to Bankrate’s national survey. 9
• Home Equity Loan Rates Stable: The average rate on the 10-year, $30,000 home equity loan held at 8.42%, along with the comparable 15-year loan at 8.35%, and the 5-year loan at 8.26%. 9
• Mortgage Complaints Declining: CFPB data shows a notable decrease in complaints regarding mortgage processes in June 2025, with conventional home mortgages seeing the largest decline in issues related to “Trouble during payment process.” 10
• FHA Loans Show Higher Delinquencies: FHA loans continue to show higher non-current rates, now 250 basis points above 2019 levels, while GSE and portfolio loans remain relatively strong. 10
• Cryptocurrency for Mortgage Reserves: FHFA has directed Fannie Mae and Freddie Mac to prepare proposals for treating cryptocurrency held on U.S.-regulated exchanges as assets for reserves in single-family mortgage loan risk assessments without requiring conversion to U.S. dollars. 11
• FHFA Director Challenges Fed Chair: FHFA Director William Pulte formally called on Congress to investigate Federal Reserve Chair Jerome Powell, alleging that Powell provided false testimony regarding a $2.5 billion renovation of the Federal Reserve’s office building. 12

Economic & Political News

Overview: The labor market shows continued resilience despite economic headwinds, while the Federal Reserve faces complex policy decisions amid inflation concerns, tariff impacts, and global monetary policy shifts. Economic uncertainty persists due to trade tensions and geopolitical conflicts.

• Bank of Japan Rate Hike Adds Global Dimension: The Bank of Japan’s decision to raise interest rates for the second time this year adds another layer of complexity to global monetary policy. This move could strengthen the yen against the dollar and impact U.S. import prices. 7
• Fed Holds Rates Steady: The Federal Reserve maintained interest rates at a target range of 4.25-4.5% at its June meeting, as it weighs inflation risks and the impact of President Trump’s tariffs on the economy. 9
• Next Fed Meeting July 29-30: Market participants are closely watching for signals about potential rate cuts at the upcoming Federal Reserve meeting at the end of July, though expectations for cuts have diminished with recent economic data. 9
• Economic Uncertainty Persists: Despite the positive jobs report, the upcoming tariff deadline and CPI report will bring added clarity to the policy and inflation outlook. Any renewed volatility in trade policy could significantly affect market conditions during the second half of the year. 7

Commercial Real Estate Markets (including Multifamily)

Overview

The commercial real estate market shows mixed signals with significant financing activity alongside pricing challenges. Recent days have seen major CLO closings, strategic acquisitions, and new insights on property insurance challenges facing the industry.

• BlackRock acquires ElmTree Funds for $7.3 billion in assets under management, strengthening its position in industrial real estate and net-lease sectors 1
• Greystone closes $901.3 million multifamily CLO, its largest to date, comprising 38 floating-rate bridge loans secured by 47 multifamily properties across 16 states 2
• CMBS issuance up 35% in first half of 2025, reaching $59.55 billion—the largest volume in more than 15 years 3
• Multifamily prices drop 12.1% year-over-year, marking the steepest decline since 2008 despite the peak leasing season 4
• Property insurance premiums continue rising with 87% of CRE executives reporting increases of 15% or more in the past year, according to ULI and Heitman survey 5

Major Financing Developments

Greystone’s Record-Breaking CLO

• Greystone has closed a $901.3 million multifamily commercial real estate CLO—its largest to date and the second-largest multifamily CLO in the industry
• The transaction includes 38 floating-rate bridge loans secured by 47 multifamily properties across 16 states
• The CLO has a 3-year reinvestment period with a weighted average interest rate of SOFR+3.06%
• This marks Greystone’s 17th CLO issuance, bringing its total CLO issuance volume to $7.5 billion 2

CMBS Market Strength

• Private-label CMBS issuance reached $59.55 billion in H1 2025, up 35% from the same period last year
• Single-asset, single-borrower (SASB) deals dominated with nearly 75% of issuance, averaging $758 million per deal
• Blackstone participated in nine SASB deals totaling $11.17 billion (19% of total issuance)
• Wells Fargo Securities leads bookrunners with 14.53 deals totaling $10.73 billion (18% market share) 3

Market Sector Performance

Multifamily Challenges

• Property prices down 12.1% year-over-year, steepest drop since 2008 financial crisis
• May transaction volume fell 18% year-over-year to $8.2 billion, breaking 11-month growth streak
• Garden-style apartments particularly affected with sales down 30%
• Despite pricing pressures, U.S. apartment occupancy rose to 95.6% in June, up 140 basis points year-over-year
• Only six major apartment markets reported occupancy declines 4

Industrial Real Estate Trends

• Construction starts at lowest levels in a decade with only 86.9 million square feet through May 2025
• Tariff uncertainty, particularly on steel imports, causing developers to delay projects
• Light industrial sector attracting significant investment with Kayne Anderson and BKM Capital Partners forming $1.5 billion joint venture
• BKM aims to double assets under management to $5 billion within two years 8