US Real Estate Sector NAICS 531

May 20, 2025 - Spring Home-Buying Season Disappoints

• Industry watchers, buyers, and sellers were hoping for a housing market turnaround this home-buying season, but so far it has been disappointing, according to The Wall Street Journal. Home prices have fallen in some parts of the country, but remain near record highs, which, along with stubbornly high mortgage rates, are keeping some would-be buyers locked out of the market. Some specific markets have plenty of homes for sale, but not much interest from buyers as prices remain high. Many in the real estate market were optimistic that the 2025 buying season would break the logjam after existing home sales in 2023 and 2024 were at the lowest levels since the mid-1990s. Some industry insiders note that housing demand softened further in April after the Trump administration’s tariff policies triggered stock market selloffs and made consumers wary of making big purchases.
• US apartment sales increased 7% year-over-year in the first quarter of 2025, reaching $30 billion, according to MSCI Real Assets and reporting by Multifamily Dive. The rise marked the fourth consecutive quarter of increased apartment sales. Single-property sales saw the most significant growth, rising 39% over Q1 2024 to $25.7 billion. While sales of individual apartment assets have returned to pre-pandemic levels, portfolio and entity-level sales remain below historical norms. Portfolio apartment deals increased 18% in the first quarter of 2025 to $4.4 billion, while there were no entity-level deals in Q1. MSCI noted that while US trade policy news cycles have had a whipsawing effect on public equity and bond markets, the multifamily market rarely reacts to shocks in a single quarter.

• The number of building permits issued for single-family, privately-owned housing units, a demand driver for interior design services, decreased 5.1% in April 2025 compared to March and fell 6.2% year-over-year. Single-family housing starts dropped by 1.6% month-over-month and were down 12% compared to April 2024. Single-family housing completions declined 5.9% in April from the previous month and decreased 12.3% year-over-year. Housing starts in April were pressured by tariff-related economic uncertainty, high mortgage rates, and rising costs for building materials, according to the National Association of Home Builders (NAHB).
• Office property insiders suggest it may take years for the office sector to recover as so-called zombie buildings cast a long shadow over business districts across the country, according to The Wall Street Journal. Investors, often private equity firms, that own large office buildings, bought them with money borrowed from issuing bonds called commercial mortgage-backed securities. Some building owners have written off their investments as vacancy rates have remained stubbornly high. Such buildings end up being controlled by bondholders in foreclosure. Bondholders are temporary landlords, often fighting amongst themselves to cash out. Such owners have little interest in investing in improvements to attract tenants, and the buildings remain largely empty. Industry watchers say it may take years to reposition zombie buildings as tenants prefer newer offices in trendier areas.