Daily Dose of Real Estate

Daily Dose of Real Estate for May 14

Good news: median home sale prices rose 2.4% year-over-year in April, the best nominal reading since March 2025. Bad news: April Consumer Price Index inflation came in at 3.8%, which means values actually fell 1.4% in real terms. Confusing news: today’s Producer Price Index print hit 6.0% year-over-year on a services-driven jump — before you panic, year-over-year inflation readings compare this month’s prices to the same month a year ago. March 2025 happened to be unusually weak (PPI fell 0.1%, the weakest monthly reading in over a year), so today’s number looks bigger than the underlying pricing momentum actually is. Context: the services blowout was concentrated in trade and transportation rather than broad-based, and bonds were only 2 basis points weaker at 10 a.m. — PPI was not as bad as the headline despite the size of the miss. The Fed officially has a new chairman, Kevin Warsh, whose 54-45 vote is the narrowest Fed Chair confirmation in modern history. Markets responded by pricing in a 39% probability of a rate hike by year-end and pushing Bank of America’s first-cut forecast to the second half of 2027. Mortgage rates hit 6.57%, a six-week high, and the administration’s announced response is to suspend the 18.4-cent federal gasoline tax.

The rest of the housing picture looks reasonably healthy. Pending home sales hit a three-year high, existing home sales ran at their highest pace since February 2023, and active listings reached a five-year high — buyers and sellers both showed up. Household debt hit a record $18.79 trillion, but debt as a share of after-tax income fell to its lowest level since 2003 outside the pandemic. The ratio improved because incomes rose, not because households paid down debt — debt itself is still climbing. The aggregate also hides who’s actually stressed: homeowners with locked-in sub-5% mortgages are fine, while renters facing 21% credit card rates and student-loan borrowers (now 10.3% delinquent after forbearance ended) are not. And it’s a first-quarter reading — none of April’s inflation surge is in the numbers yet. War of the Roses: Two Harbors rejected United Wholesale Mortgage’s $12.50 bid in favor of a $12 cash offer from CrossCountry – the shareholder vote is on May 19.

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

KEY TAKEAWAYS

  • April Producer Price Index (PPI), which tracks wholesale prices that businesses pay each other, surged 1.4% on the month and 6.0% year-over-year — the largest annual gain since December 2022. Services prices blew out alongside the energy spike, with Wolf Street’s Wolf Richter calling the print “a massive amount of inflation” that companies are passing on to each other through much of the economy.

  • The U.S. Senate confirmed Kevin Warsh as Federal Reserve chair 54-45 on May 13 in the closest Fed chair vote in modern history, hours after the PPI release and one day after a separate vote seating him on the Federal Reserve Board of Governors.

  • The Mortgage News Daily 30-year fixed mortgage rate climbed to 6.57% on May 13, matching the highest level since March 27 as back-to-back hot inflation reports and stalled Iran peace negotiations push rates higher.

  • Mortgage Bankers Association (MBA) application volume rose 1.7% for the week ending May 8, with purchase applications up 4% even as the average 30-year contract interest rate hit a five-week high of 6.46%.

  • The New York Federal Reserve’s Q1 2026 Household Debt and Credit Report showed total household debt at a record $18.79 trillion, but household debt as a percentage of after-tax income fell to 79.9% — the lowest since 2003 outside the pandemic stimulus quarters — even as the overall 90-day delinquency rate rose to 3.36% on student-loan defaults coming out of forbearance.

  • The Federal Reserve’s G.19 consumer credit report showed credit accelerated to a 3.25% seasonally adjusted annual rate in the first quarter of 2026, the strongest quarterly growth in three years. Credit-card and other revolving credit grew 3.88% on an annualized basis, with average credit-card interest rates at 21.00%.

  • Two Harbors Investment Corp. rejected United Wholesale Mortgage’s (UWM) revised $12.50-per-share offer on May 13. Both major proxy advisors — Institutional Shareholder Services (ISS) and Glass Lewis — now recommend Two Harbors shareholders vote against the competing CrossCountry Mortgage merger ahead of the May 19 special meeting.

  • The National Association of Home Builders’ (NAHB) first-quarter 2026 Multifamily Market Survey showed builder sentiment about new apartment construction unchanged year-over-year at 44, and sentiment about apartment occupancy down 13 points to 69, with garden-style and low-rise buildings outperforming mid- and high-rise across both readings. A reading below 50 on the production index indicates more builders report poor conditions than good conditions; above 50 on the occupancy index indicates the reverse.

RESIDENTIAL REAL ESTATE MARKETS

MORTGAGE MARKETS

  • The Mortgage News Daily 30-year fixed mortgage rate sits at 6.57% on May 13, up 1 basis point on the dayand matching the highest level since March 27, after a cumulative 15-basis-point climb since Friday driven by Iran war headlines and the back-to-back inflation reports. A basis point is one one-hundredth of a percentage point. https://www.mortgagenewsdaily.com/mortgage-rates

  • Mortgage News Daily Chief Operating Officer Matthew Graham noted the Producer Price Index hit harder than the Consumer Price Index but generated a milder bond-market reaction, with 10-year Treasury yields only 2 basis points weaker at 10 a.m. as the market continues to treat the inflation spike as partially reversible once the Iran war resolves. https://www.cnbc.com/2026/05/13/mortgage-rates-jump-to-highest-level-since-march.html

  • The Mortgage Bankers Association’s Weekly Applications Survey for the week ending May 8 showed total mortgage applications up 1.7%, with home-purchase applications up 4% and refinance applications down 1%. The average contract interest rate on a 30-year fixed-rate mortgage rose to 6.46%, the highest in five weeks; purchase applications were 7% higher than a year earlier and refinance applications were 28% higher year-over-year. https://www.mba.org/news-and-research/newsroom/news/2026/05/13/mortgage-applications-increase-in-latest-mba-weekly-survey

  • Mortgage Bankers Association Vice President Joel Kan attributed the application rebound to seasonal demand resilience rather than rate relief, with purchase activity holding up despite the strongest contract-rate level in over a month. https://www.housingwire.com/articles/mba-applications-rise-mba-may-8/

  • Mortgage origination credit-score data in the New York Federal Reserve’s first-quarter report continues to show almost no originations to borrowers with credit scores below 620 and a recent uptick in originations to borrowers with scores between 660 and 760. The rate at which mortgage borrowers became seriously delinquent — 90 days or more behind on payments — rose to 1.5% annualized from 1.4% in the prior quarter. The total share of mortgage balances more than 90 days delinquent stands at 1.09%, and the comparable share for home equity lines of credit stands at 0.95%, both still in the gradual return to pre-pandemic norms. https://wolfstreet.com/2026/05/12/household-debts-debt-to-income-ratio-serious-delinquencies-foreclosures-collections-bankruptcies-in-q1-2026/

REGULATORY AND POLICY DEVELOPMENTS

  • The U.S. Senate confirmed Kevin Warsh as the 17th chair of the Federal Reserve 54-45 on May 13, the closest Fed chair vote in modern history, with only Senator John Fetterman (Democrat, Pennsylvania) crossing the aisle. Warsh formally succeeds Chair Jerome Powell when Powell’s term ends Friday, and inherits a 3.8% headline inflation reading roughly twice the Fed’s 2% target. https://www.cnbc.com/2026/05/13/kevin-warsh-wins-senate-confirmation-as-the-next-federal-reserve-chair.html

  • The Mortgage Bankers Association issued a statement on Warsh’s confirmation as Federal Reserve chairman May 13, the trade group’s first formal reaction to the chair transition and a likely preview of how the industry will engage the new Fed leadership on the path of interest rates and on the Fed’s ongoing reduction of its mortgage-backed securities holdings. https://www.mba.org/

  • The House Financial Services Committee marked up two artificial intelligence (AI) bills on May 13: H.R. 2152, the Artificial Intelligence Practices, Logistics, Actions, and Necessities (AI PLAN) Act, and H.R. 4801, the Unleashing AI Innovation in Financial Services Act. The first would require the Treasury Department, the Department of Homeland Security, and the Commerce Department to coordinate a strategy on AI-related financial-crime risks. The second would create regulatory sandboxes — controlled testing environments — for AI projects at financial regulators including the Consumer Financial Protection Bureau (CFPB) and the prudential banking agencies. https://financialservices.house.gov/

  • Freddie Mac settled its tender offer for Structured Agency Credit Risk (STACR) notes on May 12-13, purchasing roughly $1.4 billion in original principal of legacy credit-risk-transfer securities tendered through the May 8 expiration. The transaction reduces outstanding obligations tied to 2022-2023 vintage issuance. Credit-risk-transfer securities are bonds Freddie Mac uses to shift a portion of its mortgage-default risk to private investors. https://www.globenewswire.com/news-release/2026/05/11/3291962/0/en/Freddie-Mac-Announces-Results-of-Tender-Offer-for-Certain-STACR-Notes.html

  • No new material releases posted within the freshness window from the Federal Housing Finance Agency, the Department of Housing and Urban Development, the Federal Housing Administration, Ginnie Mae, the Consumer Financial Protection Bureau, the Treasury Department, the Office of the Comptroller of the Currency, the Federal Deposit Insurance Corporation, the Federal Home Loan Bank system, or the Securities and Exchange Commission beyond the items above. The Federal Housing Finance Agency’s next quarterly House Price Index report is scheduled for May 26.

ECONOMIC NEWS

  • The April Producer Price Index for final demand rose 1.4% month-over-month and 6.0% year-over-year, the largest annual gain since December 2022 and well above the 0.5% monthly / 4.9% annual consensus forecast. Goods prices rose 2.0% and services prices rose 1.2% on the month, with gasoline up 15.6% and wholesale margins for machinery and equipment up 3.5%. https://www.bls.gov/news.release/archives/ppi_05132026.htm

  • Wolf Street’s Wolf Richter framed the April Producer Price Index as a services-driven blowout layered on top of the energy spike. Services producer prices rose 1.18% month-over-month (15.1% on an annualized basis), with trade-services prices up 2.7% and transportation and warehousing services up 5.0% month-over-month. Core producer prices, which exclude food and energy, rose 1.03% month-over-month (13.1% annualized) and 5.2% year-over-year — the worst core reading since December 2022 — showing the inflation impulse has migrated beyond energy into broader business-to-business pricing. https://wolfstreet.com/2026/05/13/producer-price-inflation-explodes-as-the-services-ppi-blows-out-on-top-of-the-energy-price-spike/

  • The New York Federal Reserve’s first-quarter 2026 Household Debt and Credit Report shows total household debt at a record $18.79 trillion, up just $18 billion (0.1%) from the prior quarter. Household debt as a share of after-tax income fell to 79.9% — the lowest reading since 2003 excluding the stimulus-distorted pandemic quarters — even as the overall share of debt 90 days or more past due rose to 3.36%, driven by federal student loans defaulting after coming out of pandemic-era forbearance. Foreclosures (59,160) and personal bankruptcies (124,020) remain near multi-decade lows. https://wolfstreet.com/2026/05/12/household-debts-debt-to-income-ratio-serious-delinquencies-foreclosures-collections-bankruptcies-in-q1-2026/

  • The National Association of Home Builders’ read on the Federal Reserve’s G.19 consumer credit data shows consumer credit accelerated to a 3.25% seasonally adjusted annual rate in the first quarter of 2026 — the strongest quarterly growth in three years. Credit-card and other revolving credit grew 3.88% on a seasonally adjusted annual basis and 3.46% year-over-year, reaching $1.34 trillion. Auto loans hit $1.56 trillion (up 0.37% year-over-year) at a 60-month new-car loan rate of 7.52%, while the average commercial-bank credit-card interest rate held at 21.00%. The G.19 report excludes mortgage debt. https://eyeonhousing.org/2026/05/consumer-credit-accelerated-in-q1-2026/

  • Futures markets are pricing roughly a 39% probability of a Federal Reserve interest-rate hike by year-end following the Producer Price Index release, up from about 30% after Tuesday’s Consumer Price Index print, according to CME Group’s FedWatch tool. Bank of America has pushed its forecast for the first Fed rate cut into the second half of 2027. https://www.cnbc.com/2026/05/13/ppi-inflation-report-april-2026-.html

  • President Trump told CBS News in a Monday phone interview the administration will suspend the federal gasoline tax — 18.4 cents per gallon for regular gasoline and 24.4 cents per gallon for diesel — “for a period of time,” a response to the Iran-war energy spike that has pushed gasoline prices 28.4% higher year-over-year. He separately rejected the idea of a federal bailout for U.S. air carriers facing higher jet-fuel costs. https://www.cbsnews.com/news/cpi-report-today-april-2026-inflation-iran-war-trump/

  • Real (inflation-adjusted) average hourly earnings fell 0.5% in April and are down 0.3% year-over-year, underscoring that the inflation surge is eroding consumer purchasing power even as headline employment indicators remain solid. https://www.cnbc.com/2026/05/12/cpi-inflation-april-2026-.html

COMMERCIAL REAL ESTATE MARKETS (INCLUDING MULTIFAMILY)

INDUSTRY NEWS

  • Two Harbors Investment Corp. rejected United Wholesale Mortgage’s revised $12.50-per-share cash-or-stock offer on May 13 and reaffirmed support for the $12-per-share all-cash CrossCountry Mortgage transaction. United Wholesale Mortgage responded with a statement attacking the Two Harbors board’s governance and citing Institutional Shareholder Services’ May 12 recommendation that shareholders vote against the CrossCountry merger. Institutional Shareholder Services and Glass Lewis are the two largest proxy advisory firms in the United States; their recommendations carry significant weight with institutional investors. https://lasvegassun.com/news/2026/may/13/uwmc-calls-out-egregious-corporate-governance-of-t/

  • Glass Lewis joined Institutional Shareholder Services in recommending Two Harbors shareholders vote against the CrossCountry merger on May 13 ahead of the May 19 special meeting. Dueling proxy-advisor recommendations and competing $12 / $12.50 bids set up the most consequential mortgage-sector merger vote of 2026. https://www.nationalmortgagenews.com/news/two-harbors-rejects-uwms-hostile-12-50-offer

  • Mortgage technology vendor Lender Price launched a Model Context Protocol integration on May 13 that connects real-time pricing, eligibility, and investor overlays directly into AI-driven loan-officer and pricing workflows. Model Context Protocol is an emerging technical standard that lets AI systems interact directly with software tools and live data; the announcement is the first such deployment in mortgage pricing infrastructure. https://nationalmortgageprofessional.com/

  • Lending software provider MeridianLink unveiled “Millie,” an embedded AI assistant for its lending platform, on May 13, alongside platform updates focused on loan decisioning, efficiency, and borrower experience. The launch reflects the broader push by core mortgage technology providers to integrate AI assistants — software that can take actions and make recommendations within a workflow — into the production stack. https://nationalmortgageprofessional.com/

  • A first-quarter 2026 mortgage-lender earnings round-up flagged second-quarter deterioration risk on May 12. Rocket Companies, PennyMac, United Wholesale Mortgage, and other publicly traded lenders posted solid first-quarter results against mortgage rates roughly 50 basis points below current levels, but second-quarter guidance softened as volatility rose; Rocket guided second-quarter adjusted revenue to $2.7 to $2.9 billion versus $2.82 billion in the first quarter. https://www.housingwire.com/articles/mortgage-earnings-q2-2026-outlook/

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