Inventory is rising. Affordability is inching better. Days on market are falling. And yet 2025 still closed with just over 4 million existing-home sales — the weakest year since 1995. A functioning market should be closer to 5.2 million. We’re still operating roughly 1 million units below normal.
The Senate votes Monday on a bipartisan housing package aimed at affordability. The bill leans heavily on HUD grants and investor restrictions — policy tools that may ease political pressure but do little to fix the structural supply deficit at the core of the crisis.
At FHFA, Director Bill Pulte is planning to meet with multiple companies this week to reinforce statutory compliance and underscore safety and soundness priorities, with a particular focus on mortgage fraud. The meetings fit within a broader push toward tighter risk-based supervision of lenders and homebuilders. Public details remain limited, but the signal is clear: oversight intensity is rising.
Commercial real estate remains bifurcated. Agencies increased multifamily lending caps, providing incremental liquidity, while overall transaction volume fell 25% year over year across most sectors. Industrial continues to hold up with $4.1 billion in deal activity. Meanwhile, CRE valuations have fallen to their lowest levels relative to public equities in two decades — a potential opportunity signal, depending on capital costs and refinancing risk.
Let’s get you caught up and out the door in 3 minutes. Tim
KEY TAKEAWAYS
- Mortgage rates hit multiyear lows — 30-year fixed rates dropped to 5.98% according to Freddie Mac, marking the first time rates have fallen below 6% since September 2022
- Housing affordability crisis deepens — 2025 existing home sales hit just 4.06 million, the lowest pace since 1995 despite a population 75 million larger than then, forcing industry focus on pricing realism
- Spring inventory shows mixed signals — Home inventory up 7.1% year-over-year with new listings finally turning positive, while median days on market fell to 68 days for the first time since November
- MBA reports affordability decline — National median monthly mortgage payment rose to $2,070 in January from $2,025 in December, with the Purchase Applications Payment Index increasing 1.0% to 150.3
- HUD rolls back affordable housing protections — Trump administration immediately reverted 30-day eviction notice requirements to pre-pandemic standards, affecting nearly 4 million residents in federally subsidized housing
- Rocket Companies reports strong 2025 performance — Company achieved $6.7 billion in revenue with $132 billion in rate locks and grew market share to 5.5% in Q4, up from 3.8% the year prior
- FinCEN real estate rule takes effect — Residential Real Estate Rule compliance date arrived March 1, 2026, requiring reporting for non-financed transfers of residential real property to legal entities and trusts
- GSE multifamily lending expands significantly with FHFA raising 2026 loan purchase caps to $88 billion each for Freddie Mac and Fannie Mae, a 20% increase from 2025 levels 1
- Apartment sales volume plummeted 25% year-over-year to $8 billion in January 2026, with mid/high-rise trades falling 39% and entity-level deals down 64% 2
- Commercial real estate trades at rare discount to equities for first time in 20 years as MetLife Investment Management reports CRE valuations have fallen below stocks based on cap rates relative to P/E ratios 3
- Industrial sector shows resilience with $4.1 billion in national deal volume in January at $166 PSF average, led by Los Angeles with $356 million in transactions including notable $123 million South Bay sale 4
- Major REIT privatization signals market shift as Veris Residential agrees to $3.4 billion all-cash acquisition by Affinius Capital and Vista Hill Partners, expected to close Q2 2026 2
RESIDENTIAL REAL ESTATE MARKETS
The housing market is displaying signs of transition as it enters the critical spring selling season, with mixed signals on inventory, sales pace, and buyer behavior creating uncertainty about the direction ahead.
MARKET CONDITIONS SHOW IMPROVEMENT
- Active inventory rose 7.1% year-over-year, providing buyers with more options, though the pace of inventory recovery has slowed significantly from the rapid 30% year-over-year increases seen in previous periods. 1
- New listings finally flipped into positive territory after weeks of decline, up 3.6% year-over-year, as the market recovers from post-pandemic inventory shortages. 1
- Median days on market fell to 68 days for the week ending February 21, dropping below 70 days for the first time since November, though still five days longer than the same time last year. 1
SALES PACE REMAINS HISTORICALLY LOW
- 2025 existing home sales totaled approximately 4.06 million, representing the lowest annual pace since 1995, despite the U.S. population being roughly 75 million larger today. 2
- A normalized market typically requires annual sales of at least 5.2 million homes, highlighting the significant gap that must be bridged in 2026. 2
- Industry experts note that realtors will need to focus on increasing overall sales pace rather than maximizing the sales price of any individual home. 2
REGIONAL VARIATIONS EMERGE
- Some markets like Houston, Texas have seen inventory reach all-time highs, though higher inventory levels have made buyers more selective rather than stimulating sales. 2
- Increased selectivity has led to more contract cancellations as buyers become nervous about transactions or discover issues during inspections. 2
- New home construction fell by 7.9% annually in 2025, meaning new listings of existing homes will have to make up for the lack of inventory supplying the housing market. 1
MORTGAGE RATE DISTRIBUTION SHIFTS
- For the first time in five years, more homeowners have mortgage rates above 6% (21.1%) than below 3% (20%), marking a significant reversal from the pandemic period. 3
- 78.8% of homeowners have rates under 6%, the lowest share since 2015, reflecting the broader normalization of the rate environment from pandemic-era lows. 3
- Roughly one in six (16%) U.S. homeowners say they’re staying put in their current home rather than moving because they don’t want to give up their low mortgage rate. 3
MORTGAGE MARKETS
Mortgage markets experienced significant positive movement this week, with rates hitting multiyear lows and industry participants positioning for improved spring market conditions.
RATES HIT MULTIYEAR LOWS
- 30-year fixed rates dropped to 5.98% according to Freddie Mac data, marking the first time rates have fallen below 6% since September 2022. 4
- Rates averaged 6.76% during the same period in 2025, representing a significant year-over-year improvement. 1
- The 10-year Treasury yield moving under 4% has been a key driver of the rate decline, with mortgage spreads doing much of the incremental work to drive rates lower. 4
SPREAD IMPROVEMENTS DRIVE RATE DECLINES
- The improvement in mortgage spreads has been the most critical factor in rates moving toward multiyear lows. 4
- Industry analysts note that if current conditions existed in 2023 with the worst levels of mortgage spreads, mortgage rates would still be above 7%. 4
- The rate floor outlook remains around 5.75% for 2026, with spreads designed to reduce volatility as the 10-year yield has fallen. 4
AFFORDABILITY METRICS DECLINE DESPITE RATE IMPROVEMENT
- MBA’s Purchase Applications Payment Index (PAPI) increased 1.0% in January to 150.3, indicating a modest decline in borrower affordability. 5
- National median monthly payment applied for by prospective buyers rose to $2,070 from $2,025 in December, reflecting higher loan amounts relative to income. 5
- Median purchase loan amounts climbed from $320,000 to $332,000, even as mortgage rates trended slightly lower. 5
APPLICATION ACTIVITY SHOWS MIXED TRENDS
- Total mortgage applications inched higher by 0.4% for the week ending February 20, according to the MBA, while the unadjusted index was up by 2%. 6
- Refinance applications increased 4% and were 150% above the same week a year earlier, driven by rates falling to their lowest levels since September 2022. 6
- Purchase applications fell 5% seasonally adjusted and 1% unadjusted, though they remained 12% higher than a year ago. 6
REGULATORY & POLICY DEVELOPMENTS
The Trump administration moved quickly to implement housing policy changes while Congress continues work on bipartisan housing legislation, creating a dynamic regulatory environment.
HUD ROLLS BACK PANDEMIC-ERA PROTECTIONS
- The Trump administration immediately implemented changes reverting eviction notice requirements to pre-pandemic standards, eliminating the 30-day notice rule for public housing. 7
- HUD Secretary Scott Turner said the move reflects the end of the pandemic and promotes local flexibility and affordability in national affordable housing programs. 7
- The rollback affects nearly 4 million residents in federally subsidized housing and immediately impacts tenants in rural and farmworker programs. 7
- Eight industry groups, including the National Association of Housing and Redevelopment Officials (NAHRO), support the rollback, saying it aligns with local statutes and streamlines landlord operations. 7
FINCEN REAL ESTATE RULE TAKES EFFECT
- The Residential Real Estate Rule compliance date arrived March 1, 2026, after FinCEN issued exemptive relief extending the original December 1, 2025 effective date. 8
- The rule applies to non-financed transfers of residential real property to legal entities and trusts, requiring reporting for transfers that close on or after March 1. 8
- Reporting Persons must file a Real Estate Report by the later of 30 calendar days from the date of closing or the final day of the month following the month in which closing occurred. 8
- Settlement agents, title insurance agents, escrow agents, and attorneys are expected to bear the brunt of the related reporting obligations. 9
CONGRESSIONAL HOUSING PACKAGE ADVANCES
- Senate is preparing to vote on a sweeping bipartisan housing package, with lawmakers potentially adding provisions from the House version. 10
- Trump administration and Treasury Secretary Bessent have indicated they need to see language banning large investors from purchasing single-family homes in the final version. 10
- House Financial Services Committee plans to mark up related legislation as soon as March 4. 10
FHFA HOUSE PRICE INDEX SHOWS CONTINUED GROWTH
- U.S. house prices rose 1.8% year-over-year and 0.8% quarter-over-quarter according to FHFA’s latest House Price Index report. 11
- FHFA will release the next monthly HPI report (including data through January 2026) on March 31, 2026, and the next quarterly report on May 26, 2026. 11
ECONOMIC NEWS
Economic indicators continue to support the housing market’s gradual transition, with bond market movements driving favorable rate conditions while broader economic stability provides a foundation for recovery.
BOND MARKET DRIVES RATE ENVIRONMENT
- The 10-year Treasury yield moving under 4% has caught some observers off guard, especially with recent inflation data, but remains within the expected range for 2026. 4
- Labor market continues to show stability without significant growth, supporting the current rate environment. 4
- Industry analysts emphasize that the bond market continues to be the primary driver of mortgage rates, as it has for decades. 4
COST OF LIVING VARIATIONS ACROSS REGIONS
- Regional price parities (RPPs) for 2024 show significant cost differences across the nation, with California having the highest value at 110.7 and Arkansas the lowest at 86.9. 12
- After adjusting for cost of living, Wyoming has the highest real per capita income at $75,501, followed by Connecticut at $74,254, both well above the national average of $59,195. 12
- Mississippi has the lowest real per capita income at $48,465 after adjusting for regional price differences. 12
MARKET TRANSITION RATHER THAN DECLINE
- Economic indicators point to a housing market in transition rather than decline, with pricing realism, improving inventory, and gradual interest rate relief reshaping buyer and seller behavior. 2
- Long-term housing shortages continue to provide structural support, placing a floor under how steep price adjustments become in many markets. 2
- Price adjustments are likely to be more pronounced at the lower end of the market and less severe at the high end, where buyers tend to have greater discretionary income. 2
COMMERCIAL REAL ESTATE MARKETS (INCLUDING MULTIFAMILY)
Government agencies expanded multifamily lending capacity while transaction volumes declined significantly across most property types. Industrial properties showed relative strength, and a major apartment REIT agreed to go private as valuations reached historic lows relative to public equities.
CAPITAL MARKETS & GSE ACTIVITY
- FHFA raises GSE multifamily caps to $88 billion each, up 20% from 2025, strengthening GSE role in multifamily markets. Top five MSAs account for over $242 billion or 25% of entire GSE portfolio. 1
- TruAmerica closes $708M workforce housing fund, increasing purchasing power to approximately $2 billion. Fund targets workforce housing serving households earning 60-100% of area median income across 25 high-growth markets. 5
TRANSACTION VOLUME & PRICING
- Apartment sales volume falls 25% year-over-year to $8 billion in January. Mid/high-rise trades dropped 39% to $2.7 billion while entity-level deals plummeted 64% to $600 million. 2
- Industrial sector records $4.1 billion in national deal volume at average $166 PSF. Los Angeles led with $356 million in transactions despite 13% pricing decline from 2023-2025 peak. 4
- MDH Partners acquires 410,000 SF Chino warehouse for $105 million ($256 PSF) from Nuveen. Transaction part of seven-property, 1.6 million SF industrial portfolio spanning four states. 6
VALUATION & MARKET DYNAMICS
- CRE trades at discount to stocks for first time in 20 years based on cap rates relative to stock P/E ratios. Investment activity rebounding from 2023 lows with NFI-ODCE redemption queue narrowing from 19% to 12% of NAV. 3
FUNDAMENTALS & PERFORMANCE
- Industrial rents reach $8.94 PSF nationally, up 5.1% year-over-year. Atlanta led with 8.0% annual rent growth while national vacancy climbed to 9.6%. 4
- Data center construction hits record 30.8 million SF in 2025 starts, driven by AI investments. Nearly 57% concentrated in five metros with 355.7 million SF under construction. 4
INDUSTRY NEWS
Major industry players reported mixed results while positioning for growth in the evolving market environment, with technology integration and strategic partnerships taking center stage.
ROCKET COMPANIES REPORTS STRONG 2025 PERFORMANCE
- Rocket Companies reported $6.7 billion in revenue for 2025, with net rate lock volume reaching $132 billion and closed mortgage originations of $130.4 billion. 13
- Company maintained a 97% net client retention rate and grew market share to 5.5% in Q4, up from 3.8% the year prior. 13
- CEO Varun Krishna highlighted the company’s acquisitions of Redfin and Mr. Cooper as key strategic moves, with integration proceeding ahead of schedule. 13
- Rocket Pro generated $57.149 billion in sold loan volume for full-year 2025, with $668 million in adjusted revenue. 14
UWM REPORTS RECORD ORIGINATION VOLUME
- UWM closed $163.4 billion in mortgages in 2025, up 17% from 2024, as lower rates fueled a refinancing rebound. 15
- Refinance originations surged to $70.3 billion in 2025 from $43.4 billion in 2024, while purchase volume declined modestly to $93.2 billion from $96.1 billion. 16
- Company ended the fourth quarter with approximately $1.8 billion in available liquidity and a mortgage servicing rights (MSR) portfolio with an unpaid principal balance of $240.8 billion. 16
SHARED EQUITY PRODUCTS GAIN ATTENTION
- Urban Institute research highlights how shared equity products work and provides regulatory recommendations for expanding access to homeownership through innovative financing mechanisms. 17
MAJOR M&A ACTIVITY
- Veris Residential agrees to $3.4 billion all-cash acquisition by Affinius Capital and Vista Hill Partners. Deal expected to close Q2 2026, representing another apartment REIT exit from public markets. 2