The bond market spent last week informing the Fed that their opinions/actions to influence long term rates are totally unnecessary and irrelevant. Treasury auctioned $691 billion of paper on the week – a normal-size that required abnormal concessions to get done, with the 30-year clearing above 5% at auction for the first time since 2007. Even more fascinating, the “belly” of the yield curve flipped from a sag to a hump: 2- to 5-year yields had been trading below the Fed’s policy rate on the expectation of cuts, and last week repriced sharply higher to sit above it – the market has swapped its bet on a Fed easing for an apparent tightening. Mortgage rates dutifully followed the long end up to a Friday close of 6.65%, an eight-month high – and purchase applications, evidently unbothered, rose 4% on the week and 7% year-over-year.
Housing data continued to do its usual trick of contradicting itself depending on the zip code. Existing-home sales held at a 4.02M SAAR with inventory at 4.4 months and a median price of $417,700, while Zillow’s research showed prices falling year-over-year in 25 of 33 large expensive cities – Austin and Oakland now -26% from their 2022 peaks – even as New York, Chicago, Philadelphia, Omaha, and Minneapolis printed new highs. San Francisco managed to fall 10% from peak and rise 6% year-over-year simultaneously – AI compensation trickle-down. On policy, House conservatives are pitching a third reconciliation bill by August recess with 25 legislative days to work with and a two-vote majority, while the build-to-rent restrictions quietly came out of the housing package. Sun Belt apartment landlords are giving back pricing power, construction materials are up 6.2% through April, and Americans are moving less than at any point in the modern series – which is the part of the cycle where everything is happening and nothing is moving.
Let’s get you caught up and out the door in 3 minutes. Tim
KEY TAKEAWAYS
- Mortgage rates hit an eight-month high Friday at 6.65% (+13 bps on the week) as the 10-year Treasury closed at 4.60% and the 30-year at 5.12% — the first 30-year auction above 5% since 2007.
- Treasury sold $691 billion of securities last week ($155B notes/bonds, $536B bills); the yield curve flipped from a sag to a hump in the middle as 2- to 5-year yields spiked on second-wave inflation fears.
- Existing-home sales settled at a 4.02M SAAR with median price $417,700 and 4.4 months of inventory — buyers gaining marginal leverage but affordability still gated by rates.
- Zillow ZHVI shows mid-tier prices fell YoY in 25 of 33 large expensive cities in April; Austin and Oakland are now -26% from their 2022 peaks, while NYC, Chicago, Philadelphia, Omaha, and Minneapolis set new highs.
- MBA applications +1.7% WoW; purchase apps +4% WoW and +7% YoY despite the rate move — demand keeps showing up.
- ICE Mortgage Monitor: Q1 refi volume hit $242B with servicer retention at 32%, the highest reading since 2021.
- House conservatives are pushing a third reconciliation bill by August recess combining Pentagon funding, anti-fraud reforms, and potentially SAVE Act voting provisions; the RSC’s January framework included housing and energy affordability reforms.
- House Financial Services dropped the build-to-rent restrictions from its housing package — a meaningful win for institutional SFR operators.
- Sun Belt apartment oversupply continues to shift pricing power to renters; Core Spaces closed a $1.64B student housing fund.
- Construction material costs are up 6.2% through April, reinforcing supply-side pressure on new-home pricing.
RESIDENTIAL
Existing-home sales settle at 4.02M SAAR; inventory 4.4 months. April resales held near multi-decade lows even as inventory expanded and median price hit $417,700. Affordability remains the binding constraint with rates back near 6.7%. (Mortgage News Daily)
Wolf Street: 25 of 33 expensive cities posted YoY price declines in April. Zillow’s mid-tier ZHVI shows Austin and Oakland down 26% from their 2022 peaks (both at multi-year lows), with New Orleans -19%, DC -12%, Denver -12%, and Phoenix -11%. Five cities — NYC (+4.4% YoY), Chicago (+3.1%), Philadelphia, Omaha, and Minneapolis — set new highs, and San Francisco rose 6% YoY on AI-comp “mansion shortage” trickle-down even as it sits 10% below its 2022 peak. (Wolf Street)
Mohtashami weekly tracker: demand positive despite yearly-high rates. Pending sales registered 78,006 in the latest weekly read, with active inventory continuing to build seasonally. The takeaway: rate sensitivity is real but purchase intent has not broken. (HousingWire)
Construction material costs climb 6.2% through April. Producer-price data show sustained input inflation in lumber, steel, and concrete categories, with services PPI compounding the pressure. New-home pricing flexibility is narrowing for builders into the spring/summer. (CRE Daily)
Housing mobility hits record lows. Americans are moving less frequently than at any point in the modern series, a function of rate-locked existing borrowers and elevated transaction costs. The structural drag on resale volume continues. (CRE Daily)
MORTGAGE
Mortgage rates close Friday at 6.65%, an eight-month high. Rates rose 13 bps on the week as the 10-year Treasury punched through 4.60% on back-to-back hot CPI and PPI prints. The MBS basis widened modestly into Friday’s close. (Mortgage News Daily)
MBA: applications +1.7% WoW; purchase apps +4% WoW, +7% YoY. Purchase activity is outperforming the rate backdrop, with the year-over-year gain the strongest comparable signal in the report. Refis declined modestly as rates moved higher. (Mortgage News Daily)
ICE Mortgage Monitor: Q1 refis hit $242B, retention at 32%. Servicer retention is at its highest reading since 2021 as servicers lean into recapture during the in-the-money window opened by Q1’s rate dip. The data implies the retention infrastructure built post-2022 is now paying off operationally. (Mortgage News Daily)
Ginnie Mae MBS portfolio reaches $2.93 trillion. April issuance data continue to show steady single-family production with HMBS volume firming. Ginnie’s portfolio growth is keeping pace with FHA/VA origination as the agencies remain the affordability backstop. (Ginnie Mae)
MBS Friday recap: spreads stable into the close despite rate spike. The MBS market absorbed the Treasury sell-off with relatively contained spread widening, suggesting investor demand for current-coupon paper has not deteriorated. Coupon stacking remains the watch item for next week. (Mortgage News Daily)
REGULATORY & POLICY
House GOP conservatives press for third reconciliation bill by August recess. RSC Chair Rep. August Pfluger (R-TX) and House Budget Chair Rep. Jodey Arrington (R-TX) are pushing for a Pentagon-funding-plus-anti-fraud package, with Sen. Lindsey Graham seeking SAVE Act voting provisions; the RSC’s January framework included housing and energy affordability reforms that could be revived. With 25 legislative days before August break and a two-vote House margin, the timeline is aggressive and Rep. Brian Fitzpatrick (R-PA) is already signaling resistance to a party-line approach. (The Hill)
House drops build-to-rent restrictions from housing package. Provisions that would have limited institutional purchases of single-family build-to-rent inventory were stripped before markup, removing a meaningful overhang for SFR operators and their capital partners. The political pressure on institutional SFR has not disappeared, but the legislative vehicle for near-term restriction has. (CRE Daily)
Fed working paper: “Does Banking Consolidation Harm Households?” The May 13 FEDS paper examines effects of bank mergers on local credit access and finds measurable contraction in small-business and mortgage credit availability in concentrated markets. Relevant to the ongoing Basel III reproposal debate and bank re-entry into mortgage origination. (Federal Reserve)
Boston Fed President Collins, May 13 remarks. Collins acknowledged the second-wave inflation print but stopped short of endorsing a policy shift, framing the path forward as “data-dependent” — the same posture the bond market is now actively rejecting. Useful read for how the regional Fed bench is positioning ahead of the June FOMC. (Boston Fed)
BLS shelter inflation methodology paper. The Bureau corrected part of the CPI shelter distortions that fed through September, October, and November readings; the revised series is part of why April core services accelerated on paper. Worth tracking for anyone modeling forward OER and rent-of-shelter prints. (Mortgage News Daily)
ECONOMIC NEWS
Wolf Street: Treasury sold $691B of securities last week as long yields spiked. The 30-year auctioned at 5.046% (the first auction above 5% since 2007) and closed Friday at 5.12%; the 10-year auctioned at 4.468% and closed at 4.60%, the highest since January 2025; and the 3-year auctioned at 3.965% but blew out to 4.15% within four sessions. The yield curve’s prior sag in the middle turned into a hump as 2- to 5-year yields repriced for potential Fed hikes — a clear statement from the bond market that the Fed is behind the curve on the second wave of inflation. (Wolf Street)
10-year Treasury closes Friday at 4.59%. Yields rose through the week on hot CPI and PPI prints, with the long end fully decoupling from the EFFR at 3.63%. The 149 bp gap between the 30-year and EFFR is the cleanest signal that the long market has stopped trusting the policy path.
April retail sales (Census, May 14). Headline retail held up at the topline but the control group softened, consistent with a consumer paying through services-price acceleration. Useful counterweight to the inflation narrative for anyone modeling GDP nowcast revisions. (U.S. Census Bureau)
Friday MBS recap: rate volatility absorbed without basis blowout. Despite the move in Treasuries, mortgage spreads held in reasonably well. Worth contrasting with the late-2023 episode when rates moved similarly but spreads widened harder. (Mortgage News Daily)
CRE & MULTIFAMILY
Sun Belt apartment oversupply continues to shift power to renters. New deliveries are outpacing absorption in Austin, Phoenix, Charlotte, and Nashville, with concessions deepening and effective rents flat to negative YoY. Operators are extending hold periods rather than transacting into a soft bid. (CRE Daily)
Core Spaces closes $1.64B student housing fund. The vehicle targets purpose-built student housing adjacent to Tier 1 universities, with rent growth in the segment continuing to outpace conventional multifamily. Demonstrates capital still concentrating into defensible CRE sub-sectors. (CRE Daily)
Midwest coworking growth outpaces coasts. Independent operators in Cleveland, Cincinnati, Indianapolis, and Milwaukee are driving the bulk of new flex-office expansion, while WeWork-era footprints in NYC and SF continue to contract. Suggests a structural reshaping of the office segment, not just a cyclical retrenchment. (CRE Daily)
NYC backs off property tax hike, but the $12B hole remains. The Adams administration retreated from the proposed assessment changes after broker and owner pushback, leaving a structural budget gap that will likely re-emerge in the next cycle. CRE owners get a reprieve, not an all-clear. (CRE Daily)
Cushman & Wakefield faces lawsuit after data breach. A class action filed late last week alleges the firm failed to adequately protect tenant and broker PII in a breach disclosed earlier this year. The case adds to the growing CRE-services exposure to cyber-liability litigation. (CRE Daily)
INDUSTRY NEWS
AI reshaping retail real estate underwriting in 2026. Predictive tenant-mix, foot-traffic, and lease-renewal models are now standard at top retail platforms, with underwriting cycles shortening materially. Smaller landlords without comparable infrastructure are showing visible NOI gaps. (CRE Daily)
Boeing commits $1B to Wichita aerospace facilities. The build-out anchors industrial demand across south-central Kansas and supports a multi-year flow of contractor and supplier real-estate requirements. Reinforces the broader pattern of defense and aerospace driving Sun Belt and Plains industrial absorption. (CRE Daily)
Google and SpaceX push orbital data centers forward. Both companies advanced timelines for in-space compute infrastructure, with implications for terrestrial data-center power constraints and the related real-estate pipeline. Worth tracking for how the hyperscaler footprint allocates between earth and orbit over the next 36 months. (CRE Daily)
HousingWire / Mohtashami: rates at yearly highs but housing demand is still positive. The weekly tracker continues to register positive purchase signals despite the rate move, which is the cleanest contrarian indicator for anyone modeling a sales air-pocket. Inventory builds are giving buyers more to choose from heading into summer. (HousingWire)