Housing Inventory Falls: A Turning Point for CRE?

September 4, 2024



In this edition of Above the Line, we see a shift in the real estate market as housing inventory experiences its first weekly decline of 2024. With mortgage rates dropping and spreads improving, we explore what this could mean for both residential and commercial real estate. We'll also look at the slowing pace of apartment construction and changes in CMBS delinquency rates, offering a comprehensive view of the current market dynamics.

Let's dive in. 

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Housing Inventory Falls as Mortgage Rates Drop
HousingWire
As mortgage rates decline, housing inventory has seen its first weekly drop of the year. This shift, coupled with improving mortgage spreads, suggests a potential change in market dynamics that could impact both residential and commercial real estate sectors.

Apartment Construction Is Slowing, and Investors Are Betting on Higher Rents
Wall Street Journal
The pace of multifamily-building starts has dropped significantly, down 41% from its April 2022 peak. This slowdown is prompting large investors to bet on higher future rents, with major firms like KKR, Brookfield, and Blackstone making billion-dollar portfolio acquisitions.

CMBS Delinquency Rate Inches Up
WRE News
The delinquency rate for commercial mortgage-backed securities (CMBS) increased slightly to 5.44% in August. Notably, the multifamily sector saw a significant 67-basis-point spike to 3.30%, while the office sector's delinquency rate decreased by 12 basis points to 7.97%.

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