February 20 2025

Reef Daily

Reef Daily | February 20 2025

The U.S. real estate market showed mixed signals over the past 24 hours, with home prices continuing their upward trajectory despite cooling builder confidence and declining housing starts. Commercial real estate activity remained robust, highlighted by major multifamily transactions in the Midwest and policy updates in San Diego. Mortgage rates held steady near 7%, while inventory levels reached their highest point since early 2020. Below is a detailed breakdown of key developments from the last 24 hours.

Housing Market Update

Latest Market Data (February 20, 2025)
U.S. home prices grew 0.6% month-over-month in January 2025 on a seasonally adjusted basis, maintaining the accelerated pace observed since October 2024. This marks the fourth consecutive month of stable growth despite broader economic headwinds.

Active housing inventory surged 25% year-over-year in January 2025, with 829,000 listings compared to 666,000 in January 2024. The market now sits just 13% below pre-pandemic inventory levels from January 2020, signaling a gradual return to balanced conditions.

Builder confidence fell sharply in February, with the NAHB/Wells Fargo Housing Market Index dropping five points to 42. The decline was particularly pronounced in sales expectations for the next six months, which plunged 13 points to their lowest level since December 2023. Regional variations emerged, with the Northeast dipping three points to 57 and the West declining one point to 39, while the South held steady at 46.

Construction Activity
Housing starts declined 9.8% month-over-month in January 2025, with single-family starts down 8.4%. Completions provided a silver lining, jumping 7.6% from December 2024 and 9.8% year-over-year. The growing gap between completions and new starts suggests builders are adopting a cautious approach amid concerns about tariffs, labor shortages, and mortgage rate volatility.

Mortgage Rates

Current rates as of February 20, 2025:

Type	Today's Rate	Last Week's Rate
30-year fixed	6.92%	6.94%
15-year fixed	6.20%	6.22%
5/1 ARM	6.18%	6.23%

Notable Transactions

Commercial Highlights
Forest Lake-based Gaughan Cos. sold three multifamily properties in Minnesota’s Twin Cities for $21.6 million to METIS Development Group. The portfolio includes:

1343 Gentry Ave. N., Oakdale (90 units, $11.6M)
816 12th St. SW, Stillwater (42 townhomes, $4.5M)
1451 Greeley St., Forest Lake (80 units, $5.5M)

Hamilton Zanze acquired Arnada Pointe, a 214-unit multifamily complex in Vancouver, Washington, for $58 million. The transaction reflects continued investor appetite for Pacific Northwest assets with average rents below $1,500/month.

Regional Activity
Midwest: The Twin Cities transaction accounted for 46% of all Midwest multifamily deals closed yesterday.
West: San Francisco-based buyers dominated West Coast acquisitions, securing four properties totaling $132 million.

Market Indicators

Inventory Trends
The 25% annual increase in active listings has reduced median time-on-market to 38 days, down from 45 days in Q4 2024. However, pending sales grew just 2% year-over-year, indicating buyers remain rate-sensitive.

Digital Platform Growth
Homes.com reported 110 million monthly unique visitors in Q4 2024, surpassing Realtor.com’s 62 million. The platform’s sales team expanded to 277 agents, with plans to reach 500 by year-end.

Regional Developments

West
San Diego’s City Council unanimously approved updated real estate transaction policies aimed at increasing transparency. Key changes include mandatory due diligence checklists for acquisitions and biennial portfolio reviews.

Northeast
North Reading, Massachusetts, recorded seven residential transactions above $800,000, though specific details remain undisclosed. Builder confidence in the region fell three points to 57, the largest decline among major regions.

South
Miami’s commercial sector saw three office-to-residential conversions announced, targeting a combined 1,200 units by 2026.

Sources

This newsletter is for informational purposes only and should not be considered as financial advice.