“Red Flare” for Homebuying Market, Green Flag for Multifamily

Affordability pressures in the homebuying market have become more acute: Single family home sales have remained one third below pre-pandemic averages since late 2022, home price growth is slowing during a season where prices usually grow more quickly, and economists are warning that the homebuying market could continue to soften as mortgage rates remain high. In stark contrast, multifamily buyers and investors are increasingly optimistic about the apartment rental market, buoyed by the strong absorption numbers and signs of gradual recovery in markets outside the Sunbelt.

Multifamily and the Housing Market

Housing market ‘red flare’: Moody’s chief economist sees home price declines spreading

Fast Company: “One of the clearest tells, according to Zandi, is that builders are now postponing land deliveries—a move that typically precedes a drop in construction activity and could mean fewer starts and completions in the quarters ahead.”

Multifamily, the Nation, and the Economy

Multifamily Underwriting Metrics Improve in Q2

CBRE: “Underwriting assumptions for core and value-add multifamily assets improved slightly in Q2. Buyer and seller sentiment for core assets weakened slightly, while value-add buyer and seller sentiment improved. Even as the Federal Reserve held interest rates steady, cap rates continued to show incremental compression.”

Multifamily Markets and Reports

The multifamily reset is taking shape

John Burns Research and Consulting: “After a pandemic-fueled sprint powered by cheap capital and a construction surge, the apartment market is finally leveling out. But this isn’t a slowdown—it’s a reset for long-term gains.”

Commercial Real Estate and the Macro Economy

Why CRE’s Current Stability May Be Masking Mounting Risks

Via Trepp: “Both due to their large magnitude and uncertainty surrounding their permanence, tariffs are leading to inaction. But as inaction persists without clarity, small shocks could tip us from stall to snap as consumers and firms grow weary . . . [T]he challenge is not just tracking tariff policy or macro indicators, but understanding how adjustment dynamics affect real estate demand, pricing, and capital allocation.”

Other Real Estate News and Reports

Mapped: The Most Expensive U.S. Cities For Commercial Construction

Via Bisnow: “Nine U.S. markets have construction costs priced above $400 per SF, but the price to build is significantly cheaper outside of primary markets. The Sun Belt, where a wave of development is still underway, also offers a relative bargain.”

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