Turns out Gen Z and Millennials are resourceful after all – finding a way to buy homes – despite tightening credit and break neck prices. Trump administration is reimagining aspects of the housing market—pulling out foreign labor blocks and applying tariffs – on the premise of short term pain for long term gain. Commercial real estate is finally recovering from its pandemic related slow down with office buildings desperately trying to lure workers back from their cozy home offices. Let’s get you caught up and out the door in three minutes. Tim

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Key Takeaways

• Home price growth has slowed to 2.0% annually, the lowest rate since March 2012, though prices remain 54.8% above pre-pandemic levels. 1
• Mortgage rates have declined to 6.58% for 30-year fixed loans, down from January’s peak of 7.04%. 2
• Average credit score for mortgage applications has reached a record high of 756, up 33 points from pre-pandemic levels. 3
• Gen Z and Millennial homeownership rates have increased despite high housing costs, with Gen Z’s rate rising to 26.3% and Millennials’ to 54.1%. 4
• Trump administration tariffs on building materials could increase new home costs by $8,000-$12,000. 5
• The administration is advancing a plan to privatize Fannie Mae and Freddie Mac by 2026, potentially raising mortgage rates by 0.25-0.75 percentage points. 6

Residential Real Estate

The residential real estate market is showing signs of stabilization with slowing price growth and improving inventory. Regional variations remain significant, with some markets cooling while others gain popularity. First-time buyers and younger generations continue to find ways to enter the market despite persistent affordability challenges.

• Price Growth: National home price growth has slowed to 2.0% annually, the lowest rate since March 2012. 1
• Inventory Levels: Housing supply has improved to 3.5 months in January 2025, up 16.8% from a year ago, though still below the 5-6 months needed for a balanced market. 7
• Sales Activity: Existing-home sales increased 4.8% year-over-year in November 2024, the first annual increase since 2021. 8
• Credit Requirements: Average credit score for mortgage applications has reached a record high of 756, up 33 points from pre-pandemic levels, making it harder for many potential buyers to qualify. 3
• FHA Loans: Average credit score for FHA loans has risen to 693, up from 668 pre-pandemic, as lenders tighten standards due to economic uncertainty. 3
• Gen Z Homeownership: Gen Z’s homeownership rate rose to 26.3% in Q4 2024, up from 25.7% a year earlier, with highest rates in Detroit (45.2%), Louisville (42.1%), and Oklahoma City (41.8%). 4
• Millennial Homeownership: Millennials’ homeownership rate increased to 54.1% from 53.3% a year earlier, with highest rates in Minneapolis (67.2%), St. Louis (66.9%), and Detroit (65.7%). 4
• Buyer Adaptation: Younger buyers are relocating to more affordable regions, particularly in the Midwest and South, with nearly 40% of Gen Z homebuyers receiving family assistance with down payments. 4
• Single Women Buyers: The share of single women purchasing homes has nearly doubled, reflecting changing demographics and financial independence. 9

Mortgage Markets

Mortgage rates have been on a gradual decline since peaking in January 2025, though they remain significantly higher than pandemic-era lows. Refinancing activity has slowed after a recent uptick in rates, while purchase applications have shown modest improvement. Credit requirements have tightened considerably since the pandemic, creating additional barriers for potential homebuyers.

• Current Rates: 30-year fixed mortgage rates average 6.58% as of March 25, 2025, down 16 basis points from the previous week. 2
• Historical Context: Current rates remain below the long-term average of 7.73% recorded between April 1971 and March 2025. 10
• Rate Forecasts: National Association of Home Builders predicts mortgage rates will average 6.65% in 2025; Realtor.com anticipates rates dropping to 6.20% by year-end. 11
• Refinancing Activity: Applications decreased 13% for the week ending March 14, 2025, though still 70% higher than the same week last year. 12
• Purchase Applications: Volume reached its highest level in six weeks, led by a 3% increase in FHA purchase applications. 12
• Credit Tightening: Lenders have raised credit score requirements due to economic uncertainty and fear of defaults, with the average score for conventional loans now at 770. 3
• Debt-to-Income Ratios: Average DTI ratio for approved mortgages has decreased to 36%, down from 39% pre-pandemic, further restricting access to mortgage credit. 3

Trump’s Housing Market Transformation

The Trump administration’s economic policies aim to strengthen domestic manufacturing and construction while creating long-term market stability. While short-term adjustments may present challenges, industry experts note these policies could ultimately lead to a more resilient housing market with increased domestic production, higher-quality construction, and new opportunities for American workers and businesses.

• Domestic Manufacturing Boost: Tariffs are designed to revitalize American building material production, with an estimated 45,000 new manufacturing jobs expected in the lumber, appliance, and building materials sectors over the next three years. 17
• Workforce Development: The administration has launched a $2 billion construction training initiative to develop skilled American workers, potentially creating a more stable and higher-quality construction workforce long-term. 17
• Supply Chain Resilience: Reducing dependence on foreign materials could create more predictable supply chains and pricing stability once domestic production scales up, according to industry analysts. 17
• Innovation Catalyst: Higher material costs are driving innovation in construction techniques, with modular and prefabricated housing seeing a 28% increase in investment as builders seek efficiency improvements. 17
• Quality Improvements: Treasury Secretary Scott Bessent notes that “American-made building materials often meet higher quality and safety standards, potentially increasing home durability and reducing long-term maintenance costs for homeowners.” 17
• Regional Manufacturing Revival: Former manufacturing hubs in the Midwest are seeing renewed investment, with five new building material factories announced in Michigan, Ohio, and Pennsylvania, potentially creating economic growth in regions with more affordable housing. 17
• Market Adaptation: The National Association of Home Builders reports that builders are responding with creative solutions, including smaller footprint designs, value-engineered construction methods, and community land trust partnerships to maintain affordability. 17

Economic & Political News

The Trump administration has implemented significant policy changes affecting the real estate industry, from regulatory rollbacks to ambitious plans for mortgage finance reform. New tariffs are expected to increase housing costs, while proposed budget cuts could impact affordable housing initiatives. These policy shifts will likely have far-reaching implications for housing affordability and market dynamics.

• AFFH Termination: HUD Secretary Scott Turner announced the end of the Biden-era Affirmatively Furthering Fair Housing rule, citing the need to reduce “costly red tape” and return decision-making power to local governments. 14
• Tariff Impact: New tariffs on building materials could increase new home costs by $8,000-$12,000, affecting Canadian lumber, Chinese appliances, and Mexican materials. 5
• Entry-Level Impact: Tariff-related cost increases will particularly affect the entry-level home segment, where margins are thin and buyers are most price-sensitive. 5
• GSE Privatization Plan: The administration aims to end government conservatorship of Fannie Mae and Freddie Mac by mid-2026, requiring them to raise approximately $100 billion in capital. 6
• Rate Impact: Economists project privatization could increase mortgage rates by 0.25-0.75 percentage points as enterprises price in their true cost of capital. 6
• Market Competition: Proponents argue privatization would create a more competitive mortgage market with a wider range of loan options and innovative products. 6
• Affordability Concerns: Critics warn privatization could reduce access to affordable mortgages, particularly for low-income and first-time homebuyers. 6
• Budget Cuts: The National Association of Affordable Housing Lenders has issued an urgent appeal against proposed cuts to federal housing agencies, warning of delays in affordable housing construction and increased homelessness. 15
• Legal Victory: The Ninth Circuit Court of Appeals ruled in favor of Zillow and NAR in a case brought by REX, affirming that NAR’s no-commingling rule was not anticompetitive. 16

Commercial Real Estate

The commercial real estate market is positioned for an upswing in 2025 after several challenging years, with significant variations across sectors. Industrial properties continue to perform strongly, while the office sector shows early signs of recovery from pandemic-related disruptions. Retail and multifamily sectors face both opportunities and challenges in the current environment.

• Industrial Sector: Vacancy rates have held steady at 6.8% in Q3 2024, remaining well below pre-pandemic averages, driven by e-commerce and logistics demand. 13
• Office Recovery: Vacancy rates dropped to 20.0% in late 2024, following record-high levels for three consecutive quarters, with significant regional variations. 13
• Regional Office Variations: New York’s office vacancy rate stands at 13.3% compared to San Francisco’s 22.1%. 13
• Retail Strength: Grocery-anchored neighborhood shopping centers in densely populated areas and high-end retail shopping centers continue to perform well despite e-commerce growth. 13
• Multifamily Challenges: Cities like Austin, Raleigh-Durham, and Nashville have experienced overbuilding of Class A properties, leading to concessions from property managers. 13
• Affordable Housing Integration: Some multifamily developers are adapting by offering 30% of units to renters making less than 80% of the area median income. 13

Impact Capitol DC SitusAMC Mortgage Bankers Association The Mortgage Collaborative Guild Mortgage Mr. Cooper PENNYMAC Movement Mortgage National MI National Association of REALTORS® National Association of Home Builders National Mortgage News Federal Reserve Board Federal Reserve Bank of New York Federal Reserve Bank of San Francisco Federal Reserve Bank of St. Louis Federal Housing Finance Agency Federal Housing Administration and HUD Office of Housing Consumer Financial Protection Bureau Fannie Mae Freddie Mac The White House The Family Office Association QP Global Family Offices Family Office Club Family Office & Private Equity Dealmakers Breakfast Series Housing Policy Council Bipartisan Policy Center