Bill Pulte leads off with priorities of “safety and soundness” and “efficiencies” at the GSEs (conservatorship?). Mortgage rates are moving in the right direction for seven-weeks dip, offsetting tariffs threatening to make lumber more expensive. Location, location, location means something totally different when you’re talking climate risk – $17 trillion in homes facing major wind risk. Let’s get you caught up and out the door in three minutes. Tim 

As always, this newsletter and the associated analysis were prepared by our AI platform ALFReD. Know Better. Work Smarter. Be More Successful.

Key Takeaways

• Bill Pulte confirmed as FHFA Director with a Senate vote of 56-43 on March 13, prioritizing operational efficiency and fraud prevention at Fannie Mae and Freddie Mac over immediate re-privatization 1 2
• Mortgage rates declined for the seventh consecutive week to 6.63% as of March 13, spurring a 16% increase in refinance applications and a 7% increase in purchase applications 3
• Trillions in U.S. home value face major climate risk with approximately $17 trillion in homes at major risk from wind, $9.1 trillion from fire, and $7 trillion from flooding 4
• Homes with extreme climate risk face market challenges with lower probability of being sold and lower sales prices compared to initial list prices 5
• Existing-Home Sales data for February 2025 will be released on Thursday, March 20, providing crucial insights into market activity as the spring buying season approaches 6
• Consumer housing sentiment declined year-over-year for the first time since 2023, driven by increased pessimism about mortgage rates and personal financial situations 7
• Residential Real Estate Markets

Residential Real Estate Markets

Climate risks are increasingly affecting residential real estate values and market dynamics across the United States. These risks vary significantly by geography and type, with certain metro areas facing particularly high exposure. Recent research provides insights into how these risks are shaping buyer behavior and property values.

• $17 trillion in U.S. home value is at major risk from wind, $9.1 trillion from fire, and $7 trillion from flooding 4
• Los Angeles has the highest total value of homes at major fire risk, while New York City and Miami lead in flood risk 4
• Only 52% of homes with high flood risk listed in June 2024 eventually sold, compared to 71% with low flood risk 5
• More than 80% of home shoppers now consider climate risks when looking for a new home 5
• Despite climate concerns, median list prices for flood-prone homes were 22% higherthan in low-risk areas, while fire-prone homes were 49% higher than homes with low fire risk 5

Mortgage Markets

Mortgage rates have continued their downward trajectory, providing relief for potential homebuyers and refinancers. This decline has stimulated increased mortgage activity while forecasts suggest rates will remain in the mid-6% range for much of 2025. The refinance market has shown particular strength as homeowners take advantage of lower rates.

• 30-year fixed-rate mortgage dropped to 6.63% as of March 13, marking the seventh consecutive week of declines 3
• Refinance applications jumped 16% and purchase applications increased by 7%according to MBA data 8
• Fannie Mae predicts rates will reach 6.60% by year-end, while MBA forecasts 6.50% 9
• NAR anticipates rates near 6.50% in 2025, and Realtor.com expects rates to drop to 6.20% 9
• Refinance share of mortgage applications increased to nearly 44%, the highest since mid-December 3

Economic & Political News: Tariffs and Housing Costs

The Trump administration’s tariffs on goods from Canada, Mexico, and China have sparked debate about their potential impact on housing costs. Industry groups warn of increased construction costs, while the administration argues the measures are necessary for trade fairness and will ultimately strengthen domestic production. Both perspectives acknowledge short-term adjustments but differ on long-term outcomes.

• 25% tariffs on Canada and Mexico took effect on March 4, 2025, after a 30-day pause 10
• NAHB estimates tariffs could increase material prices by $7,500 to $10,000 for the average new single-family home 11
• More than 70% of softwood lumber imports come from Canada, and the combined tariffs will effectively reach nearly 40% 12
• Administration officials argue tariffs will encourage domestic production and create manufacturing jobs, potentially stabilizing supply chains long-term 10
• The administration has announced plans to increase timber harvesting from federal lands to help offset price increases 10
• Industry experts note it could take years to build new mills and find skilled labor to significantly increase domestic production 13

Commercial Real Estate Markets (Including Multifamily)

The commercial real estate market in 2025 is showing signs of stabilization after several challenging years, with performance varying significantly across property types. Industrial properties continue to outperform other sectors, while office markets are slowly improving from record-high vacancy rates. The multifamily sector is expected to recover by 2026 as supply and demand fundamentals rebalance.

• Industrial vacancy rates remained steady at 6.8% in Q3 2024, well below pre-pandemic averages 14
• Office vacancy rates dropped to 20.0% following record-high levels for three straight quarters 14
• New York’s Q3 office vacancy rate was 13.3%, while San Francisco’s was 22.1%, highlighting significant regional variations 14
• 83% of multifamily investors plan to make acquisitions in 2025, while only 2% intend to shrink their portfolios 15
• Sun Belt markets like Austin, Raleigh-Durham, and Nashville face overbuilding challenges, leading to increased vacancy rates and rental concessions 14
• 93% of multifamily investors cite financing as a pain point, though capital remains available for well-positioned projects 15
• The Federal Reserve’s Beige Book reports commercial real estate markets are experiencing modest, mixed growth 16

Bill Pulte Takes Helm at FHFA

On March 13, 2025, the U.S. Senate confirmed Bill Pulte as the new Director of the Federal Housing Finance Agency. Pulte, the grandson of homebuilding magnate William J. Pulte, brings a background in private equity and philanthropy to the role. His confirmation has generated significant interest regarding the future direction of Fannie Mae and Freddie Mac.

• Senate confirmed Pulte with a vote of 56-43 on March 13 17
• Pulte emphasized that his “number one” priority will be to strengthen and safeguard the housing finance system 2
• Top priorities include rooting out fraud in Fannie Mae and Freddie Mac and ensuring they are running efficiently, rather than immediate re-privatization 1
• “Fannie and Freddie shouldn’t be in conservatorship forever,” Pulte told CNN, but emphasized safety and soundness must come first 18
• MBA President Bob Broeksmit welcomed the confirmation, stating MBA members “stand ready to work with Director Pulte and his team” 1
• Community Home Lenders of America praised Pulte’s commitment to affordable homeownership while urging that re-privatization be addressed in an orderly way 1

Key Housing Data Releases This Week

Several important housing economic data releases are scheduled for this week and the remainder of March. These reports will provide crucial insights into the state of the housing market as we approach the spring buying season, traditionally the busiest time for residential real estate activity.

• Existing-Home Sales data for February 2025 will be released on Thursday, March 20, at 10:00 a.m. Eastern 6
• January’s report showed a 2% year-over-year increase in sales, marking the fourth straight monthly increase 6
• Pending Home Sales data for February 2025 will be released on Thursday, March 27, at 10:00 a.m. Eastern 19
• January’s report showed a 4.6% decline in pending home sales, with the Midwest, South, and West experiencing month-over-month losses 19
• FHFA House Price Index for January 2025 will be released on Tuesday, March 25 20
• Producer Price Index data for March 2025 will be released on April 11, providing insights into construction material costs 21