CRE Markets Must Navigate High Rates

With the Consumer Price Index showing inflation increasing for the second straight month, hopes are dimming for a cut to the federal funds rate from the Federal Reserve. Commercial real estate sales across all sectors have been down since 2023, and for multifamily specifically, sales activity is about half of what it was before 2020. Apartment supply and demand trends are pointing to improved performance moving into 2026, but many apartment buyers, sellers, and investors—along with apartment owners facing loan maturities and potential distress—continue to wait for interest rates to improve. They may not be able to wait much longer.

Multifamily, the Nation, and the Economy

Consumer Price Index, June 2025: Inflation Up from 2.3% to 2.7% YoY

Bureau of Labor Statistics: “The index for shelter rose 0.2 percent in June and was the primary factor in the all items monthly increase. The energy index rose 0.9 percent in June as the gasoline index increased 1.0 percent over the month. The index for food increased 0.3 percent as the index for food at home rose 0.3 percent and the index for food away from home rose 0.4 percent in June.”

Multifamily and the Housing Market

International Transactions in U.S. Residential Real Estate

NAR: While international transactions are up since last year, they are still at less than half the pre-pandemic number. China tops the list of foreign buyers at 15%, with Canada in second at 14%. Top states for foreign buyers include Florida (21%), California (15%), and Texas (10%).

Multifamily Markets and Reports

Though Still at Record Levels, Quarterly Apartment Supply Keeps Falling

RealPage: “New apartment deliveries continued to be most prolific in the South region of the U.S., as nearly 57,800 units wrapped up there in 2nd quarter 2025. But the South also saw the steepest pullback, delivering roughly 6,900 units less than in the first three months of 2025 and even fewer than the peak achieved in 3rd quarter 2024.”

Commercial Real Estate and the Macro Economy

Capital Under Pressure: Navigating CRE Lending in a Shifting Interest Rate Environment

Via Colliers: “As interest rate volatility, regulatory pressure, and economic uncertainty converge in 2025, community banks and credit unions are recalibrating their approach to real estate lending.”

Other Real Estate News and Reports

The Office-Market Recovery Is Here, Just Not Everywhere

Via MSCI: “Between January 2007 and December 2021, more than USD 4.5 trillion was invested in the global office market — far more than in any other sector and exceeding industrial and apartment properties combined. However, office deal volumes have since plummeted to record lows across many of the world’s largest property markets.”

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