Daily Dose of Real Estate for May 6

Treasury raised its Q2 borrowing estimate by $79 billion to $189 billion and projected another $671 billion for Q3 – all that 10-year investors needed to push the yield to 4.44% and the 30-year fixed rate up 12 bps to 6.56%, its highest reading since March 27. Rate watchers now have their eyes on Friday’s payrolls print, expected at roughly 60,000 versus 178,000 in March. Kevin Warsh assumes the Fed chair on May 15. With the Strait of Hormuz effectively closed, retail gasoline up 38.2 cents over seven days, and no tax-writing vehicle available in the eight remaining session days this month, consumer relief — a payroll tax holiday, a federal gas tax suspension, or anything similar – will not come from Congress. Whatever is done will be done by executive order.

Property data tells a consistent story. Census reported March new home sales at a 682,000 SAAR, up 7.4% month-over-month, with the median price down 5.3% to $387,400 – now more than $20,000 below the median existing-home price – which is wild and puts downward pressure on resale values. Builders are clearing inventory by cutting prices while existing-home appreciation has flattened to near zero. AEI’s March HPA reading came in at 1.2%, the second-lowest in series history, with a 16.5 point spread between Kansas City (+9.0%) and Memphis (-7.5%).

Non-QM monthly new impairments (loans that went DQ or were modified) at 1.13% in March with first-time new impairments at a multi-year low of 0.42%, while the stock of serious delinquencies rose 15 bps to 3.42% and total impairment held at 6.92%. However, CPA/P&L and bank-statement loans continue to run impairment rates near 11% versus roughly 6% for full-doc and DSCR product – improvement at the front of the book, deterioration in the seasoned book. Trepp’s April multifamily CMBS delinquency rate hit a series high of 7.71% on two large San Francisco and New York loans, and CRED iQ pegged top-50 metro CMBS distress at 12.2%, with Providence at 71%, Hartford at 44.1%, and Denver at 42.3%, while Miami, Phoenix, Dallas, Houston, and Atlanta remain below 10%. The $835 million Trinity/Sculptor JW Marriott trade and the $535 million GNL/Modiv merger show that selective hospitality and industrial net-lease bids still clear at scale; the rest of the CMBS tape is still working through 2021–2022 vintage refinancing pressure.

Let’s get you caught up and put the door in 3 minutes. Tim

KEY TAKEAWAYS

• Mortgage rates jump back above 6.5%. Mortgage News Daily’s 30-year fixed climbed 12 bps to 6.56% on May 4, the highest since late March, as bond yields rose on Iran war escalation and oil price pressure. (Mortgage News Daily)
• New home sales rebound in catch-up release. Census/HUD’s delayed New Residential Sales report, released May 5, showed March new home sales at a 682,000 SAAR, up 7.4% from February and 3.3% year-over-year, with the median price falling to $387,400. (Census Bureau)
• AEI: home price appreciation slows to 1.2% in March. AEI Housing Center’s April HMI release pegged March 2026 preliminary YoY HPA at 1.2% — tied for the second-lowest reading in the series and down from 2.6% a year earlier — with the spread between fastest- and slowest-growing top metros at 16.5 percentage points. (AEI Housing Center)
• Treasury borrowing estimate jumps $79B for Q2. Treasury announced May 4 that it expects to borrow $189 billion in privately-held net marketable debt in April–June, well above its February estimate, and projects $671 billion in borrowing for Q3. (U.S. Treasury)
• April Services PMI eases but stays in expansion. ISM’s Services PMI registered 53.6% in April, a 0.4-point decline from March but the 22nd straight month of expansion, with the Business Activity Index rising to 55.9%. (ISM/PR Newswire)
• Multifamily CMBS delinquencies hit a new high. Trepp’s April CMBS report showed the multifamily delinquency rate jumping 56 bps to 7.71%, driven by two large San Francisco and New York loans turning delinquent. (Mortgage Professional America)
• CRE distress concentrates in legacy markets. CRED iQ’s April analysis pegged aggregate CMBS distress in the top 50 metros at 12.2%, with Providence, Hartford, and Denver leading and office still the most stressed property type at 17%. (Commercial Observer)
• Non-QM impairments ease in March, but quality bifurcation deepens. dv01 data show new impairment rates fell 36 bps to 1.13% in March with first-time new impairments at 0.42% (lowest since early 2023), even as serious delinquencies rose 15 bps to 3.42% and CPA/P&L loans run ~11% impairment vs. ~6% for full-doc. (Scotsman Guide)
• $835M Florida resort trade signals hospitality bid. Trinity Investments and Sculptor Real Estate announced an $835 million acquisition of the JW Marriott Marco Island Beach Resort, one of the largest hospitality trades of the year. (Commercial Observer)
• Global Net Lease to acquire Modiv Industrial in $535M deal. GNL announced an all-stock merger with Modiv Industrial that would add a sizeable industrial net-lease portfolio to its platform. (Commercial Observer)
• HMBS issuance climbs in April. HousingWire reported May 4 that Ginnie Mae HMBS issuance reached $525 million in April, up from $441 million in March, while HECM endorsements slipped 1.4% to 2,088 loans. (HousingWire)
• Treasury yields press higher on Iran war fears. The 10-year Treasury rose to roughly 4.44% on May 5 after a 5+ bp jump Monday, as Middle East escalation pushed oil prices higher and rekindled inflation concerns. (Trading Economics)

RESIDENTIAL REAL ESTATE MARKETS

• New home sales surge 7.4% in March; median price hits multi-year low. Census Bureau and HUD released the delayed March New Residential Sales report on May 5, showing sales at a 682,000 SAAR (the strongest pace since mid-2025), with the median price down 5.3% month-over-month to $387,400 — the lowest in roughly five years. (Census Bureau)
• Builders working down inventory at the cost of margins. New houses for sale stood at 481,000 in March, lowering months’ supply to 8.5 from 9.1 in February, as builders use price cuts and incentives to clear standing inventory. Realtor.com’s Joel Berner noted the median new-home price is now more than $20,000 below the median existing-home price, a historically rare inversion. (RISMedia)
• February sales also revised higher. Census reported the previously unreleased February figure at a 635,000 SAAR, up 8.9% from January’s storm-affected 583,000 pace, confirming a stronger spring start than initial readings suggested. (Scotsman Guide)
• AEI Housing Market Indicators flag near-flat HPA, widening metro dispersion. AEI Housing Center’s April HMI release pegged March 2026 preliminary YoY HPA at 1.2% — tied for the second-lowest reading in the series and down from 2.6% in March 2025 — with the gap between fastest-growing (Kansas City, MO at +9.0%) and slowest-growing (Memphis, TN at -7.5%) top metros at 16.5 percentage points. The release also notes the median purchase note rate held at 6.25% in week 18, down 1.375 ppts from the late-2023 series peak. (AEI Housing Center)
• AEI flags policy fights ahead on institutional SFR investors. The same release argues that proposals like Section 901 of the 21st Century ROAD to Housing Act — which would restrict large institutional investors from acquiring single-family rentals — could harm housing supply, citing analysis of Amherst Holdings showing acquisitions are typically deteriorated properties requiring substantial rehab investment. (AEI Housing Center)

MORTGAGE MARKETS

• 30-year fixed jumps to 6.56%, highest in over a month. Mortgage News Daily’s daily index climbed 12 basis points on May 4 to 6.56%, the highest reading since March 27, with all loan types posting increases as MBS prices weakened materially. The 15-year fixed rose to 6.05%, jumbo to 6.62%, and FHA 30-year to 6.03%. (Mortgage News Daily)
• Bond market reacts to Iran war and supply outlook. MND attributed the rate move to escalation in the Iran conflict driving oil and inflation expectations higher, plus expectations of additional Treasury supply to fund war-related outlays. The 6.56% level is the third-highest reading since August 2025. (Mortgage News Daily)
• HMBS issuance accelerates in April. Ginnie Mae HMBS issuance totaled $525 million in April, up from $441 million in March, while HECM endorsements eased 1.4% month-over-month to 2,088 loans, per HousingWire’s May 4 report. (HousingWire)
• Refinance rates also tick up. According to Zillow data, the average 30-year refinance rate rose 7 basis points to 6.66% as of May 5, while 5/1 ARM refinance rates held steady at 7.13%. (Norada Real Estate)
• Non-QM impairments ease in March on seasonal tailwind. dv01 data show non-QM new impairment rates fell 36 bps to 1.13% in March, with first-time new impairments down to 0.42% — the lowest level since early 2023 — suggesting better initial performance on new originations even as overall impairment remains elevated at 6.92%. (Scotsman Guide)
• Quality bifurcation deepens within non-QM. Despite the headline improvement, serious delinquency rose 15 bps to 3.42%, and dv01 cautioned that March is “seasonally the best performing month.” CPA/P&L loans and bank-statement product continue to run impairment rates near 11%, roughly double the ~6% rate seen on full-documentation, DSCR investor, and verification-of-employment loans. (Scotsman Guide)

REGULATORY & POLICY DEVELOPMENTS

• Treasury raises Q2 borrowing estimate by $79B. Treasury’s May 4 announcement now projects $189 billion in net marketable borrowing for April–June 2026, $79 billion above the February estimate, with the increase driven primarily by lower projected net cash flows. End-of-June cash balance is assumed at $900 billion. (U.S. Treasury)
• Treasury projects $671B Q3 borrowing. The May 4 release also forecasts $671 billion in privately-held net marketable borrowing for July–September, targeting an end-September cash balance of $950 billion. Q1 actual borrowing came in at $577 billion vs. the $574 billion February estimate. (U.S. Treasury)
• Refunding announcement scheduled for May 6. Treasury’s full quarterly refunding details, including coupon and FRN auction sizes for the upcoming quarter, will be released at 8:30 a.m. on Wednesday, May 6 — closely watched for any softening of “at least the next several quarters” guidance language that would signal a shift toward larger coupon issuance. (Reuters via MarketScreener)
• Industry analysis dissects April CFPB ECOA rule. Ballard Spahr’s Consumer Finance Monitor on May 4 published a detailed analysis of the CFPB’s April 22 final rule under Acting Director Russell Vought, which narrows ECOA enforcement away from disparate-impact theories and limits “discouragement” liability. The piece notes disparate-impact risk remains intact under the Fair Housing Act for residential mortgage lenders. (Consumer Finance Monitor)

ECONOMIC NEWS

• April Services PMI at 53.6% — 22nd straight month of expansion. ISM’s report, released May 5, showed services activity easing 0.4 points from March’s 54.0, while Business Activity rose to 55.9% and New Orders fell sharply to 53.5% from 60.6%. The 12-month moving average is 52.5%. (PR Newswire/ISM)
• 10-year Treasury yield pushes to 4.44%. Yields rose more than 5 basis points Monday and held near 4.44% Tuesday as Iran war escalation drove oil prices higher and stoked inflation concerns; markets are pricing the Fed on hold for the remainder of 2026 with some probability of a December hike. (Trading Economics)
• Jobs report Friday expected to show sharp slowdown. Consensus expects roughly 60,000 nonfarm payrolls in April vs. 178,000 in March, with the unemployment rate holding at 4.3% — a key data point for mortgage rate direction with Kevin Warsh set to assume the Fed Chair role on May 15. (Trading Economics)

COMMERCIAL REAL ESTATE MARKETS (INCLUDING MULTIFAMILY)

• Multifamily CMBS delinquencies set a new high. Trepp’s April report, covered by Mortgage Professional America on May 4, shows the multifamily delinquency rate jumping 56 bps to 7.71%, driven by two large new delinquencies — a San Francisco multifamily loan and a New York City multifamily loan. The overall CMBS rate edged down 1 bp to 7.54%. (Mortgage Professional America)
• Office CMBS delinquencies remain near record at 11.69%. Office held at the highest reading among major property types despite a 2 bp dip in April, with year-over-year office delinquencies up 141 basis points and the sector continuing to dominate special-servicing transfers. (Mortgage Professional America)
• CRED iQ pegs top-50 metro distress at 12.2%. Across the 50 most populous MSAs, aggregate CMBS distress (delinquent, in special servicing, or REO) reached 12.2% in April per CRED iQ, with office at 17% and mixed-use at 14.6%. Providence, Hartford, and Denver lead at 71%, 44.1%, and 42.3% respectively, while Sun Belt metros (Miami, Phoenix, Dallas, Houston, Atlanta) continue posting sub-10% distress rates. (Commercial Observer)
• Multifamily distress concentrating in tech-adjacent and Midwest markets. Aggregate multifamily distress across the top 50 metros reached 11.4% in April, with San Francisco–Oakland posting the highest reading among major markets due to rent declines and tech-submarket vacancy, while Minneapolis–St. Paul also logged elevated stress. CRED iQ attributes the broader stress to rent normalization, floating-rate debt service burdens, and 2021–2022 vintage maturity pressure. (Commercial Observer)
• Trinity and Sculptor close $835M JW Marriott Marco Island deal. Trinity Investments and Sculptor Real Estate announced the acquisition of the JW Marriott Marco Island Beach Resort in Florida for $835 million, one of the largest hospitality transactions of 2026 to date and a meaningful signal of selective resort/hospitality bid coverage in the current rate environment. (Commercial Observer)

INDUSTRY NEWS

• Global Net Lease to acquire Modiv Industrial in $535M merger. REIT consolidator GNL announced May 4 it will absorb Modiv Industrial in a $535 million transaction, adding industrial net-lease assets to its platform and continuing the wave of net-lease consolidation among public REITs. (Commercial Observer)
• Clearwater PACE leads $95M Utah resort financing. FirstPathway and Clearwater PACE provided a $95 million loan for the Ameyalli Wellbeing Resort in Midway, Utah, a notable PACE-led hospitality financing in a tightening capital environment and indicative of growing PACE penetration in resort and wellness asset classes. (Commercial Observer)
• KB Home CFO Robert Dillard to resign. The homebuilder disclosed in an April 29 8-K (covered by HousingWire May 4) that EVP and CFO Robert Dillard will step down effective May 8, 2026, with the company stating the departure is unrelated to financial reporting or accounting disputes. The transition comes as builders are aggressively cutting prices to clear inventory, putting pressure on margin disclosure and capital allocation messaging. (HousingWire)

HEARD ON THE STREETS OF DC

• Strait of Hormuz effectively closed; gas prices spiking. Prices have jumped 38.2 cents in the last seven days, with $4.75/gallon plausible by week’s end and $5/gallon possible by Memorial Day. CENTCOM warns hazardous mines across the Strait require strict coordination with Oman at a minimum for any transit attempt.
• Trump retains GOP cover despite underwater polling. Approval on his handling of the war sits at 33%/66% disapproval, with overall approval 16 points underwater, yet the Republican conference intends to give him continued latitude through June. The prevailing GOP message is “sacrifice for the greater good,” and the internal conversation is about extending presidential latitude, not constraining it.
• AUMF activity coming when Senate returns May 12. Senator Murkowski (R-AK) is expected to introduce an AUMF Monday night to extract strategy and information from the White House, while a separate GOP group drafts authorization for continued hostilities ranging from 30 days to one year. The 90-day War Powers Resolution window closes in late May, and Senator Curtis (R-UT) has tied additional war funding to oversight conditions.
• No congressional stimulus is coming — full stop. The eight session days remaining this month will be consumed by the second reconciliation bill ($70B for DHS/ICE through 2029), and because tax-writing committees were excluded, there is no legislative vehicle for a payroll tax holiday, gas tax suspension, or any other consumer relief. Bipartisanship sufficient to change that is unrealistic to expect.
• Executive action is the only path through July 2026. Available levers include encouraging state gas tax cuts (Georgia and Indiana likely to comply, Florida not), additional SPR releases, a 90-day federal gas tax suspension, and — if prices breach $5/gallon — export controls on refined products. Sustained energy shocks pressure household DTI and shelter inflation, keeping rates range-bound and affordability constrained through summer.