Weekly Real Estate Wrap Up & Week Ahead for August 25

Weekly Real Estate Wrap Up & Week Ahead

Introduction

Welcome to the Weekly Real Estate Wrap Up & Week Ahead, your go-to source for the latest updates and insights into the real estate market. This newsletter provides a comprehensive overview of the most important and popular news stories from the past week, covering residential real estate markets, mortgage markets, commercial real estate markets, multifamily real estate markets, and CMBS/REIT markets. Additionally, we offer a preview of key economic releases, housing reports, speeches, hearings, and earnings releases for the upcoming week.

Summary of the Week: August 18-24, 2024

Residential Real Estate Markets

• Home Prices and Sales:Zillow projects a modest increase in home values by 1.8% in 2024, a slight decrease from the previous forecast of 2% growth. They anticipate 4.1 million home sales for 2024, which is 1% more than last year but lower than the previous forecast of 4.2 million home sales. Inventory levels are currently 25% higher compared to a year ago, indicating a potential easing in the market Zillow.National Association of Realtors (NAR) reports that existing-home sales grew 1.3% in July to a seasonally adjusted annual rate of 3.95 million, ending a four-month decline. The median existing-home sales price increased 4.2% from July 2023 to $422,600, marking the 13th consecutive month of year-over-year price gains Yahoo Finance.

Mortgage Markets

• Mortgage Rates and Volume:Freddie Mac forecasts that mortgage rates will remain above 6.5% for most of the year, which could continue to create a lock-in effect where homeowners are less incentivized to sell their homes due to their existing lower mortgage rates. About two-thirds of outstanding home loans have a rate below 4%, and 90% have a rate below 6% Freddie Mac.Mortgage News Daily reports that mortgage applications for new home purchases increased 9.4% compared to a year ago, according to the Mortgage Bankers Association Builder Application Survey data for July 2024. This indicates a growing interest in new home purchases despite higher mortgage rates Mortgage News Daily.

Commercial Real Estate Markets

• Market Trends:CommercialEdge reports that more than 1.2 billion square feet of office buildings (14.8% of total stock) are quality residential conversion candidates. This trend is driven by the increasing interest in converting vacant offices into residential spaces due to the shift towards remote and hybrid work CommercialEdge.Colliers highlights that the U.S. office market continues to face challenges with high vacancy rates and declining rental rates. The national office vacancy rate was 18.1% in July, an increase of 100 basis points year-over-year Colliers.

Multifamily Real Estate Markets

• Construction and Demand:Freddie Mac Multifamily reports that the multifamily market remains resilient amid volatility and high supply. Multifamily properties are enjoying healthy demand for rental housing fueled by demographic trends and a high barrier-to-entry in the for-sale housing market. However, the Sun Belt and Mountain West regions are facing oversupply challenges, which could suppress rent growth and occupancy rates in the near term Orion Prop.CBRE notes that the multifamily market is stabilizing after a two-year decline, with improving fundamentals and rising investor confidence. The national median rent increased by 3.2% year-over-year in July, down from 4.5% in June CRE Daily.

CMBS/REIT Markets

• Market Developments:Commercial Real Estate Direct reports that the $180 million loan against the 560,210-square-foot office property at 17 State St. in lower Manhattan wasn’t refinanced at its maturity last month. So, it’s been transferred to special servicer Rialto Capital Advisors Commercial Real Estate Direct.GlobeSt predicts a record-breaking CMBS issuance of $85 billion for the year, reflecting strong investor demand and favorable market conditions GlobeSt.

Major Economic Announcements and Speeches

• Federal Reserve Chair Jerome Powell's Speech at Jackson Hole:
• Economic Data Releases:

Week Ahead: August 25-31, 2024

Economic Releases

• Consumer Confidence Index: The Conference Board will release the Consumer Confidence Index for August on August 27. This index measures the degree of optimism that consumers feel about the overall state of the economy and their personal financial situation.
• GDP Report: The Bureau of Economic Analysis will release the second estimate of Q2 GDP growth on August 29. This report will provide a more detailed look at economic growth during the second quarter of 2024.
• Personal Income and Outlays: The Bureau of Economic Analysis will release data on personal income and outlays for July on August 30. This report includes information on consumer spending, income, and the personal consumption expenditures (PCE) price index, a key measure of inflation.

Housing Reports

• Pending Home Sales Index: The National Association of Realtors (NAR) will release the Pending Home Sales Index for July on August 28. This index is a leading indicator of housing activity, based on contract signings.
• Case-Shiller Home Price Index: The S&P CoreLogic Case-Shiller Home Price Index for June will be released on August 29. This index measures the change in the value of residential real estate in 20 metropolitan regions across the United States.

Speeches and Hearings

• Federal Reserve Speeches: Several Federal Reserve officials are scheduled to speak throughout the week, providing insights into the Fed's economic outlook and monetary policy. Notable speeches include:John Williams, President of the Federal Reserve Bank of New York, will speak on August 26.Loretta Mester, President of the Federal Reserve Bank of Cleveland, will speak on August 28.

Earnings Releases

• Homebuilders and Real Estate Companies: Several major homebuilders and real estate companies are scheduled to release their earnings reports this week, providing insights into the health of the housing market. Notable earnings releases include:Toll Brothers (August 27)Lennar Corporation (August 29)

Key Takeaways

• Stabilizing Home Prices: Home prices are expected to stabilize with modest growth, indicating a more balanced market.
• Increased Sales Activity: Existing-home sales are projected to increase significantly in 2024, reversing the decline seen in 2023.
• Higher Mortgage Rates: Mortgage rates are expected to remain relatively high, which may impact the mobility of homeowners and the overall housing market dynamics.
• Construction Growth: Increased construction activity, particularly in single-family homes, is expected to meet rising demand.
• Commercial Real Estate Slowdown: The commercial real estate market is experiencing a slowdown due to rising interest rates and tighter lending standards.
• Strong CMBS Issuance: The CMBS market is expected to see record-breaking issuance, reflecting strong investor demand.
• Economic Outlook: The Fed is poised to cut interest rates, signaling confidence in the US economy's ability to achieve a soft landing. However, concerns about the labor market and potential recession remain.

Stay tuned for next week's updates and insights in the Weekly Real Estate Wrap Up & Week Ahead! Check us out for yourself at www.impactcapitoldc.com.

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