Daily Dose of Real Estate

Daily Dose of Real Estate for July 2

The July 2 tape reads like a market that has stopped pretending a recovery is imminent. Mortgage News Daily’s 30-year fixed closed at 6.65%, and the price data confirmed the obvious: Case-Shiller was up 0.8% year over year, FHFA down 0.1% for the month, and both trailing inflation for the 11th straight month. Realtor.com supplied the only genuine movement, with list prices off 2.5% year over year against a seventh straight month of rising pending sales, which is what a market clearing through lower prices rather than lower rates looks like. MBA applications went nowhere, ADP missed at 98,000 ahead of Thursday’s payrolls print, and Warsh used his Sintra debut to say inflation is still too high and commit to nothing. None of it argues for rate relief, and the market is not pricing any.

Policy is where the friction sits. The ROAD to Housing Act remains unsigned as the 10-day clock runs, held hostage to an unrelated voting bill, while Fitzgerald floats a conservatorship framework that Congress is unlikely to act on before regulators do. The HUD OIG report is the more instructive item: the agency insuring roughly a trillion dollars in single-family risk booked servicing errors on 74 of 81 sampled partial claims, a reminder that the back office decays while Washington celebrates deregulation. On the commercial side, Sergey Brin exiting a New York rent-stabilized fund at six cents on the dollar and office construction down 11.9% year over year tell one story, while Kennedy Wilson’s $237 million Westchester buy tells another: capital is not gone, it is just done paying for anything without pricing power.

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

Table of Contents

KEY TAKEAWAYS

Rates crept up again. Mortgage News Daily’s 30-year fixed closed July 1 at 6.65%, up 0.05% on the day and back in line with last week’s highs, though still shy of the early-June peak. Link
Home prices are treading water. Case-Shiller’s national index rose a scant 0.8% year over year in April, the 11th straight month that inflation outran home values in real terms. Link
FHFA agreed. Its April house price index slipped 0.1% for the month and managed just 2.0% year over year. Link
HUD’s own auditor criticizes FHA’s back office. An Inspector General review found servicing or collection errors on 74 of 81 sampled partial claims, raising the risk that money owed back to the MMI Fund never gets collected. Link
Buyers finally got a summer. Realtor.com’s June report shows list prices down 2.5% year over year, the steepest drop since 2017, even as pending sales rose for a seventh straight month. Link
Applications went nowhere fast. MBA volume edged up 0.4% for the week ending June 26, purchases up 1% and refis down 1%. Link
The ROAD to Housing Act is still sitting on the desk, unsigned, with the 10-day clock running while Trump holds out for the SAVE America Act. Link
ADP disappointed. Private payrolls added just 98,000 in June, below the 110,000 consensus, with the BLS jobs report due Thursday. Link
Warsh went to Portugal and said nothing new, reiterating that inflation is “too high” and declining to hint at the July decision. Link
Sergey Brin ate a 94% loss on a New York rent-stabilized fund, a tidy illustration of institutional capital fleeing the sector. Link
Kennedy Wilson still likes suburbs, paying $237 million for a 421-unit Westchester community with Japanese partners. Link

RESIDENTIAL REAL ESTATE MARKETS

Case-Shiller confirms the market is flat in nominal terms and shrinking in real ones. The national index rose 0.8% year over year in April (up from 0.7% in March), with the 10-city and 20-city composites at 1.8% and 1.1%; Chicago led at +6.5% while Seattle brought up the rear at -2.3%. Link
FHFA’s April index told the same story with fewer syllables, down 0.1% for the month and up 2.0% year over year, with the Mountain division (-0.8%) weakest and New England (+1.0%) strongest. Link
Realtor.com’s June report is the more interesting read. The median list price fell 2.5% year over year to $430,000 (eighth straight monthly decline) even as pending sales rose 3.7%, and for the first time in 26 months homes sold no slower than a year ago, at a median 53 days. Link
Inventory keeps rebuilding, unevenly. Active listings hit 1,102,615 in June, up 1.9% year over year but still 11.3% below 2017-2019 norms, with the Northeast (+8.5%) and Midwest (+7.3%) doing the lifting while the South and West stayed flat. Link

MORTGAGE MARKETS

Rates edged higher into the holiday weekend. Mortgage News Daily’s 30-year fixed finished July 1 at 6.65%, up 0.05%, leaving lenders roughly 0.11% higher than the prior morning and back near last week’s highs but below the early-June and mid-May peaks. Link
Application volume was essentially a rounding error. MBA’s index rose 0.4% seasonally adjusted for the week ending June 26 (up 11% unadjusted after the Juneteenth distortion), with purchases up 1%, refis down 1%, and the ARM share below 8%, its lowest since January. Link
The reverse market stayed quiet. HMBS issuance slipped to $456 million in June from $500 million in May, with Finance of America again the top issuer at $179 million, while HECM retail endorsements ticked up 6% month over month to 2,064. Link

REGULATORY AND POLICY DEVELOPMENTS

HUD OIG found FHA can’t reliably collect on its own partial claims. An Inspector General review of the National Servicing Center found servicing or collection errors on 74 of 81 sampled loans, blaming rising volume, weak oversight of the loan servicing contractor, and manual processes, and warning of elevated risk that debts owed back to the MMI Fund go uncollected. Link
The 21st Century ROAD to Housing Act is law-adjacent but not law. As of this week the enrolled bill remains unsigned after Trump postponed the June 24 signing pending the SAVE America Act; absent a veto, it becomes law without his signature once the 10-day clock (excluding Sundays) runs, with the institutional-investor 350-home cap intact and build-to-rent carved out. Link
Congress wants a say on conservatorship. Rep. Scott Fitzgerald introduced a three-bill package led by the Sustainable Homeownership Act, which would set statutory guardrails for releasing Fannie and Freddie, expand GSE construction lending, and ease some TRID requirements. Link

ECONOMIC NEWS

Hiring cooled in June. ADP reported 98,000 private jobs added, below the 110,000 consensus and down from 122,000 in May, with education and health services (+48,000) doing nearly half the work and natural resources the only sector in the red; the BLS payrolls report lands Thursday. Link
Warsh made his global debut and revealed little. At the ECB’s Sintra forum the new Fed chair called inflation “too high,” framed price stability as the primary objective despite AI-driven optimism, and pointedly declined to signal the July rate decision. Link
Construction spending barely moved. May outlays rose 0.1% to a $2.21 trillion annual rate, down 1.5% year over year, with residential up 0.4% for the month while nonresidential stayed flat and office and warehouse spending kept sliding. Link

COMMERCIAL REAL ESTATE MARKETS (INCLUDING MULTIFAMILY)

Even $268 billion can’t beat New York rent stabilization. Sergey Brin’s Amphitheatre LLC sold its stake in an A&E Real Estate fund holding roughly 5,900 rent-stabilized units back to the manager for about six cents on the dollar, as A&E carries $84 million in unpaid rent and faces foreclosure on a $506 million loan. Link
Suburban Class A still trades. Kennedy Wilson partnered with Kenedix and Hulic to buy Carraway, a 421-unit 2021-vintage community in West Harrison, New York, for $237 million, citing rents up more than 5% over the past year in the supply-constrained Westchester market. Link
Office construction remains in freefall. Within the May construction data, ABC chief economist Anirban Basu flagged general office spending down 11.9% year over year and warehouse down 8.5%, with data centers the lone source of nonresidential momentum. Link

PODCAST HIGHLIGHTS

Thoughts on the Market (Morgan Stanley): the Warsh-era mortgage tape. Jim Egan and Jay Bacow walk through how the market has swung from pricing 2.5 Fed cuts to roughly 1.5 hikes since January, and reiterate Morgan Stanley’s call that conventional rates stay above 6% through 2027 with affordability improving only at the margins. Link