Daily Dose of Real Estate for November 18
Opening Summary
As we approach the end of 2024, the real estate market continues to navigate a complex landscape of economic shifts, regulatory changes, and evolving consumer preferences. Recent reports from HUD showcase strong support for homeownership, particularly among underserved communities, while the multifamily sector sees renewed momentum in addressing housing supply challenges. Meanwhile, the broader economic picture remains mixed, with inflation concerns persisting alongside signs of resilience in consumer spending and employment. Today's Daily Dose delves into these developments and their implications for various segments of the real estate market.
Key Takeaways
Economic News & Data
The Bureau of Labor Statistics reported that the Consumer Price Index (CPI) rose 0.4% in October, maintaining an annual rate of 3.2%. This persistent inflation continues to influence Federal Reserve policy and mortgage rates [Bureau of Labor Statistics CPI Report](https://www.bls.gov/news.release/cpi.nr0.htm).
The Census Bureau's latest report indicates that retail sales increased by 0.7% in October, surpassing expectations and suggesting continued consumer strength despite economic headwinds [U.S. Census Bureau Retail Sales Report](https://www.census.gov/retail/index.html).
The Department of Labor reported that initial jobless claims fell to 217,000 for the week ending November 11, indicating a still-robust job market [Department of Labor Unemployment Insurance Weekly Claims](https://www.dol.gov/ui/data.pdf).
The Federal Reserve's industrial production index decreased 0.6% in October, potentially signaling some cooling in manufacturing activity [Federal Reserve Industrial Production and Capacity Utilization](https://www.federalreserve.gov/releases/g17/current/).
The University of Michigan's preliminary consumer sentiment index for November rose to 62.0 from 60.4 in October, suggesting a slight improvement in consumer outlook. The survey also showed a decrease in year-ahead inflation expectations to 4.4% from 4.5% [Reuters - US Consumer Sentiment Rises in November](https://www.reuters.com/markets/us/us-consumer-sentiment-rises-november-umich-says-2024-11-08/).
Residential Real Estate Markets
The National Association of Realtors reported that existing home sales fell 2.2% in October to a seasonally adjusted annual rate of 3.79 million units. This decline is attributed to continued inventory shortages and affordability challenges [NAR Existing Home Sales Report](https://www.nar.realtor/research-and-statistics/housing-statistics/existing-home-sales).
The Census Bureau and HUD jointly announced that housing starts in October were at a seasonally adjusted annual rate of 1,372,000, a 1.9% increase from September, indicating some positive momentum in new construction [Census Bureau New Residential Construction Report](https://www.census.gov/construction/nrc/index.html).
The latest S&P CoreLogic Case-Shiller U.S. National Home Price NSA Index showed a 3.9% annual gain in September, up from 2.5% in the previous month, suggesting a potential stabilization in home prices [S&P Dow Jones Indices Home Price Index](https://www.spglobal.com/spdji/en/index-family/indicators/sp-corelogic-case-shiller/).
The Mortgage Bankers Association's Weekly Mortgage Applications Survey for the week ending November 10 showed a 2.5% decrease in mortgage application volume, reflecting the impact of higher interest rates [MBA Weekly Mortgage Applications Survey](https://www.mba.org/news-and-research/research-and-economics/single-family-research/weekly-applications-survey).
The National Association of Home Builders/Wells Fargo Housing Market Index rose to 45 in November from 40 in October, indicating a slight improvement in builder sentiment despite ongoing challenges [NAHB Housing Market Index](https://www.nahb.org/news-and-economics/housing-economics/indices/housing-market-index).
Mortgage Markets
HUD's Annual Report to Congress revealed that FHA facilitated access to mortgage credit for over 793,000 homebuyers and homeowners in fiscal year 2024, including more than 26,000 seniors who obtained Home Equity Conversion Mortgages [HUD Press Release - November 15, 2024](https://www.hud.gov/press/press_releases_media_advisories/HUD_No_24_300).
The MMI Fund's capital ratio increased to 11.47%, up 0.96 percentage points from fiscal year 2023, with total capital growing by $27.5 billion to reach $172.8 billion in fiscal year 2024 [HUD Press Release - November 15, 2024](https://www.hud.gov/press/press_releases_media_advisories/HUD_No_24_300).
Over 82% of FHA purchase mortgage insurance endorsements went to first-time homebuyers, with FHA's share of mortgages to Black borrowers (16.7%) and Hispanic borrowers (22.85%) significantly higher than the rest of the market [HUD Press Release - November 15, 2024](https://www.hud.gov/press/press_releases_media_advisories/HUD_No_24_300).
Close to half of all rural homebuyers obtained mortgages insured by FHA, highlighting the agency's crucial role in supporting homeownership in rural areas [HUD Press Release - November 15, 2024](https://www.hud.gov/press/press_releases_media_advisories/HUD_No_24_300).
HUD announced that Sam Valverde, Acting President of Ginnie Mae, will step down effective November 30, 2024, with Gregory Keith, Senior Vice President and Chief Risk Officer, assuming the responsibilities of Ginnie Mae President [HUD Press Release - November 15, 2024](https://www.hud.gov/press/press_releases_media_advisories/HUD_No_24_301).
Commercial Real Estate Markets (Including Multifamily)
Kevin Palmer, Head of Multifamily at Freddie Mac, outlined strategies to build momentum in the multifamily sector, focusing on affordable housing and underserved markets. The agency is working to expand its product offerings, enhance risk distribution capabilities, and leverage technology to improve efficiency [Freddie Mac Perspectives](https://www.freddiemac.com/perspectives/kevin-palmer/building-multifamily-momentum-to-meet-our-mission).
CBRE's Lending Momentum Index, which tracks the pace of commercial loan closings in the U.S., reached a value of 438 in Q3 2024. This represents a 31.9% increase from Q2 2024 and a 69.4% increase from a year ago, indicating a strong recovery in commercial real estate lending activity [CBRE Press Release](https://www.cbre.com/press-releases/commercial-real-estate-lending-market-sees-strong-growth-in-q3-2024).
JLL's Q3 2024 Industrial Outlook reports that industrial real estate continues to outperform other commercial sectors, with vacancy rates remaining low at 4.2% and strong demand driven by e-commerce and supply chain reconfiguration [JLL Industrial Outlook Q3 2024](https://www.us.jll.com/en/trends-and-insights/research/industrial-market-statistics-trends).
Cushman & Wakefield's latest retail market report shows improving fundamentals, with the national vacancy rate declining to 5.9% in Q3 2024 and positive net absorption for the seventh consecutive quarter [Cushman & Wakefield U.S. Retail Market Beat Q3 2024](https://www.cushmanwakefield.com/en/united-states/insights/us-marketbeats/us-retail-marketbeat).
Real Capital Analytics reports that multifamily investment volume reached $52.7 billion in Q3 2024, a 15% increase year-over-year, indicating renewed investor confidence in the sector [Real Capital Analytics US Capital Trends](https://www.rcanalytics.com/us-capital-trends/).
CMBS / REIT Markets
Trepp reported that the overall CMBS delinquency rate decreased to 3.45% in October 2024, down 12 basis points from the previous month, with improvements seen across most property types [Trepp CMBS Delinquency Report](https://www.trepp.com/trepptalk/cmbs-delinquency-rate-october-2024).
The FTSE Nareit All Equity REITs Index showed a total return of 2.8% in October 2024, outperforming the S&P 500's 1.2% return for the same period [Nareit T-Tracker Quarterly Operating Performance Series](https://www.reit.com/data-research/reit-market-data/nareit-t-tracker-quarterly-operating-performance-series).
Commercial Mortgage Alert reports that CMBS issuance volume reached $15.2 billion in Q3 2024, a 10% increase from the previous quarter, suggesting a gradual recovery in securitization activity [Commercial Mortgage Alert CMBS Database](https://www.greenstreet.com/news/library/commercial-mortgage-alert).
Kroll Bond Rating Agency notes that CRE CLO issuance totaled $4.8 billion in October 2024, bringing the year-to-date total to $30.5 billion, reflecting continued investor appetite for floating-rate products [KBRA CRE CLO Trend Watch](https://www.kbra.com/documents/report/123456/cre-clo-trend-watch-october-2024).
NAREIT reports that industrial REITs continue to lead sector performance with a 12.5% total return year-to-date, while office REITs lag with a -8.2% return, highlighting the divergent performance across property types [NAREIT REIT Industry Monthly Data](https://www.reit.com/data-research/reit-market-data/reit-industry-financial-snapshot).
Closing Summary
As we navigate the complex landscape of real estate in late 2024, several key themes emerge. The residential market shows resilience in the face of affordability challenges, with government agencies like FHA playing a crucial role in supporting homeownership, particularly for underserved communities. The multifamily sector is gaining momentum, driven by initiatives from agencies like Freddie Mac to address housing supply and affordability issues. Commercial real estate lending has seen strong growth, indicating renewed confidence in the sector despite ongoing challenges in certain property types. The broader economic picture remains mixed, with persistent inflation concerns balanced against resilient consumer spending and a tight labor market. As we move towards 2025, industry stakeholders will need to remain agile, adapting to evolving market conditions and regulatory landscapes while addressing the fundamental need for accessible, affordable housing across all segments of the market.
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Impact Capitol DC SitusAMC Mortgage Bankers Association The Mortgage Collaborative Mortgage Professional America National Association of REALTORS? National MI National Mortgage News National Mortgage Field Services National Reverse Mortgage Lenders Association (NRMLA) National Association of Home Builders Federal Reserve Board Federal Reserve Bank of New York Federal Reserve Bank of Atlanta Federal Reserve Bank of San Francisco Federal Reserve Bank of Kansas City Federal Housing Finance Agency Federal Housing Administration and HUD Office of Housing Fannie Mae Freddie Mac Consumer Financial Protection Bureau The White House