Single-Family Housing Outlook

Homeownership Trends Translate into Uneven CRE Effects

• Geopolitical tensions raising oil prices, along with tariffs, have intensified inflation pressures, reducing the chances of near term expansionary monetary policy
• The Federal Reserve held interest rates steady in March, while market expectations have shifted markedly, with investors in early April assigning a 72 percent probability of rates remaining unchanged through December.
• Treasury yields have risen 30 to 50 basis points since late February as markets repriced the timing of rate cuts, contributing to elevated long-term financing costs
•  Mortgage rates climbed 50 basis points, lifting the 30-year fixed rate to 6.46 percent, straining housing affordability. 
•  Higher mortgage rates have increased the average monthly payment on a median-priced home by $120 since late February
• Single-family home prices rose 0.2 percent over the past year, while sales volumes have remained stable near 4 million units annually since rate hikes began in 2022, roughly in line with early pandemic activity, but below long-run norms.

A softer housing market ripples across CRE. When homebuying slows, it can impact commercial property types tied to housing-related spending.

• Inflation-adjusted furniture sales declined 8.0 percent year-over-year through February, reflecting softer demand for home-related goods.
• Building and gardening sales increased 1.2 percent from last year, marking a modest improvement after more than three years of decline.
• Softer demand for home-related goods can modestly weigh on retail space demand, with marginal spillover effects on industrial space as retailers hold leaner inventories.

Affordability pressures favor multifamily. Cost barriers to homeownership and a sharp slowdown in construction are improving the long-term supply-demand balance for apartments.

• Rising mortgage payments and slower home sales have had the greatest impact on the multifamily sector.
• Since the end of 2021, median home prices have risen more than 10 percent to approximately $420,000.
• Higher mortgage rates have lifted monthly payments on a median-priced home by more than 50 percent since 2021 to roughly $3,090
• During the same period, the average U.S. apartment rent has only risen about 13 percent to $1,854 per month
• The affordability gap between the average apartment rent and typical mortgage payment has widened to $1,236 per month, presenting a significant barrier for first-time homebuyers.
• Delayed transitions into homeownership have supported renter retention, with apartment renewal rates reaching 56 percent at the end of 2025.
• Elevated interest rates, tariff s, and shipping costs are further restraining multifamily construction, with starts down 72 percent from their 2022 peak and units under construction down 51 percent

* Mortgage payments based on median home price for a 30-year fi xed rate mortgage, 90% LTV, taxes,
insurance, and PMI; 27% mortgage payment coverage ratio
Sources: Marcus & Millichap Research Services; Bureau of Economic Analysis; Costar, Inc.; Federal
Reserve; Freddie Mac; Moody's Analytics; National Association of Realtors; RealPage, Inc; U.S.
Census Bureau