Key Shifts in Mortgage and Real Estate Markets

New-Home Sales Just Dropped to a Seven-Month Low New-home sales fell 13.7% in May - the steepest decline this year and the weakest pace since October. It’s another clear signal that demand is under stress, and that the housing market’s soft landing may be turning soft underfoot. For much of the past year, homebuilders have done what existing homeowners couldn’t: they kept inventory flowing. With owners locked into ultra-low mortgage rates and staying put, the new-home market became the only viable path to ownership for many buyers. Builders responded with aggressive incentives like mortgage rate buy-downs, free upgrades, closing cost coverage. And it worked . . . for a while because incentives kept the pipeline moving. But now, even with those perks, buyers are stepping back. The underlying affordability gap is simply too wide. Mortgage rates remain stuck around 7%. Insurance costs are rising. Household budgets are under pressure. The tools that once created urgency are losing their grip. When incentives stop working, it’s not just caution. It’s a signal that buyers are fundamentally rethinking what they can afford, or what feels worth the risk right now. That kind of behavioral shift doesn’t just affect homebuilders. It cascades through the entire consumer economy. Behind the scenes, supply is quietly building. Completed homes for sale rose to 119,000 in May which is the highest in nearly 16 years. Groundbreaking activity is slowing. Builders are pulling back. And yet, despite softer demand, the median sales price climbed 3% year-over-year to $426,600. That’s not inflation. That’s segmentation. Price gains aren’t market-wide they’re concentrated in the upper tiers, where buyers are less sensitive to rates and more resilient to volatility. Everyone else is sitting on the sidelines. For the Fed, this report won’t move the needle alone, but it adds to a mounting case that restrictive policy is weighing heavily on interest rate–sensitive sectors. Housing is often the first to turn. If it stays soft into the fall, it could reshape expectations about consumer strength heading into 2026. At Havas Edge, we track this data because when the psychology of the buyer shifts, so must the strategies of the marketer. #HousingMarketUpdate #ConsumerBehavior #MacroSignals

I spoke with Bloomberg yesterday about the state of the housing market. Here are a few key takeaways: Easing Rate Lock-In Effect: Currently, 81 percent of mortgaged homes have a rate below 6 percent, a decrease from the peak of approximately 93 percent in 2022. Despite this improvement, the rate lock-in effect continues to constrain the market's full potential. Regional Market Variations: While the national housing market is trending towards a buyer's market, significant regional differences persist. Markets in Southwest Florida and parts of Arizona, Texas, and Colorado have weakened, whereas pockets in the Northeast and Midwest, including my hometown of Rochester, NY, remain seller's markets. Signs of Improvement: Although overall sales activity remains subdued, there are tentative signs of modest spring recovery. Pending home sales and purchase mortgage applications have seen slight increases compared to last year. This slow thaw is driven by factors such as wage growth outpacing house price appreciation, improving affordability, and increasing inventory. Life Events Driving Demand: Life events continue to drive housing demand. However, affordability challenges and macroeconomic uncertainties are keeping many potential buyers on the sidelines. Nonetheless, the slight uptick in activity offers cautious optimism for the remainder of the year, especially if interest rates moderate (though we're not predicting significant mortgage rate declines this year). Check out the full interview below! https://lnkd.in/eUSiKkVJ

The Housing Market Is About to Drag the Economy Down—Here’s What Smart Capital Is Doing About It Moody’s just dropped the truth bomb: housing is no longer a tailwind—it’s dead weight. And most investors are still acting like it’s 2021. Let’s break it down: 1. Mortgage Rates Are Stalling Demand We’re 18 months into a high-rate environment and 30-year fixed mortgages are holding around 6.7%. That’s more than double what buyers were paying in 2021. And it’s not coming down anytime soon—Goldman has rates pegged at 6.75% through Q4 2025. The result? Buyer demand is down 35% from peak levels. Mortgage applications are hovering near 1995 levels. Homebuilders are offering 3-2-1 buydowns just to move inventory. 2. Inventory Is Locked and Supply Is Shrinking You can’t buy what no one’s selling. 92% of mortgage holders are locked in under 5%. New listings are down 18% YoY. Housing starts have fallen 19%—a 10-year low. That means even if you wanted to buy, the choices are shrinking—and what’s available is often overpriced and underperforming. 3. Housing Is Becoming an Economic Drag Mark Zandi (Moody’s) said the quiet part out loud: housing is no longer driving the economy—it’s dragging it down. Historically, housing contributes ~15–18% of GDP. In 2025? That number is falling fast. Price growth is expected to be +0.5% this year and +1.2% in 2026—barely pacing inflation. Consumer confidence tied to housing is dipping. CRE construction has stalled. The housing slowdown is bleeding into retail, lending, and labor markets. This isn’t a correction. This is a prolonged, grinding reset. What We’re Actually Doing at Thrivegate Capital: Underwriting exit cap rates 150–200bps wider than entry—no fantasies. Targeting sub-60% LTV with fixed-rate debt or interest rate caps baked in. Avoiding speculative metros and focusing on renter-heavy markets with below-replacement-cost housing. Bottom line: If you’re still underwriting deals like it’s 2021, you’re setting capital on fire. Housing may be dragging the economy, but operators who can create yield in this climate will dominate the next cycle. #privateequity #realestate #usmarketupdates