US Real Estate Sector NAICS 531

Apr 14, 2025 - Housing Markets Diverge on Geography

• The US housing market is increasingly defined by location, according to recent reporting by The Wall Street Journal. In some markets in the Northeast, demand is strong, and the available housing supply is tight. Land availability and zoning restrictions challenge building new supply in the Northeast. Parts of the Sunbelt have seen a building boom, but buyer interest is weakening. To attract buyers, some builders are offering incentives. According to a March survey by real estate consultancy John Burns, 78% of real estate agents surveyed in Southern Florida said existing homes on the market outnumber buyers. The same survey showed that 81% of real estate agents in the Northeast said buyers outnumber sellers. Some markets that grew the fastest over the past few years are seeing the most significant slowdowns. Broader weakness in the US housing market could be a drag on the overall economy.
• In an April report, National Association of Home Builders analysis of US Census Bureau data showed that nearly half of owner-occupied homes were built before 1980. In 2023, the median age of owner-occupied homes reached 41 years, up from 31 years in 2005. Median home age has increased since the Great Recession when new housing production dropped dramatically. Since then, home building activity has not kept pace with demand. As they age, US homes require more maintenance and repairs, driving remodeling spending. The lock-in effect of low mortgage rates during the pandemic is also prompting homeowners to renovate rather than move and face a higher interest rate.

• As distress in the commercial real estate market persists, more lenders may require property owners to take on force-placed insurance, according to Bisnow. Lenders can require force-placed insurance if a borrower’s coverage lapses, is insufficient to cover potential losses, or fails to provide proof of insurance. Force-placed typically covers the loan balance and offers protection against fire, wind, and underinsured equipment, and its cost is baked into the loan’s monthly payments. The use of force-placed insurance tends to tick upward during widespread downturns. According to commercial real estate data firm Cred iQ, at the end of 2024, more than 10% of all US commercial properties backed by commercial mortgage-backed securities (CMBS) were distressed.
• The Trump administration’s trade war threatens the recovery of the US office property market, according to The Wall Street Journal. While office leasing activity in the first quarter of 2025 was the strongest since 2019, some businesses are putting plans for new space on hold amid economic uncertainty and recession fears brought on by shifting trade policies. Companies will likely trim their office occupancy to reduce costs if a slowing economy leads to weaker hiring or layoffs. Tariffs could also trigger inflation and higher interest rates, chilling new office development activity. The gradual recovery of the office market is important for cities that have struggled since the pandemic. Offices are the core of cities’ business districts, which generate taxes, jobs, and growth and contribute to local economies by supporting small businesses, including nearby restaurants, bars, and retail.