Home prices continue their upward climb at 4.1%. Mortgage rates are taking a breather at 6.71%. Meanwhile, commercial real estate is playing favorites—office buildings are getting ghosted with vacancy rates at an all-time high of 19.8%. That’s bad in isolation but really bad when you combine them with $1 trillion in commercial mortgages come due this year. Let’s get you caught up and out the door in three minutes. Tim

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Key Takeaways

Housing market data shows mixed signals with accelerating home prices but declining sales volumes. Mortgage rates have eased slightly while policy changes may impact certain homebuyer segments. Commercial real estate markets continue to face challenges with office vacancies at historic highs, while multifamily and industrial sectors show resilience.

• Home prices increased 4.1% year-over-year in January 2025 according to the S&P Case-Shiller National Home Price Index, down slightly from 5.6% in December 2024 1
• New home sales increased 1.5% in February 2025 to a seasonally adjusted annual rate of 662,000, 8.1% above February 2024 levels 2
• Existing home sales decreased year-over-year in February following four consecutive months of increases, with sales at 4.26 million SAAR, still 23% below pre-pandemic levels 3
• 30-year fixed mortgage rates averaged 6.71% as of today, down 2 basis points from last week 4
• HELOC rates fell to 8.01%, their lowest level in two years 5
• FHFA ordered termination of Fannie Mae and Freddie Mac support for Special Purpose Credit Programs 6
• Millennial homeownership rate at 38.5%, well below the 45.4% rate for the same age group in 2004 7
• Office vacancy rate reached 19.8% in Q1 2025, the highest level on record according to Moody’s Analytics 8
• CMBS delinquency rate decreased to 6.30% in February 2025, down 26 basis points from January 9

Residential Real Estate Markets

The residential market shows diverging trends between new and existing home sales, with prices continuing to rise despite affordability challenges. New construction is gaining market share while existing home sales remain depressed.

• Case-Shiller National Home Price Index rose 4.1% year-over-year in January 2025, down slightly from 5.6% in December 2024 1
• 20-City Composite Index increased 4.7% year-over-year in January 2025, down from 6.7% in December 2024 1
• New York metro area lead the pack with a reported an annual gain of 7.75%
• S 1
• Month-over-month prices increased 0.1% in January 2025 after seasonal adjustment, showing continued but moderating price growth 1
  • Chicago (7.52 percent)
  • Boston (6.55 percent)
  • Cleveland (6.45 percent)
  • Detroit (5.73 percent)
  • Las Vegas (5.49 percent)
  • Seattle (5.47 percent)
• New home sales increased 1.8% in February to a seasonally adjusted annual rate of 662,000, 5.1% above February 2024 levels 2
• Median new home sales price was $417,300 in February, while the average sales price was $487,300 2
• New home inventory stands at 463,000 units, representing a 8.4-month supply at the current sales rate 2
• Existing home sales at 4.26 million SAAR in February, above consensus estimates but still 23% below pre-pandemic levels 3
• House hunting activity increased 7% as mortgage rates declined to their lowest levels since mid-December, but pending home sales still down 6.1% year-over-year 10
• Remodeling market exceeds $600 billion, 50% above pre-pandemic levels despite labor shortages and inflation challenges 11

Mortgage Markets

Mortgage rates have stabilized with a slight downward trend, while HELOC rates have reached two-year lows. Forecasts suggest rates may remain in the 6.5-7% range in the near term with potential for further declines later in the year.

• 30-year fixed mortgage rate averaged 6.71% as of today, down 2 basis points from last week 4
• Inflation cooled to 2.8% in February according to the Labor Department’s March 12 report, relieving some upward pressure on mortgage rates 12
• MBA forecasts 30-year rates to decrease to 6.5% by the end of 2025 13
• Fannie Mae predicts rates will edge down to 6.6% over the same period 13
• Bank of America suggests tariffs could push rates below 6% by year-end due to policy uncertainty 12
• HELOC rates fell to 8.01% on March 26, the lowest level in two years 5
• HELOC rates projected to reach 7.25% by the end of 2025, a low not seen since 2022 5
• Mortgage servicing release premiums (SRP) remain strong, creating a dilemma for lenders on whether to sell mortgages servicing released or retained 14
• Purchase loan applications held steady while refinance applications continued their downward trend in February 14

Economic & Political News

Recent policy changes and research from federal agencies highlight challenges in housing affordability, demographic shifts affecting housing demand, and economic indicators that impact real estate markets.

• FHFA ordered Fannie Mae and Freddie Mac to terminate support for Special Purpose Credit Programs, deeming such support “inappropriate” for entities under conservatorship 6
• Programs like HomeReady and Home Possible not impacted by the FHFA directive as they are categorized differently from Special Purpose Credit Programs 6
• Homeownership rate for 25-34 year-olds at 38.5%, well below the 45.4% rate for the same age group in 2004 7
• 22.3% of 25-34 year-olds living with parents in 2022, up from 11.6% in 2000 7
• Non-Hispanic whites projected to comprise less than 50% of the U.S. population by 2045, affecting housing demand patterns 7
• Pandemic accelerated migration from high-cost urban centers to more affordable suburban and rural areas 7
• Federal Reserve research shows markets overreact to economic announcements that attract high levels of investor attention, particularly during inflation surges 20
• Credit card interest rates average 23%, significantly higher than other loan types according to New York Fed research 21
• Enterprise mortgage acquisitions dropped from $800 billion in late 2020 to $124 billion in early 2024 due to higher interest rates and rising home prices 22
• PCE inflation shows residual seasonality despite adjustments, typically running hot in January and cool in November/December 23

Commercial Real Estate Markets (including Multifamily)

Commercial real estate markets show divergent performance across sectors, with office properties continuing to struggle while industrial and multifamily sectors demonstrate greater resilience. Financing conditions remain challenging with elevated delinquency rates, particularly for office assets.

• CMBS delinquency rate decreased to 6.30% in February 2025, down 26 basis points from January, with four of five main property types showing improvement 9
• Office delinquency rate fell to 9.78% in February, its second consecutive decline after reaching an all-time high of 11.01% in December 9
• Multifamily delinquency rate dropped 16 basis points to 4.46% in February, showing gradual improvement 9
• Office vacancy rate reached 19.8% in Q1 2025, the highest level on record as remote work continues to impact demand 8
• Office construction pipeline shrunk to 67 million square feet, the lowest level since 2012, with 2024 posting the fewest new starts on record 15
• Office preleasing rates improved to 67% by the end of 2024, up from 60% in mid-2023, indicating selective demand recovery 15
• Industrial sector vacancy rate at 5.2% in Q1 2025, remaining historically low despite slight increases 8
• E-commerce continues to drive 42% of industrial leasing activity in Q1 2025 8
• Southeast industrial market absorbed 545.1 million square feet since 2019, fueled by population growth and strategic infrastructure 16
• Multifamily rent growth slowed to 1.2% year-over-year in February 2025, with high new supply keeping price growth in a “holding pattern” 17
• Multifamily completions fell 15.8% year-over-year to an annualized rate of 646,000 units, with a 20.7% month-over-month decrease 18
• Multifamily units under construction decreased 21.0% year-over-year to 754,000 units, signaling potential rent growth in late 2025 18
• Commercial mortgage delinquencies increased in Q4 2024, with CMBS showing the highest rate at 5.78%, up 0.63 percentage points from Q3 19
• Nearly $1 trillion in commercial mortgages will mature in 2025, potentially leading to further increases in delinquencies if refinancing proves difficult 19