Daily Dose of Real Estate

Daily Dose of Real Estate for May 19

These spring mortgage rates are brutal. Mortgage rates sit at an eight-month high of 6.65%, and for good measure the 10-year Treasury hovers near 4.60% & the 30-year is at its highest level since 2007 – bonus, April food-at-home inflation just posted its worst monthly print since August 2022, with ground beef at a record $6.90 a pound and coffee up 29% year-over-year. Builder sentiment somehow rose three points to 37 in May, beating consensus, though 32% of builders are still cutting prices and 61% are still throwing in incentives, the fourteenth straight month above that threshold – still, builders are feeling more optimistic, so they’re seeing something more than these hard numbers. The Cleveland Fed’s inflation nowcast is running at 4.18%, real rates are negative, and Kevin Warsh will be sworn in as Fed Chair on Friday in time to preside over the June FOMC (welcome back).

FHFA’s February report shows GSE foreclosure prevention activity slowing to 19,152 actions, the forbearance population shrinking to roughly 0.13% of the serviced book, and the cash-out refi share down to 34.4% from its 82.4% peak in September 2022, which is what happens when the refinance economy gets replaced by a HELOC economy. Meanwhile MBA’s Broeksmit used the Secondary conference to ask regulators to revisit LO comp, QM, TRID, and the 250% Basel risk weight on MSRs, and AEI’s Ed Pinto published a case study attributing roughly 930,000 missing homes in Los Angeles to three policy decisions made between 1934 and 1965 – a useful reminder that today’s affordability crisis was substantially priced in before most of today’s market participants were born.

Let’s get you caught up and out the door in 3 minutes. Tim

Table of Contents

KEY TAKEAWAYS

Homebuilder sentiment rebounds in May. NAHB/Wells Fargo HMI rose three points to 37, topping the 34 consensus, with all three components and all four regions higher; 32% of builders cut prices in May at an average 6% discount, and 61% used incentives — the 14th straight month above 60%. (NAHB)
30-year mortgage rate holds at an eight-month high. Mortgage News Daily’s 30-year fixed sits at 6.65% on May 18, unchanged after Friday’s 13-bp surge to that level — the highest reading since September. (Mortgage News Daily)
Treasury rout enters second week. The 10-year yield held at 4.595% Monday after touching a 15-month intraday high, and the 30-year sits at 5.13%, its highest since 2007, as fiscal supply concerns and reaccelerating inflation pressure the long end. (CNBC)
Warsh takes Fed chair Friday. Kevin Warsh will be sworn in as Federal Reserve Chair on May 22, with his first FOMC meeting scheduled June 16-17 against a backdrop of negative real rates. (CNBC)
GSE foreclosure prevention activity slows; refi share shifts. Fannie and Freddie completed 19,152 loss mitigation actions in February — the lifetime total since conservatorship now stands at 7.36 million — while initiated forbearance plans fell to 8,997 and the cash-out refi share dropped to 34.4% from a September 2022 peak of 82.4%. (FHFA)
MBA’s Broeksmit calls for sweeping rule rollback. At the Secondary and Capital Markets Conference, the MBA CEO urged regulators to revisit LO comp, QM points-and-fees, TRID, and the Basel III 250% risk weight on MSRs, framing them as cost layers the market can no longer absorb at current rate levels. (HousingWire)
Food inflation reaccelerates on top of an already elevated base. April CPI food-at-home jumped 0.7% MoM — the worst monthly print since August 2022 — pushing the YoY to 2.9%, with ground beef at a record $6.90/lb (+18.9% YoY) and ground coffee at $9.72/lb (+29% YoY). (Wolf Street)
AEI traces LA’s shortage to three pre-1965 policy decisions. A new Pinto case study estimates roughly 930,000 “missing” homes in Los Angeles attributable to FHA underwriting standards adopted in the mid-1930s, the 1963 Knox-Nisbet Act, and 1965 LA zoning changes that established large-lot RE districts — enough housing to absorb the city’s estimated 500,000-unit shortage and house an additional 2.3 million residents. (AEI)

RESIDENTIAL REAL ESTATE

NAHB HMI breaks higher in May. The composite moved to 37 from 34, with current sales at 40 (+3), expectations at 45 (+3), and traffic at 25 (+3); regional readings: Northeast 44 (+5), Midwest 45 (+6), South 36 (+2), West 27 (+1). (NAHB)
Builders still discounting, but less aggressively at the edges. 32% of builders reduced prices in May (down from 34% in April), average price cut held at 6%, and 61% used some form of sales incentive — extending a streak of incentive use above 60% to fourteen consecutive months. (Advisor Perspectives)
AEI case study reframes LA affordability as a 90-year-old policy artifact. Ed Pinto identifies three layered decisions — FHA’s 1930s shift toward exclusively single-family, low-density subdivisions; California’s 1963 Knox-Nisbet Act establishing LAFCOs to discourage “uncoordinated” expansion; and LA’s 1965 creation of RE11, RE15, RE20, and RE40 large-lot zones — as the structural cause of a price-to-income ratio that has moved from under 2 in the 1920s to 9.5 today. (AEI)
LA vs. Houston as the natural experiment. AEI’s 13-city Continuum of Care comparison shows LA’s displacement pressure at 2.35 times Houston’s and its homeless displacement rate (7.7 per 1,000) at fifteen times Houston’s rate of 0.5, with the bulk of LA’s 1-8 unit stock dating to pre-1950 versus Houston’s heavy post-2000 build-out. (AEI)
Exurbs and master-planned communities continued to lead 2025 growth. Updated Census migration data shows the fastest-growing counties remain concentrated in exurban Sun Belt markets anchored by master-planned communities, with builder land pipelines following the same pattern. (CRE Daily)
Mohtashami: spreads are doing the work. Mortgage-to-Treasury spreads are running at 1.92 percentage points; absent the post-2023 spread compression, 30-year rates would print near 7.84% rather than 6.65%, a key reason demand has held up despite the rate ceiling. (HousingWire)

MORTGAGE MARKETS

MND 30-year flat at 6.65% after Friday’s surge. The 15-year sits at 6.10%, FHA 30-year at 6.17%, jumbo 30-year at 6.69%, 7/6 SOFR ARM at 6.49%, and VA 30-year at 6.19%; Friday’s +13bp move pushed the 30-year to an eight-month high. (Mortgage News Daily)
GSE loss mitigation slows; performance edges weaker. February foreclosure prevention actions totaled 19,152, with 6,198 permanent modifications; 35.4% of mods were extend-term-only and 63.6% included principal forbearance. The 30-59-day delinquency rate rose to 1.10% and the serious delinquency rate to 0.60%, while foreclosure starts fell 2.2% to 8,414. (FHFA)
Forbearance population continues to shrink. Loans in forbearance fell to 39,318 at end-February from 42,733 in January — approximately 0.13% of the GSEs’ serviced book and 6.60% of the delinquent population — and initiated plans dropped to 8,997 from 9,567. (FHFA)
Refi mix continues normalizing. February refi volume rose as the GSE 30-year fixed averaged 6.05% (down from 6.10% in January), with the cash-out share at 34.4% — well off the 82.4% September 2022 peak that defined the rate-locked refi cycle. (FHFA)
Broeksmit lays out MBA’s deregulatory ask. At the Secondary conference, the MBA CEO targeted LO comp, the QM points-and-fees cap, TRID, Basel III’s 250% MSR risk weight, and the 100/50 warehouse treatment, citing first-time buyer median ages now in the 32-34 range as evidence the cost stack is binding. (HousingWire)
Fannie/Freddie issue joint single-family MBS correction file. The Enterprises’ joint Single-Family MBS Loan Level Issuance Correction File goes into effect May 18, formalizing a shared correction protocol across the two issuers. (Fannie Mae Capital Markets)

REGULATORY & POLICY

Warsh sworn in as Fed Chair Friday. Following Senate confirmation 54-45, Warsh takes the oath May 22 and will preside over the June 16-17 FOMC with the Cleveland Fed nowcast running well above the 2% target. (CNBC)
AEI report quantifies the federal role in zoning. Pinto’s case study revisits the 1922 Commerce Department standard state zoning enabling act and FHA’s April 1936 Underwriting Manual — which required “homogeneity regarding types of dwellings and classes of people” — as the federal anchors of low-density zoning, with 80% of FHA-conforming subdivisions by 1940 built at roughly 3.26 units per acre. (AEI)
House Real Estate Caucus endorses revised ROAD to Housing Act. The bipartisan caucus formally backed the latest House version of the 21st Century ROAD to Housing Act, adding momentum to a package that has now cleared MBA, NAHB, and a growing list of industry endorsements. (House Real Estate Caucus)
NRMLA’s Irwin previews HECM modernization push. Steve Irwin laid out the trade group’s 2026 priorities ahead of the June 9 Western Regional, with HECM program modernization and HMBS 2.0 issuance plumbing at the top of the list. (HousingWire)

ECONOMIC NEWS

Food inflation reaccelerates sharply. April CPI food-at-home rose 0.7% MoM and 2.9% YoY — the worst monthly print since August 2022 and the worst annual print since August 2023; total food-at-home is now up 32% since January 2020. (Wolf Street)
Beef and coffee lead the spike; eggs reverse. Ground beef rose 3.0% MoM and 18.9% YoY to a record $6.90/lb; steak hit a record $13.02/lb (+17.1% YoY); ground roast coffee reached $9.72/lb (+29% YoY, +133% since January 2020); fresh fruit and vegetables rose 1.8% MoM (the third consecutive monthly spike). Eggs fell 4.2% MoM and 56% YoY to $2.25/dozen, down 64% from the March 2025 peak. (Wolf Street)
Cleveland Fed nowcast points to a hot May print. The Cleveland Fed Inflation Nowcast for the trailing twelve months sits at 4.18% as of mid-month, well above the 2% target and reinforcing the long end’s repricing. (Motley Fool)
Treasury curve under sustained pressure. The 10-year held at 4.595% after an intraday push to a 15-month high, the 30-year sits at 5.13% (highest since 2007), and inflation expectations remain unanchored across the curve as Treasury supply continues to test demand. (CNBC)
Oil back near $111/bbl. Brent climbed on fresh Gulf drone strikes and tighter near-term supply, adding to the energy-led inflation impulse running through the May data. (CNBC)
G7 finance ministers convene in Paris. Treasury Secretary Bessent joined G7 counterparts Monday to discuss FX coordination, Ukraine financing, and trade frictions, with no joint communique yet released. (CNBC)

COMMERCIAL & MULTIFAMILY

Exurb growth narrative gets fresh data. Updated Census county-level data reinforces that master-planned community pipelines in Texas, Florida, Arizona, the Carolinas, and Idaho are absorbing the bulk of household formations, with multifamily land entitlements following the same map. (CRE Daily)
AEI’s LA findings cut into the multifamily conversation. The Pinto study highlights that high-density 5+ unit construction has been the predominant LA build type since the early 1960s but at levels well below pre-1965 totals, with the 2-4 unit “light touch density” category having effectively disappeared from the city’s pipeline after 1965 — a structural feature with direct implications for multifamily underwriting in supply-constrained markets. (AEI)
Long end repricing presses CRE. With the 30-year at 5.13% and 10-year at 4.60%, refinancing math for 2021-2022 vintage acquisitions continues to deteriorate; spread compression on Treasuries is not occurring in conduit and CMBS markets. (CNBC)
GSE multifamily activity stable. Fannie and Freddie’s joint single-family correction file release is paired with continued steady multifamily volume reporting; no caps disclosure changes were issued in the May 18 update. (Fannie Mae Capital Markets)
Energy and food inflation feed into operating costs. With Brent near $111 and food-at-home at +2.9% YoY, the input pressure on hospitality, senior housing, student housing, and grocery-anchored retail operators is rebuilding after a brief reprieve in late 2025. (Wolf Street)

INDUSTRY NEWS

NRMLA Western Regional set for June 9. Steve Irwin highlighted the agenda in a May 18 interview, with HECM modernization, HMBS 2.0, and originator training the headline tracks. (HousingWire)
MBA Secondary continues through Wednesday. Day-one remarks featured Broeksmit’s deregulatory ask and a packed capital markets track; day two will feature GSE leadership and primary-secondary spread panels. (HousingWire)
AEI Housing Center publishes LA report alongside HEAT toolkit update. The May 18 Pinto report is paired with refreshed Housing and Economic Analysis Toolkit (HEAT) and Good Neighbor Index (GNI) data layers available at the AEI Housing Center site, giving lenders and operators block-level overlays for displacement pressure and stock vintage. (AEI)
Fannie/Freddie joint correction file goes live. The single-family MBS loan-level correction file took effect May 18, standardizing post-issuance correction workflows across the two issuers. (Fannie Mae Capital Markets)
CFPB enforcement posture remains in flux. Industry counsel continues to flag the absence of new examinations or supervisory letters in May, consistent with the administration’s pause posture; no May 18 enforcement actions were posted. (CFPB)