Great meeting with Mark Calabria at EOB yesterday. We are in good hands. Rates skid sideways. Down payments through the roof. Commercial loans being doled out at near record pace. Pulte and Turner continue to reign in the footprints of the GSEs and HUD respectively. Let’s get you caught up and out the door in three minutes.

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Key Takeaways

• Home buyers remain “on strike” as mortgage rates stabilize around 6.7%, with existing home sales in February 2025 being the worst February since 2009, reflecting continued buyer resistance to high prices and rates. 1
• Down payments reached record highs in 2024, with buyers paying an average of 14.4%of the purchase price (up from 14.2% in 2023), as the typical down payment hit $30,250 in Q4 2024, about $3,000 higher than a year earlier. 2
• Residential mobility patterns have changed significantly during and after the pandemic, with interstate migration rates returning to pre-pandemic levels after a surge during 2020-2022, while migration to less dense communities continues to be elevated. 3
• Housing inventory continues to rise significantly, with active inventory up 27.8% year-over-year, marking 70 consecutive weeks of higher inventory than the previous year. 4
• The FHFA has rolled back its UDAP advisory bulletin, shifting enforcement to the Federal Trade Commission and reducing regulatory overlap for lenders, a move welcomed by the Mortgage Bankers Association as eliminating unnecessary oversight. 5
• HUD announced that non-permanent U.S. residents will no longer be eligible for FHA-insured mortgages effective May 25, 2025, citing concerns about immigration uncertainties affecting borrowers’ ability to fulfill long-term financial obligations. 6

Residential Real Estate Markets

The residential real estate market continues to face significant challenges as buyers resist current conditions. High mortgage rates combined with elevated home prices have severely dampened demand. Meanwhile, inventory continues to grow as sellers become more willing to list their properties despite market headwinds.

Buyer Resistance

• February 2025 was the worst February for existing home sales since 2009. 1
• Buyers are effectively “on strike,” waiting for lower prices, lower mortgage rates, and higher incomes. 1
• First-time buyers accounted for 31% of sales in February, up from 28% in January 2025 and 26% in February 2024. 7
• Cash sales represented 32% of transactions in February. 7
• Individual investors or second-home buyers purchased 16% of homes in February. 7

Down Payment Trends

• Average down payment in 2024: 14.4% of purchase price (up from 14.2% in 2023). 2
• Typical down payment in Q4 2024: $30,250 (approximately $3,000 higher than a year earlier). 2
• Higher mortgage rates are incentivizing buyers to limit loan size by putting more money down upfront. 2
• Homebuyers are leveraging pandemic-era savings and home equity to make larger down payments. 2

Inventory and Supply

• Active inventory: Up 27.8% year-over-year (70 consecutive weeks of higher inventory). 4
• New listings increased 8.3% according to Realtor.com‘s weekly data. 8
• Months-of-supply: 3.5 months in January 2025 (up from 3.0 months in January 2024). 9
• A balanced market typically requires 5-6 months of supply. 9

Home Prices

• Median existing-home price (February): $398,400 (up 3.8% from one year ago). 7
• 20th consecutive month of year-over-year price increases. 7
• Home prices are falling in five states on a 90-day average basis: Washington (-0.9%), Georgia (-0.8%), Montana (-0.2%), South Carolina (-0.3%), and Texas (-0.1%). 10
• Florida and Arizona markets are at high risk for price declines according to CoreLogic. 11

Residential Mobility Patterns

• Household mobility rate fell to a historically low 8.2% in 2024. 3
• Interstate migration rate rose to 2.3% in 2021 and 2.5% in 2022 but has since returned to pre-pandemic levels. 3
• Homeowner mobility rate fell sharply to 5.5% in 2023 (from 6.8% in 2021) due to mortgage rate “lock-in effect.” 3
• Migration to lower-density suburbs, smaller metro areas, and non-metro areas has persisted beyond the pandemic. 3

Regional Variations

• Northeast: Sales down 2.0% from January but up 4.2% from February 2024; median price $464,300 (up 10.4% year-over-year). 7
• Midwest: Sales unchanged from January at 1 million SAAR, up 1.0% from prior year; median price $295,500 (up 5.8% year-over-year). 7
• South: Sales up 4.4% from January. 7
• West: Sales up 10.3% from January. 7

Mortgage Markets

Mortgage rates have stabilized in a tight range between 6.7-7.0% in March as the market awaits clarity on economic policies. The Federal Reserve has maintained its cautious approach to monetary policy. Affordability challenges persist for potential homebuyers despite the rate stabilization.

Current Rates

• 30-year fixed mortgage rate (March 28): 6.73% (up 5 basis points from previous week). 12
• 15-year fixed refinance rate: 6.09% (up 7 basis points from previous week). 12
• Freddie Mac 30-year fixed-rate (March 13): 6.65% (down from 6.74% one year ago). 7
• Rate Forecasts
• NAR forecast: Rates to average 6.4% in 2025 and 6.1% in 2026. 13
• Fannie Mae: Rates to inch down to 6.60% by end of 2025 and 6.50% in 2026. 14
• MBA: Rates could end 2025 at 6.50% and tick down to 6.40% in 2026. 14
• Realtor.com: Rates to drop to 6.20% by end of 2025. 14
• NAHB: Rates to average 6.65% in 2025 and 6.19% in 2026. 14

Affordability Metrics

• National median mortgage payment for purchase applicants: $2,205 in February 2025 (unchanged from January). 15
• Median mortgage payment for borrowers seeking lower-payment mortgages: $1,506 in February (down from January). 15
• Non-QM, HELOC, and second mortgage originations are holding steady as more borrowers turn to these alternative products. 16

Economic & Political News

The regulatory landscape for housing and mortgage markets is undergoing significant changes under the Trump administration. Recent policy shifts at the FHFA, HUD, and CFPB signal a move toward reduced regulatory oversight and a focus on prioritizing U.S. citizens and permanent residents for federal benefits.

FHFA Policy Changes

• FHFA Director Bill Pulte rescinded the UDAP advisory bulletin that previously required GSEs to conduct consumer protection oversight of their customers. 5
• The rollback shifts enforcement to the Federal Trade Commission, reducing regulatory overlap and potential confusion over interpretation of UDAP provisions. 5
• Mortgage Bankers Association welcomed the move, stating the previous bulletin “wrongly established the GSEs as compliance regulators” and would have increased costs for consumers and lenders. 5
• FHFA also rescinded multifamily lease policies that required borrowers to meet “certain minimum standards for rental payment flexibility and lease notices.” 17

GSEs and Special Purpose Credit Programs

• FHFA Director Bill Pulte ordered Fannie Mae and Freddie Mac to terminate Special Purpose Credit Programs (SPCPs) they support. 18
• The directive describes these programs as providing assistance to borrowers who lack adequate down payments or ability to cover mortgage closing costs. 18
• FHFA deemed these programs “inappropriate for regulated entities in conservatorship.” 18
• The termination does not affect Freddie Mac’s Home Possible or Fannie Mae’s HomeReady mortgage programs, which are categorized as Equitable Housing Finance Plans (EHFPs). 18
• FHA Loan Eligibility Changes
• HUD announced non-permanent U.S. residents will no longer be eligible for FHA-insured mortgages effective May 25, 2025. 6
• The policy aligns with the Trump Administration’s commitment to “safeguarding economic opportunities for U.S. citizens and lawful permanent residents.” 6
• HUD cited concerns about non-permanent residents’ ability to fulfill long-term financial obligations due to immigration uncertainties. 6
• The change will impact those on work visas, with asylum status, and DACA recipients, who must now secure a case number by May 24, 2025, to remain eligible. 19

CFPB Regulatory Shifts

• Acting CFPB Director Russ Vought is seeking to vacate the settlement with Townstone Financial and return the $105,000 penalty the company paid. 20
• The CFPB claimed it found “significant undisclosed problems” with the bureau’s treatment of the case that resulted in “unmerited investigation and litigation.” 21
• The agency now acknowledges the investigation violated Townstone’s First Amendment rights of free speech. 21
• Since the new administration took over, the CFPB has dropped nine lawsuits that the agency brought on behalf of consumers. 21

Commercial Real Estate News

The commercial real estate market is showing mixed signals across sectors, with multifamily construction potentially stabilizing while financing trends reflect ongoing challenges. Lenders continue to extend loans rather than force resolutions, while some trophy assets still attract significant investment despite market headwinds.

Multifamily Sector

• Multifamily permits fell 4.3% in February to a seasonally adjusted annual rate of 404,000 units (down nearly 16% year-over-year). 22
• Multifamily starts jumped 12.1% from January to 370,000 units, suggesting the sector may be nearing its cyclical low. 22
• Units under construction have dropped 21% from last year to 754,000 but remained steady from January. 22
• Completions fell 20.7% month-over-month and 15.8% year-over-year to 512,000 units. 22
• Regional variations show steep annual permit declines in the Northeast (-72.1%) and West (-22%) but increases in the Midwest (+23.5%) and South (+13.7%). 22

Office Market

• Office loans now make up just 14-15% of CMBS conduit deals post-pandemic, down from their previous dominance. 22
• Witkoff and Cammeby’s secured a $279 million refinancing from Blackstone for the office portion of Manhattan’s iconic Woolworth Building. 23
• Nuveen Real Estate sold a Washington, DC office building for $118 million, nearly half its 2006 purchase price. 22
• Park Avenue in NYC continues to thrive with low vacancies and high rents despite broader office market struggles. 24
• San Francisco’s office market is showing signs of recovery, with AI firms driving leasing demand. 24

Retail Trends

• Service-based tenants, led by food & beverage, fitness, and healthcare, are set to lease more space than goods-based retailers in 2025. 25
• Retail closures are expected to free up 140 million square feet of space. 25
• Forever 21 filed for bankruptcy for the second time, leaving vacancies in 32 Texas malls. 25
• Harlem USA’s $108 million mortgage is at risk of default amid 26% vacancy. 25
• Publix acquired a store near Galleria Mall for $25 million, continuing its South Florida expansion. 25

CRE Financing

• Lenders extended a record $384 billion in commercial real estate loans into 2025, accounting for roughly 40% of the $957 billion in CRE debt coming due this year. 26
• Multifamily saw the largest extension volume at $97 billion—around a third of the sector’s 2025 maturities. 26
• Industrial loans were the most extended proportionally, with 55% of 2025 maturities pushed from prior years. 26
• Office came in with $85 billion in extensions—45% of its $187 billion due this year. 26
• Commercial real estate CLO issuance is booming in 2025, with volumes far outpacing 2023 and 2024. 22

Hospitality Sector

• San Francisco hotel bookings are up 70% in 2025, fueled by a rebound in conventions at Moscone Center. 22
• International travel to San Francisco remains a challenge despite the convention rebound. 22
• Developers are pushing major hotel projects in Chicago, from Fulton Market to the South Side. 24
• Distressed hotel properties in Chicago are changing hands as lenders grapple with troubled debts. 24