Key Takeaways

• FHFA Director Pulte undoes Biden era policies in one fell swoop (Twitter)
• Housing inventory continues its upward trajectory, with active listings now 28.5% higher than a year ago, marking 71 consecutive weeks of year-over-year inventory growth. 1
• The Federal Housing Finance Agency (FHFA) announced it will not reduce conforming loan limits for Fannie Mae and Freddie Mac in 2026, despite previous indications it might do so, citing concerns about market disruption. 2
• HUD announced a $75 million initiative to address the housing supply shortage through innovative construction methods, including $50 million for the Pathways to Removing Obstacles to Housing (PRO Housing) program and $25 million for the Innovative Housing Showcase. 3
• Commercial real estate transaction volume fell 18% year-over-year in Q4 2024, with office properties continuing to struggle while industrial and multifamily sectors show resilience. 4
• Mortgage rates decreased slightly yesterday with the 30-year fixed rate averaging 6.72%, down from 6.78% last week, providing a small reprieve for homebuyers as the spring buying season accelerates. 5
• Commercial mortgage delinquency rates have risen to 4.8% overall, with office properties showing the highest distress at 7.2% delinquency rate. 6

Residential Real Estate Markets

Overview: The market continues to rebalance with growing inventory and moderating price growth, though affordability remains a significant challenge for many buyers.

• Inventory Growth: Active listings are up 28.5% year-over-year, marking 71 consecutive weeks of inventory growth. 1
• Supply Metrics: Months-of-supply stands at 3.5 months as of January 2025, up from 3.0 months a year ago but still below the 5-6 months needed for a balanced market. 7
• Price Trends: The S&P CoreLogic Case-Shiller Home Price Index reported a 3.9% annual gain in December 2024, up slightly from 3.7% in November. 8
• Regional Variations: Northeast markets show stronger price growth, while Florida and Arizona markets continue to cool; western New York is gaining popularity. 9
• New Listings: Seller activity is increasing with new listings up 10.4% year-over-year, marking the 10th consecutive week of growth. 1
• HUD Housing Initiative: The Department announced a $75 million initiative to address the housing supply shortage through innovative construction methods, including $50 million for PRO Housing and $25 million for the Innovative Housing Showcase. 3
• Optimal Listing Time: Mid-April (April 13-19) identified as the best time to list a home in 2025 for faster sales and potentially higher prices. 10

Mortgage Markets

Overview: Mortgage rates have shown a slight decline in recent days, though they remain elevated compared to historical norms, continuing to challenge affordability for many buyers.

• Current Rates: The 30-year fixed mortgage rate averaged 6.72% as of yesterday, down from 6.78% last week and 6.82% two weeks ago, according to Mortgage News Daily’s rate survey. 5
• Rate Volatility: Rates have been less volatile in March compared to January and February, trading in a narrower range between 6.70% and 6.85% for most of the month. 5
• FHFA Decision: The agency will not reduce conforming loan limits for Fannie Mae and Freddie Mac in 2026, maintaining the current baseline limit of $766,550. 2
• First-Time Buyers: First-time homebuyers’ share of purchase loans dropped to 47.8% in February, the lowest level since June 2023. 21
• Application Volume: Mortgage purchase applications have declined 5.2% year-over-year, with an 8.7% decrease in applications for loans below $300,000. 21
• Refinance Activity: Refinance applications increased 16% as rates declined for six consecutive weeks in February and early March. 22
• FHFA Director Pulte out an end to the following Biden era programs yesterday:
  Equitable Housing Finance Plans, Fair Lending, Fair Housing, Special Credit Purpose Programs, Terminating “Repair All REO” Strategy, Climate Related Risk Managament, Rescind Regulatory Guidance re UDAP compliance, and Rescind MF lease polices related to rent flexibilities and lease notices (Twitter)

Economic & Political News

Overview: Economic uncertainty persists amid policy shifts from the new administration, with inflation concerns keeping the Federal Reserve cautious about rate cuts.

• Fed Policy: The Federal Reserve maintained its federal funds rate between 4.25% and 4.5% at its March meeting, continuing a cautious approach to monetary policy. 23
• HUD Housing Innovation: HUD Secretary Scott Turner announced a $75 million initiative to address housing supply challenges through innovative construction methods, including $50 million for the PRO Housing program to help communities implement housing-friendly policies and $25 million for the Innovative Housing Showcase to demonstrate new building technologies. 3
• Administration Policies: Tariffs, deportations, and reduced legal immigration are expected to have complex effects on housing demand and construction costs. 24
• Regulatory Changes: HUD terminated the Biden-era Affirmatively Furthering Fair Housing (AFFH) rule, aiming to “cut costly red tape imposed on localities.” 25
• Recession Risk: There is increasing talk about recession risk, with the administration acknowledging that tariffs and policy uncertainty could have negative economic consequences. 26
• Consumer Confidence: The University of Michigan’s consumer confidence index fell sharply in February to 64.7, the lowest level since November 2023. 26
• Labor Market: Job growth remained solid with 223,000 jobs added in February, though wage growth moderated to 3.8% year-over-year, potentially easing inflation concerns. 27

Commercial Real Estate Markets

Overview: Commercial real estate faces a bifurcated recovery with industrial and multifamily sectors showing strength while office properties continue to struggle with high vacancy rates and declining values.

• Transaction Volume: Commercial property sales totaled $111 billion in Q4 2024, down 18% from Q4 2023, with full-year 2024 volume down 22% from 2023. 4
• Office Sector Challenges: Office property values have declined 25% from their peak, with vacancy rates reaching 19.8% nationally in Q1 2025. 11
• Industrial Strength: Industrial properties continue to outperform with a 5.2% annual rent growth and vacancy rates holding steady at 4.7%. 12
• Multifamily Stabilization: Apartment rents increased 1.8% year-over-year in February 2025, showing modest growth after the post-pandemic correction; occupancy rates improved to 94.2%. 13
• Retail Recovery: Neighborhood and community shopping centers show resilience with vacancy rates declining to 5.9% in Q1 2025, though regional malls continue to struggle with 12.3% vacancy. 14
• Distressed Properties: The volume of distressed commercial real estate has reached $80 billion in Q1 2025, up 32% from a year ago, with office properties accounting for 58% of distressed assets. 15

CRE Financing & Servicing

Overview: Commercial real estate financing faces continued challenges with tightening lending standards, rising delinquencies, and significant upcoming loan maturities.

• Delinquency Rates: CMBS delinquency rates rose to 4.8% in February 2025, up from 4.6% in January, with office properties showing the highest distress at 7.2%. 6
• Loan Maturities: Approximately $929 billion in commercial real estate loans will mature in 2025, with refinancing challenges expected due to higher interest rates and stricter underwriting standards. 16
• Bank Lending: Commercial banks reduced CRE lending by 8.3% in Q4 2024, marking the fifth consecutive quarter of contraction as institutions manage exposure to troubled sectors. 17
• Alternative Lenders: Private debt funds and life insurance companies have increased market share, now accounting for 38% of CRE lending volume, up from 29% in 2023. 18
• Agency Financing: Fannie Mae and Freddie Mac multifamily lending volume reached $18.7 billion in Q1 2025, up 12% from Q1 2024, as they continue to provide liquidity to the apartment sector. 19
• Special Servicing: The CMBS special servicing rate increased to 8.9% in February 2025, with $52.3 billion in loans now under special servicing, primarily in the office and retail sectors. 20