[User] Construction Activity Stalls as Vacancy Rates Rise New housing construction softened again in 2025, reflecting weakening demand and rising inventories. Single-family starts fell 7 percent as high homebuying costs stifled demand and unsold new homes accumulated. Builders responded by cutting prices, buying down interest rates, and pivoting toward smaller homes, townhomes, and smaller lots to reduce costs. Still, new home sales slipped 1 percent, reducing the need for development. In this environment, builders increasingly found customers in the build-to-rent single-family market, a segment that constituted 11 percent of completions in 2025, nearly three times its historical average. Slowing construction threatens recent progress toward bolstering the nation’s housing supply. The degree of relief, however, varies by region depending on local construction levels, and the market remains tight overall. The nationwide homeowner and renter vacancy rates are still below historic averages, at 1.1 percent and 7.3 percent, respectively, implying that at least several hundred thousand additional units are needed to overcome shortages. A Failure to Provide Low-Cost Housing The most serious and intractable housing shortage involves units affordable to households with low and moderate incomes. According to the National Low Income Housing Coalition (NLIHC), 11.0 million house holds with extremely low incomes competed for 3.8 million affordable and available rental units at last measure in 2024. For Rent For Sale For Rent Historical Average For Sale Historical Average Notes: Vacancy rates exclude units rented or sold but not yet occupied. Historical averages are from 1990 to 1999. Source: JCHS tabulations of US Census Bureau, Housing Vacancy Surveys. Meanwhile, rather than being replenished by units filtering down to lower rents, the existing stock of low-rent units is shrinking. The number of units renting for less than $1,000 per month in inflation-adjusted terms dropped by more than 30 percent between 2014 and 2024, reducing the low-rent stock by more than 7 million units. The supply of higher-rent units grew by 46 percent during the same period, espe cially those renting for more than $2,000 per month. And many more units are at risk, as rent restrictions on over half a million units financed with Low-Income Housing Tax Credits (LIHTC) are slated to expire in the coming decade. High Costs Impede Homeownership The high cost of homeownership is constraining home sales and suppressing homeownership rates, despite a slowdown in home price growth. Annual home price appreciation dropped to just 0.7 percent in February 2026, down from 4.0 percent last year and a far cry from the record-high 20.7 percent in 2022. The slow down was widespread. Indeed, 41 of the top 100 metros experienced outright price declines in early 2026. Still, since 2020, home prices have increased by 54 percent nationwide and more than 50 percent in 73 of the nation’s 100 largest markets. Prices in smaller markets in the South and the Northeast remain most elevated relative to 2020 levels, led by Knoxville (84 percent), Fayetteville (82 percent), and Syracuse (81 percent), but all top markets have seen prices rise by at least 18 percent. As a result, the median sales price in 2025 for an existing single-family home was nearly five times the median household income, dramatically exceeding the price-to-income ratio of 3.2 averaged throughout the 1990s. Home sales have stagnated, homeowner household growth is sluggish, and homeownership rates are falling. In 2025, existing home sales were unchanged from 2024 at 4.1 million, stuck at a 30-year low that is two-thirds of the 6.1 million sales in 2021. Increasing by just in 2025, the number of homeowner households experienced its slowest rate of growth in a decade. The US homeownership rate fell for the second year in a row to 65.2 percent last year. Homeowner Cost Burdens Rising Alongside Expenses For many homeowners, increases in non-mortgage expenses, including insurance premiums, energy bills, and property taxes, are straining household budgets. According to the ICE Mortgage Monitor report for March 2026, property taxes rose 31 percent nation wide between 2019 and 2025. During the same period, average monthly insurance premiums increased 72 percent to $201. In markets most susceptible to natural disasters, like Texas and Florida, premiums were even higher. Homeowner cost-burden rates have subsequently increased. According to the ACS, 20.7 million home owner households (24 percent) were cost burdened at last measure in 2024, spending more than 30 percent of income on housing. This is an increase of 4.0 million households since 2019 and includes an additional 2.5 million severely burdened homeowners, bringing the number that spend more than half their income on housing to 9.6 million households. More encouragingly, many homeowners have expe rienced substantial home equity gains in recent years. Aggregate homeowner equity totaled $34 trillion in the fourth quarter of 2025, up 88 percent and an astounding $16 trillion since 2019. According to Cotality, the average homeowner has in home equity. Given this potential upside, increasing access to homeownership for more moderate- income households is a public policy priority. Even in the difficult homebuying conditions of the past year, thou sands of moderate-income households purchased homes through housing counseling and homebuyer assistance programs that could be extended with additional resources and funding. Rents Tick Down, yet Affordability Challenges Persist After two years of stagnant growth, apartment rents declined nationally, down on an annual basis by 0.5 percent in the first quarter of 2026, according to RealPage. Rents fell in many, but not all markets. The strongest decreases were in Sunbelt markets that previously had rapid rent increases and substantial new apartment construction. Rents continued to rise fastest in supply-constrained places like San Francisco (up 9 percent) and Honolulu (7 percent) and in smaller markets in the Northeast and the Midwest. As new rental units continue to come online, weakening demand has also contributed significantly to declining apartment rents. After renter household growth peaked in the second quarter of 2025, the annual rate dropped 61 percent nationally through the first quarter of 2026. All regions saw a steep deceleration, with the slow down ranging from 54 percent in the Northeast to 63 percent in the South. Against this backdrop, renter cost burdens reached a new high. In million renter households (49 percent) were cost burdened, including 12.1 million (26 percent) with severe burdens. Nationwide, the number of cost-burdened renters is up by 2.3 million since 2019. Affordability challenges disproportionately affect Black, Hispanic, and multiracial renters, due in part to a history of discrimination in housing, employment, and education. Fully 83 percent of renters earning less than $30,000 are cost burdened, and 67 percent are severely burdened. Cost-burden rates for this group exceed 70 percent in every state, reaching over 90 percent in some. Residual incomes for lower- income renters have fallen sharply, leaving little money to cover other needs after paying for housing. Some renters, especially younger ones, are skipping meals or delaying medical care to pay rent. Absent concerted efforts by all levels of government, more households will face overlapping material hardships that heighten the risk of housing instability. Moderately Burdened Severely Burdened All Renter Households $75,000 and Over $45,000––44,999 Under $30,000 Household Income Notes: Household incomes are adjusted for inflation using the CPI-U for All Items. Moderately (severely) cost-burdened households spend more than 30% (more than 50%) of income on housing and utilities. Source: JCHS tabulations of US Census Bureau, American Community Survey 1-Year Estimates. The shortfall in assistance leaves the lowest-income households with severe cost burdens, putting them at even greater risk of housing insecurity. Homeless ness has reached record levels, with more than unhoused people counted on a single night in January 2024. This was a 33 percent increase since the start of the pandemic. While expanded shelter capacity for migrants in certain states temporarily inflated sheltered homelessness, the more enduring trend is rising unshel tered and chronic homelessness, especially in West Coast states with severe affordable housing shortages. Note: Costs are adjusted for inflation using the CPI-U for All Items. Source: JCHS tabulations of National Oceanic and Atmospheric Administration, Billion-Dollar Weather and Climate Disasters. Events over the past year have underscored the threat to the housing stock of more frequent weather- and climate-related disasters. The Federal Emergency Management Agency’s (FEMA’s) Individuals and Households Program and HUD’s Community Devel opment Block Grant Disaster Recovery (CDBG-DR) funds have provided substantial short- and long- term recovery assistance. But proposed changes to federal disaster management strategies would shift more burden to state and local governments. Already, FEMA tried to cancel the two largest hazard mitigation programs in 2025, a move that delayed grant disbursements as legal challenges proceeded. At the same time, the 2025 federal budget reconcili ation law prematurely ended Inflation Reduction Act tax credits that supported energy-efficiency retrofits to the aging housing stock, despite steep increases in electricity costs and widespread energy insecu rity. Federal programs like Weatherization Assistance and Low Income Home Energy Assistance (LIHEAP) still deliver critical efficiency upgrades and assis tance paying utility bills to millions of low-income households. Nevertheless, some states and cities are advancing their own electrification and retrofit initiatives to cut emissions and reduce household utility bills. The Outlook The US faces interlocking housing crises—affordability, homelessness, climate change, and discrimination— that demand coordinated action across federal, state, local, private, and nonprofit actors. The bipartisan 21st Century ROAD to Housing Act reflects rising recognition that some of these challenges are growing in magni tude and urgency. However, the federal government’s simultaneous pullback from social programs, disaster recovery, and housing enforcement creates funding gaps, uncertainty, and administrative disruption that strain lower levels of government and hinder long- term planning and progress. Nationwide, state and local governments across the political spectrum are reforming zoning and building codes and deploying a range of financing tools to encourage more devel opment, especially mixed-income and affordable housing projects. These initiatives offer replicable models and proofs of concept that can inform a more comprehensive national response to the country’s severe, widespread, and urgent housing challenges. However, they cannot replace the scale, scope, or resources of the federal government, whose commit ment is imperative to ensuring equitable access to safe, affordable housing for all. 02 HO U SI N G S U PPLY Construction slowed in 2025 amid a growing number of unsold units and rising vacancy rates. Yet a substantial shortage of low-cost housing remains, made worse by increasing unit losses and rising development costs. Growing numbers of state and local governments are reforming zoning codes and approval processes to promote development and lower costs, and private sector actors are innovating new approaches. But to reduce housing costs enough to adequately serve those with the lowest incomes, greater public assistance at the federal level is required. Inventory of Completed New Units For Sale New Home Sales Note: New home sales are a 12-month rolling average of seasonally adjusted estimates converted to a monthly rate. Source: JCHS tabulations of US Census Bureau, New Residential Sales. Even as homebuilders sought to increase affordability, new home sales slid 1 percent in 2025 to . With sluggish demand from individual buyers, home builders have increasingly relied on demand from the build-to-rent market. In completed single-family homes were built for rent, representing 11 percent of single-family completions. This was nearly three times the 4 percent (38,000 units) averaged annually in the 2000s and 2010s. Remodeling Activity Bolstered by Aging Housing Stock As construction of new units slowed, owner improve ments rose by just over 1 percent in 2025, supported by an aging housing stock in need of repairs and improvements. As of 2024, owner-occupied homes have a median age of 42 years, up from 33 years in 2010. The median age of rental units is even higher, at 43 years in 2024, up from 36 years in 2010. Typically, older homes necessitate more spending on maintenance and improvements than newer units, and repairing and preserving older units is both a growing priority and a growing share of construction spending. According to the 2023 American Housing Survey, owners living in homes built before 1940 spent an average of $6,700 per year on improvements and repairs, about 50 percent more than those occu pying homes built in 2010 or later. Consequently, as the median age of the housing stock has increased, so, too, has spending on improvements. Over the last 10 years, owner improvement spending grew by 153 percent, far outpacing growth in spending on new multifamily (84 percent) and single-family develop ment (90 percent), according to Census data. This outsized increase raised the share of total construc tion spending on owner improvements to 41 percent in 2025 from 34 percent in 2015. Last year, owner spending on improvements ($376 billion) rivaled that on single-family development ($419 billion). Progress Toward Reducing the Housing Shortage Varies by Market The pandemic-era construction surge produced a wave of supply additions, particularly of multifamily units, that is now helping to lift vacancy rates from historic lows. Nationwide, the homeowner vacancy rate was 1.1 percent in the first quarter of 2026, up from a 70-year low of 0.7 percent in the second quarter of 2023, according to the Housing Vacancy Survey (HVS). Meanwhile, the renter vacancy rate rose to 7.3 percent in the first quarter of 2026 from a 40-year low of 5.6 percent in the second quarter of 2022. Vacancy rates are up from pandemic-era lows in all regions, though the size of the increase varies by area, depending largely on supply growth. The largest rebounds for both homeowner and rental vacancy rates are in the South and the smallest are in the Midwest, mirroring regional production levels. On the one hand, the nationwide rise in vacancy rates signals progress in alleviating supply shortages. Indeed, abnormally low vacancy rates in recent years have been a key indicator of the housing shortage. Throughout the 1990s (the last relatively stable period), the for-sale and for-rent markets averaged vacancy rates of 1.6 percent and 7.7 percent, respectively. On the other hand, vacancy metrics are national in scope and housing shortages are local. A new unit in Atlanta does not help to alleviate a shortfall in Miami. As such, national measurements obscure the situa tion in any single market. RealPage finds that between 2021 and 2025, the apartment vacancy rate increased 5 percent in Austin and 0.5 percent in Chicago, and decreased 0.2 percent in San Francisco. During the same period, the number of active for-sale listings more than tripled in Austin while falling over :For Rent For Sale Notes: Excess vacant units is the difference between the current number of vacant units and the number of vacant units expected given historical averages from 1990 to 1999. Vacancy rates exclude units rented or sold but not yet occupied. Source: JCHS tabulations of US Census Bureau, Housing Vacancy Surveys. 20 percent in Chicago, according to Realtor.com. So, while the national vacancy rate reflects an easing of the housing shortage, the shortfall remains substan tial in certain markets. New Construction Is Not Providing Low-Cost Housing Although rising vacancy rates suggest some progress in reducing the housing shortage overall, a massive deficit remains of units affordable to low-income households. In million households with extremely low incomes, defined as up to 30 percent of area median income, competed for just 3.8 million rental units that were both affordable and available, according to the NLIHC. This translates to about 35 units per 100 extremely low-income households. JOINT CENTER FOR HOUSING STUDIES OF HARVARD UNIVERSITY THE STATE OF THE NATION’S HOUSING Under –––and Over Contract Rent Notes: Rents are adjusted for inflation using the CPI-U for All Items Less Shelter. Units that are occupied but do not receive payment are excluded. Contract rents exclude utility costs. Source: JCHS tabulations of US Census Bureau, American Community Survey 1-Year Estimates. The price of land has also risen sharply. Standardized lot values increased 52 percent between 2020 and 2024, according to the American Enterprise Institute’s Land Price Indicator. And 62 percent of builders list lot availability as a significant challenge they expect to face this year, according to the HMI from January 2026. Another potential obstacle to development is building codes. State and local governments are seeking to strike the right balance. For example, some are considering permitting multifamily buildings with a single stairwell, rather than the two more commonly mandated by fire codes. According to a 2025 report by the Pew Research Center, single stairway buildings provide more space for units, cost 6 to 13 percent less to construct than similar two-stairway buildings, and may be just as safe given today’s other mandatory fire safety equipment. To fully capitalize on these public sector reforms, the private sector must also innovate. Productivity in the homebuilding industry has long lagged the rest of the economy, increasing only 15 percent between 1993 and 2023. In comparison, the overall economy registered a 49 percent productivity increase, according to a 2025 report by Ivory Innovations. Advancements in the use of artificial intelligence by the building trades JOINT CENTER FOR HOUSING STUDIES OF HARVARD UNIVERSITY THE STATE OF THE NATION’S HOUSING The Outlook The construction slowdown is likely to continue as the underlying drivers of affordability and economic uncertainty linger. The conflict in Iran has pushed up interest rates and gas prices, placing upward pressure on inflation, which could increase costs for builders and would-be renters and homebuyers, and further dampen consumer sentiment. These increases will also further impede efforts to address the substan tial shortage of low-cost units, which persists even as overall vacancy rates for market-rate units rise. As is evident, the private market cannot single-handedly provide the necessary supply of low-cost housing. Governments at all levels must continue to innovate new ways to reduce development costs for market- rate units, grow the supply of lower-cost housing options, and increase subsidies for people the markets cannot serve. 03 DEM O G R A PH I C DR I V ER S Household growth is declining, especially among young adults, as many key drivers of housing demand deteriorate. The job market has weakened and consumer confidence is down sharply. Record-low house hold mobility is undercutting demand as elevated costs and economic uncertainty discourage moves by both homeowners and renters. Immigration plummeted in 2025, suppressing population growth. At the same time, the age distribution of the population is shifting older, slowing household growth while increasing demand for remodeling and repairs to address the needs of older households. Household Growth Is Still Slowing Last year, household growth slowed for the third consecutive year, falling by 16 percent according to the HVS. Even so, the recent pace is on par with that of the 2010s, bringing the total number of US households to 132.8 million in 2025. Note: Estimates for 2020 and 2021 represent averages from 2019–2021 due to data collection issues experienced during the pandemic. Source: JCHS tabulations of US Census Bureau, Housing Vacancy Surveys. Between 2020 and 2022, young adults took advantage of rising incomes and record-low interest rates to form households at a faster pace than at any point since the 2008 reces sion, according to the ACS. Indeed, 33.0 percent of adults aged 18–34 were householders in 2022, compared to 30.3 percent in 2019. This brought the JOINT CENTER FOR HOUSING STUDIES OF HARVARD UNIVERSITY THE STATE OF THE NATION’S HOUSING As interest rates, home prices, and rents have climbed in the aftermath of the pandemic, however, many young adults have been unable to afford to create new households. Consequently, beginning in 2024, household formation among this group has slowed, contributing to the decline in overall household growth. Because household growth and housing demand move in lockstep, this has weakened housing demand. Economic Headwinds Are Undermining Housing Demand Like the slowdown in household growth, the increas ingly stagnant job market is undercutting housing demand. Job growth remained tepid in early 2026. With fewer new jobs come fewer opportunities to increase earnings, making it harder to form households or transition to homeownership. The labor market has also lost much of its usual churn. The unemployment rate ticked up from a monthly average of 4.0 percent in 2024 to 4.3 percent in 2025, where it remains as of April 2026, according to the BLS. Additionally, the average monthly hiring rate was 3.3 percent in 2025, the lowest since 2012, and the average monthly layoff and discharge rate was 1.1 percent in 2025, below the historical average of 1.4 percent from 2001 to 2025. This “low-hire, low-fire” economy limits job mobility and wage gains, further suppressing household formation. Households are also facing the added strain of debt, especially from student loans. The pandemic-era pause on federal student loan payments ended in late 2023, and the renewed pressure of payments on household budgets has recently become evident. In the fourth quarter of 2024, the effects of the pause lingered, with less than 1 percent of student loan debt 90 or more days past due. But, by the fourth quarter of 2025, the share that was seriously delinquent had skyrocketed to 10 percent, according to the New York Federal Reserve, nearly back to the 11 percent rate that existed prior to the pause. The challenges of repay ment disproportionately affect young adults. At the end of 2025, student loans accounted for 27 percent of debt held by individuals aged 18–29, compared to 7 percent for those age 30 and over. Uncertainty about the economy is further undermining broader housing demand. Consumer confidence in the financial prospects of both households and the broader economy was near a record low in 2025, according to the University of Michigan’s Index of Consumer Sentiment. By December 2025, this index was 29 percent lower than a year earlier. Sentiment remains down year over year in early 2026 amid wors ening expectations of inflation with the onset of the conflict in Iran. In such an environment, people may opt to postpone moves or home purchases. Household Residential Mobility at a Record Low The share of households that have relocated in the past 12 months fell to 11.2 percent in 2024, according to the ACS, lower than any point in the 20-year history of the survey. About 14.8 million households moved in 2024, down from 15.0 million in 2023. This decline was driven entirely by a decrease in homeowner mobility, while renter mobility was essentially flat. The decline in overall homeowner mobility was at least partially a result of interest rate increases in recent years that gave a high share of homeowners with mortgages a strong disincentive to move. The average weekly rate on a 30-year fixed-rate mort gage was above 6.5 percent in both 2024 and 2025, according to the Primary Mortgage Market Survey. Yet as of late 2025, half of all outstanding mortgages have an interest rate below 4 percent, according to the National Mortgage Database. Therefore, many homeowners likely have elected not to move, rather than take out a new mortgage with a higher interest rate. In contrast, renter mobility held steady around 22.5 percent in 2023 and 2024, hovering above the pandemic-era low of 22.0 percent set in 2022, according to the ACS. Historically high levels of multi family housing came online in 2024, prompting moves for many renter households as housing options expanded. But a rising share of renters also renewed leases in 2024, according to RentCafe, offsetting some of these new moves. While overall mobility became depressed, millions of households continued to relocate, shaping regional population growth. Domestic migration accounted for about a third of population growth in the South in 2025, despite a 10 percent decline in net inflows from 2024, according to the Census Bureau’s Population Estimates Program (PEP). Although 2025 marked the first year of net inflows to the Midwest in at least two decades, domestic migration accounted for only 7 percent of its regional growth. Domestic migration has also been fueling population growth in rural communities with the persistence of elevated net in-migration, a trend that began during the pandemic. Non-metropolitan counties had a net inflow of people from 2021 to 2025 that reversed the previous net domestic outflow of people from 2016 to 2020, according to the PEP. In a third of these rural counties, net domestic inflows from 2021 to 2025 were high enough to avert population loss by offsetting negative natural change (more deaths than births). Drop in Immigration Slowing Population Growth Population growth is declining, driven by plummeting immigration. Net international migration fell by more than half, from 2.7 million in 2024 to 1.3 million in 2025, according to the PEP. The Census Bureau has projected that immigration will fall further to a mere people in 2026, which will substantially suppress population growth, especially in states that have relied on immigration. Between 2021 and 2025, immigration prevented aggregate population loss in 14 states, including Ohio, Pennsylvania, and Michigan, and accounted for more than half of all growth in another 12 states. These states are concentrated in the Northeast and the Midwest, and on the West Coast. Many other states in the Sunbelt and the Mountain West received high numbers of immigrants as well. Often, though, they also benefited from strong domestic in-migration and natural growth.

[Assistant] As with population growth, household growth will likely slow with declining immigration. However, the full effect will be delayed because new immigrants typically need time to gain the economic footing required to form households. In percent of immigrants aged 25–34 who arrived that year were householders, compared with 32 percent of their counterparts who arrived in 2023, and 41 percent who arrived in 2022. Therefore, the decline in immigration in 2025 will likely impact household growth over the next few years.


[User] In the housing market, this slowdown in foreign- born household growth will mostly impact the rental segment. Recent immigrants overwhelmingly form renter households. As of percent of foreign- born householders who had lived in the US for less than five years are renters, according to the ACS. Recent immigrants also accounted for two-thirds of overall renter household growth in 2024. As such, the recent curtailment of immigration is expected to meaningfully suppress rental demand. Aging Population Undercutting Future Housing Demand Older adults are becoming an increasingly large share of the population. This demographic shift has several implications, including slower population growth, an increased need for accessible housing, and more aging-related household dissolutions. From 2015 to 2025, the number of adults age 65 and over rose from 48 to 65 million, according to the PEP, increasing their share of the population by 4 percentage points to 19 percent. During the same period, the number of adults age 80 and over grew from 12 to 15 million. The Census Bureau projects that the number of adults age 65 and over will rise to 71 million by 2030, including 19 million age 80 and over. At that point, older adults will represent 21 percent of the population. As older adults become a larger share of the population, the number of older adult households will correspondingly increase. According to Center projections, the number of households headed by Under Age of Householder 25–29 30–34 35–39 40–44 45–49 50–54 55–59 60–64 65–69 70–74 75–79 80 and Over Source: JCHS 2024 Household Projections.

[Assistant] someone age 65 and over is expected to grow 26 percent between 2025 and 2045, to 49.7 million.


[User] The growing number of householders age 65 and over is fundamentally reshaping housing by increasing demand for accessible units. This could expand the market for housing with relevant features or for remodeling services to improve the accessibility of existing units. More than half of all professional remodelers were involved in home modifications to support aging in place in 2024, according to the NAHB. The aging of the population is also driving an emerging dynamic that is slowing household growth: increasing household losses due to death or consolidation. Between 2023 and 2024, the number of households headed by someone in the baby boom generation (aged 62–80 in 2026) dropped by households, according to the ACS, as householders died or moved out of their residences to live with other people or in a managed care facility. During the same period, the preceding generations (age 81 and over in 2026) lost households. These aging-related household dissolutions are poised to increase dramatically. The cohort of householders age 65 and over in 2025 is projected to shrink by 1.4 million annually between 2025 and 2035. In comparison, the cohort of householders who were age 65 and over in 2014 shrank by 1.2 million annually between 2014 and 2024.

[Assistant] Conversely, younger generations like Gen Z (aged 17–31 in 2026) are expected to form a large number of households in the coming years, though not enough to prevent household growth from slowing. Adults under age 35 in 2025 will form an additional 2.4 million households annually on net between 2025 and 2035, according to Center projections. This is down from the 2.7 million households formed from 2014 to 2024 by adults who were under age 35 in 2014.


[User] Nevertheless, the substantial size of Gen Z will help to sustain relatively high levels of new household formation. In 2025, this generation included 68.7 million people, according to the PEP, surpassing the 68.3 million millennials (aged 32–46 in 2026). The strong expected household growth from these young adults will bolster housing demand, especially in the rental sector.

[Assistant] The Outlook A number of headwinds threaten to undercut housing demand. In the near term, the slowdown in household growth is expected to persist. The weakened labor market and volatile economic conditions will likely continue to contribute to record-low consumer confi dence and, in turn, undermine household formation, mobility, and homebuying. Already, the acute decline in immigration is suppressing population growth and will constrain renter household growth in particular in coming years. Over the longer term, the increasing number of older adult households will dramatically reshape housing demand, eventually acting as a major depressant on household growth as dissolu tions become more widespread. Household formation among young adults will continue to support new housing demand but will not be sufficient to prevent a slowdown in household growth due to increased dissolutions of older households.


[User] Affordability has hovered near record lows, pricing out potential buyers, depressing homeownership rates, and limiting home sales. Meanwhile, homeowners are grappling with rising non-mortgage costs like property taxes, energy bills, and insurance premiums. Still, owning a home remains a good deal financially for most households able to do so. Growth Is Slowing, Though Home Prices Are Still High Home price growth has slowed substantially in recent years. After adjusting for inflation, prices have declined annually for nine consecutive months, falling 1.5 percent in February. Prices fell year over year in 41 of the nation’s 100 largest markets in February 2026, compared with 9 markets in 2025. Conversely, prices rose year over year in 59 markets. However, even in appreciating metros, the rate of year-over-year home price growth slowed in 55 markets and dropped below 3 percent in 39 of them. Regionally, home prices declined most often and most sharply in the South and the West. Year-over-year prices fell most significantly in Austin (down 4.5 percent), JOINT CENTER FOR HOUSING STUDIES OF HARVARD UNIVERSITY THE STATE OF THE NATION’S HOUSING Despite the recent slowing, home prices remain exceedingly high. Prices are up more than 54 percent— almost 25 percent after adjusting for inflation—since January 2020. They have also risen considerably in most large markets. Between early 2020 and 2026, prices jumped more than 50 percent in 72 of the nation’s 100 largest markets and by at least 18 percent in all of them. However, prices actually rose most dramatically during this period in midsize markets in the South and the Northeast, including in Knoxville (84 percent), Fayetteville (82 percent), and Syracuse (81 percent). For the fifth straight year, the median sales price for an existing single-family home hovered near five times the median household income, falling slightly from the all-time high of 5.0 in 2022 to 4.7 in 2025. By comparison, this ratio was 4.1 in 2019 and averaged 3.2 throughout the 1990s. With prices so high, home sales have slowed to a trickle. And there is no sign of a turnaround. Home sales aver aged just a 4.1-million-unit pace in the first quarter of 2026. Source: JCHS tabulations of National Association of Realtors (NAR), Existing Home Sales. In March million existing homes were for sale, up 5 percent from the previous year and 49 percent from record-low inventories in 2022. To cycle through the present supply would take 4.2 months, double the 2.0 months in 2022. The increase in inventories has been geographically widespread. According to Center tabulations of data from Realtor.com, active inven tories grew year over year in March 2026 in all but five states and by more than 20 percent in Washington (29 percent), Vermont (21 percent), and Wisconsin (20 percent). Many Potential Buyers Are Priced Out High home prices and elevated interest rates have priced many potential buyers out of homeownership. According to estimates from Moody’s, the median sales price for an existing single-family home was in the fourth quarter of 2025. Assuming a 3.5 percent downpayment and a 30-year fixed-rate mortgage at 6.23 percent, the monthly mortgage payment on that home is $2,420. This is a tick below the $2,480 mortgage payment from a year earlier and consistent with the record-high payments in early 2025. By comparison, payments on the median-priced home were $1,240 at the end of 2020, when home prices and interest rates were much lower. Note: Monthly payments are on the median-priced home and assume a 3.5% downpayment on a 30-year fixed-rate loan, 0.55% mortgage insurance, 0.35% property insurance, and 1.15% property tax rates. Source: JCHS tabulations of Freddie Mac, Primary Mortgage Market Surveys; NAR, Existing Home Sales; Moody’s Analytics estimates. Homeownership Rate (Right scale) Annual Change Note: Estimates for 2020 and 2021 are omitted due to data collection issues experienced during the pandemic. Source: JCHS tabulations of US Census Bureau, Housing Vacancy Surveys. According to the 2025 Profile of Home Buyers and Sellers from NAR, just 21 percent of homebuyers between mid-2024 and mid-2025 were first-time homebuyers, an all-time low. Meanwhile, the median age of first-time homebuyers rose to 40, an all-time high. Those able to purchase homes in this market are affluent. The median income for all homebuyers was last year, including $94,400 for first-time buyers. Higher-income homebuyers are making large downpayments. In 2025, the median down payment was 19 percent overall and 10 percent for first-time homebuyers. This is the highest rate for first-time buyers since 1989. Sizable shares of home buyers rely on money from friends and family to cover this cost. According to a 2025 Redfin survey of 2,000 recent homebuyers, 10 percent used an inheritance for a downpayment, while 13 percent used a cash gift from family. Homebuyers have also adapted to higher interest rates and the resulting higher monthly costs by fore going financing. According to NAR, a record-high 26 percent of homebuyers paid cash. This high share reflects not only the uptick in affluent buyers who can self-finance, but also the large number who purchase a home using the equity accumulated from selling their previous one. Homeowner Cost Burdens Continue to Rise Existing homeowners are also experiencing rising costs. This is an increase of Share with Cost Burdens (Right scale) Severely Cost Burdened Moderately Cost Burdened Notes: Moderately (severely) cost-burdened households spend more than 30% (more than 50%) of income on housing and utilities. Estimates for 2020 are omitted due to data collection issues experienced during the pandemic. Source: JCHS tabulations of US Census Bureau, American Community Survey 1-Year Estimates. Nearly a quarter (24 percent) of homeowners are cost burdened, up 2.7 percentage points since before the pandemic. Of those, 11 percent are severely burdened, a 2.0 percentage point increase over five years. Rising cost burdens have been driven largely by growing housing costs, especially non-mortgage expenses such as property taxes, energy bills, and insurance premiums. According to the ICE Mortgage Monitor report for March 2026, property taxes leapt 31 percent between 2019 and 2025. At the same time, average monthly insurance premiums skyrocketed 72 percent to $201. Insurance costs are even higher in markets susceptible to natural disasters, like Texas and Florida. Lower-income households have been especially susceptible to rising costs. The share of cost- burdened homeowners earning under $30,000 climbed 5.7 percentage points between 2019 and 2024, to a record-high 75 percent. This increase has been driven entirely by lower-income homeowners with severe cost burdens. Among this group, the share with severe burdens grew 7.2 percentage points to 57 percent. While homeowner cost burdens are concentrated among those with low incomes, burdens are climbing up the income scale, increasing among households with moderate and higher incomes. About 45 percent of homeowners earning $30,000 to $44,999 are cost burdened, up 2.7 percentage points from 2019 to 2024. Similarly, cost burdens among homeowners earning $45,000 to $74,999 rose by 2.8 percentage points to 31 percent during the same period. Just 10 percent of homeowners earning $75,000 or more were cost burdened, but even this is a 1.8 percentage point increase since 2019. As older adults reach retirement age, work hours and income tend to fall. Accordingly, households headed by someone age 65 and over have the highest cost- burden rates (28 percent). Younger adult households under age 35 also have relatively high burden rates (27 percent) because they are earlier in their careers, newer to homeownership, and more likely to have a mortgage. Indeed, homeowners with a mortgage (29 percent) are considerably more likely to be cost burdened than homeowners without a mortgage (16 percent). Meanwhile, homeowners aged 35–64 generally have higher earnings and lower burden rates (21 percent). Homeowners of color are burdened at especially high rates. Historically, many people of color have lacked access to equal opportunities in education and the workforce, suppressing income. In 2024, nearly a third of homeowner households headed by a Black person (32 percent) had cost burdens, as did 29 percent of Hispanic, 27 percent of Asian, and 25 percent of Native American households. Meanwhile, 22 percent of white homeowners were burdened. Market Reveals Benefits and Risks of Homeownership Despite the growing challenges, owning a home finan cially benefits most who have been able to do so. The flipside of rising home prices is substantial home equity gains. Aggregate homeowner equity totaled $34 trillion in the fourth quarter of 2025, up 88 percent and an astounding $16 trillion since 2019. According to Cotality, the average homeowner had in home equity at the end of 2025. But homeowners also face potential risks. While overall negative equity rates remain low, many home owners who purchased homes in recent years have experienced only modest price increases or even outright declines. According to the ICE Mortgage Monitor, about 2.1 percent of mortgage holders (1.1 million households) have balances that are higher than the home value. This is the highest share since 2018 and up from 1.3 percent at the start of last year. Rates are higher for Federal Housing Administration (FHA) and Veterans Affairs (VA) loans at 5.7 percent and 9.6 percent, respectively. Serious delinquencies have also risen. According to the ICE Mortgage Monitor, loans are 90 days past due or in foreclosure as of February 2026, the highest number since mid-2018 aside from a brief pandemic-induced spike. Serious delinquencies rose fastest for FHA and VA loans, which slightly surpassed pre-pandemic rates. The Outlook Affordability is likely to remain the primary challenge for both homebuyers and homeowners. With home prices dramatically eclipsing income, home sales and homeowner household growth will probably remain muted for some time and will further limit oppor tunities to expand homeownership, especially for younger adults and households of color. Since the start of the year, interest rates have risen in response to the conflict in Iran, reversing the decreases of late 2025. However, if interest rates resume their decline, home price growth holds steady, and incomes rise at a healthy clip, affordability could improve, though even then, only modestly. For current owners, costs are likely to increase even more and may further strain household budgets, especially for the growing number of older adults with lower incomes. 05 REN TA L H O U S I N G Rental markets are cooling. Demand has weakened amid growing economic uncertainty and constrained immigration. In many parts of the US, rents are flat or falling modestly as vacancy rates have ticked up, boosted by a wave of new construction. Meanwhile, rents continue to climb in markets with less multifamily development. Despite slower rent growth, affordability remains a primary concern across the country. The number of renter households with cost burdens has hit another record high. Though affordability challenges are concentrated among lower-income households and households of color, burdens are rising for many different groups of renters. Asking rents fell in most Southern and Western markets. Indeed, rents dropped in 65 percent of markets in the South and 59 percent of those in the West, leading to overall regional rent decreases of 2.1 percent and 0.4 percent, respectively. Meanwhile, rents continued to JOINT CENTER FOR HOUSING STUDIES OF HARVARD UNIVERSITY THE STATE OF THE NATION’S HOUSING The strongest rent decreases were in previously hot Sunbelt metros where rents rose most quickly during the pandemic. Recent declines were steepest in Florida markets, including Cape Coral, Naples, and North Port, where rents fell by at least 9 percent annu ally, and in supply-heavy markets like Austin (down 7 percent) and Denver (down 6 percent). Meanwhile, rents continued to rise fastest in supply-constrained coastal cities like San Francisco (up 9 percent) and Honolulu (up 7 percent), and in smaller markets like Champaign, IL (up 6 percent). Nevertheless, rents remain persistently high relative to pre-pandemic levels. By the first quarter of 2026, asking rents for professionally managed apartments had risen 29 percent since 2020, outpacing non-housing inflation, which grew 25 percent during this period. And these substantial increases were widespread. Apart ment rents were 41 percent higher in the Midwest, 38 percent higher in the Northeast, and up by 28 percent in the South and 23 percent in the West. Rental Vacancy Rates Are Ticking Up Vacancy rates are rising, which has helped to place downward pressure on rents. In the first quarter of 2026, the national rental vacancy rate hit 7.3 percent, according to the HVS. This is up substantially from the 5.6 percent registered in 2022, the lowest vacancy rate in over four decades. In the professionally managed apartment sector, vacancy rates have grown from record lows. The national apartment vacancy rate inched up to 5.1 percent in the first quarter of 2026 from 5.0 percent the year prior, according to RealPage. By comparison, vacancy rates were just 2.5 percent in early 2022. Across both professionally managed apartments and the broader rental stock, vacancy rates are rising in response to the higher levels of apartment deliv eries beginning in 2023 and, more recently, softening demand amid mounting economic headwinds. Apartment vacancy rates have increased in every region except the Midwest, where vacancies were stable. However, they are highest in the South (6.0 percent) and the West (4.9 percent), where rents have declined the most and new supply has been particularly concentrated. Meanwhile, vacancy rates remain lower in the Northeast (3.8 percent) and the Midwest (4.3 percent), sustaining upward pressure on rents in these regions. Vacancy rates have also climbed in an increasing number of markets. Of the 150 large markets tracked by RealPage, vacancy rates rose year over year in 84 in the first quarter of 2026, compared to just 16 a year earlier. Renter demand has also cooled substantially across the broader rental market. According to the HVS, though the number of renter households rose by a robust 1.1 million year over year in the first quarter of 2025, it plunged to by the end of the year. The slowdown continued into 2026, with the number of renter households increasing by just year over year in the first quarter. However, strong renter household growth in recent years has been largely driven by higher-income households. Between 2019 and 2024, the nation gained 2.0 million renter households. Fully 1.5 million of these households (76 percent) had an annual income of at least $75,000 in inflation-adjusted terms. longer-term trend. Between 2014 and 2024, the number of higher-income renters increased from 12.2 million in 2014 to 16.3 million in 2024, and from 28 percent to 35 percent of all renters. Still, in 2024, the median household income for renters was $53,700, roughly half that of homeowners ($99,800). Renters also possess less wealth than their homeowning counterparts, who can build home equity. Renter households have a median net wealth of $10,400, as compared to for homeowners, according to the 2022 Survey of Consumer Finances. and Over $45,000––44,999 Under $30,000 Household Income Note: Household incomes are adjusted for inflation using the CPI-U for All Items. Source: JCHS tabulations of US Census Bureau, American Community Survey 1-Year Estimates. The rapid rise in rents in the early 2020s has driven up the share of cost-burdened renters. Fully 49 percent of renters were burdened in 2024, up 3.1 percentage points since 2019. Moreover, 26 percent of renters were severely cost burdened, an increase of 2.3 percentage points since before the pandemic. These affordability challenges are geographically widespread. In 12 states, more than half of renters are cost burdened, led by Florida (59 percent), Nevada (57 percent), California (54 percent), and Connecticut JOINT CENTER FOR HOUSING STUDIES OF HARVARD UNIVERSITY THE STATE OF THE NATION’S HOUSING Severely Cost Burdened Moderately Cost Burdened Share with Cost Burdens (Right scale) Notes: Moderately (severely) cost-burdened households spend more than 30% (more than 50%) of income on housing and utilities. Estimates for 2020 are omitted due to data collection issues experienced during the pandemic. Source: JCHS tabulations of US Census Bureau, American Community Survey 1-Year Estimates. Rates are also high in many of the nation’s markets, with the majority of renter house holds cost burdened in 48 of the 100 largest metros. Most of these markets experienced notably steep rent growth without a proportionate rise in incomes, such as Miami, Las Vegas, and Orlando, where 60 percent or more of renters were burdened in 2024. Even in lower- rent large markets like Des Moines and Wichita, where burden rates were lowest, 39 percent and 41 percent of renters were cost burdened, respectively. More than half of Black (57 percent) and Hispanic (54 percent) renters were cost burdened in 2024, as were half of multiracial renters. These rates far exceed the share of Asian (44 percent) and white (45 percent) households living in unaffordable housing. Native American renters (44 percent) also have lower burden rates, reflecting their relatively low rents and greater likelihood of living outside metropolitan areas and in substandard housing. Unaffordability Is Worst for Lower- Income Renters While affordability challenges are widespread, they are concentrated among renters with lower incomes. In percent of renters earning under $30,000 were cost burdened, up 1.1 percentage points since 2019. Of these, more than two-thirds (67 percent) have severe burdens, a substantial increase of 4.8 percentage points since just before the pandemic. The share of lower-income renters with burdens has been persistently high for over two decades, with 78 percent of renters cost burdened as far back as 2001. Lower-income renters have difficulty finding housing they can afford in every state in the country. At least 70 percent of households earning under $30,000 are cost burdened in each of the 50 states. But cost burdens are highest in Western and Sunbelt states, where rents have risen most rapidly in recent years. In Nevada, for example, a stunning 92 percent of renters with lower incomes are cost burdened, the highest rate in the country. Likewise, Texas, Utah, California, and Florida have burden rates of 87 percent or more among these households. While cost burden rates are especially high for renters with lower incomes, affordability challenges have increasingly hit households up the income scale, with cost burdens rising fastest in recent years among those with moderate incomes. The share of burdened renters earning between $45,000 and $74,999 increased by 9.5 percentage points to 49 percent between 2019 and 2024. For those earning $30,000 to $44,999, the share grew by 3.8 percentage points to 72 percent. Mean while, just 14 percent of higher-income households were cost burdened, up 4.1 percentage points during the same period. With so little remaining each month, renters are forced to make difficult trade-offs, especially renters with the greatest affordability challenges. Severely cost-burdened renter households in the lowest expenditure quartile (a proxy for lower income) spent 50 percent less on food and 37 percent less on healthcare than unburdened households, according to the 2024 Consumer Expenditure Survey. A majority of severely burdened renters are households with children, or those headed by an older adult or an individual with a disability. For these groups, reduced spending carries particularly serious consequences, whether due to the critical role of nutrition in child hood development or the greater care needs of older adults and people living with disabilities. Rising Costs Are Straining Apartment Owners Apartment owners are grappling with higher operating costs amid softening rents and rising vacan cies. According to data from Yardi Matrix, operating expenses in market-rate properties increased 2.0 percent annually in the 12 months ending March 2026. While this rate of increase is down from 3.9 percent a year earlier and a peak of 8.8 percent in 2023, oper ating costs have risen enormously in recent years. Between 2019 and 2026, operating expenses jumped nearly 37 percent, from $6,950 per unit to $9,510. Rising costs have been driven in part by growing insurance premiums. According to Trepp, the cost of multifamily property insurance nearly doubled between 2019 and 2024. For operators of affordable properties, insurance costs and other expenses can be even higher. Simultaneously, softening rents have placed down ward pressure on operators’ bottom lines. According to Yardi Matrix, expenses rose faster than incomes for the third consecutive year, pushing down net operating income growth. Through early 2026, net operating income grew a modest 1.3 percent, down from 2.3 percent in 2025 and a fraction of the 9.5 percent peak in 2023. After declining annually for more than three years, apartment prices are essentially flat. According to MSCI, apartment prices declined for 38 consecutive months year over year through early 2026, the longest such streak on record. But prices have recently stabilized, rising a minuscule 0.03 percent in March 2026. Mean while, apartment capitalization rates—net operating income divided by apartment prices—have held at 4.4 over the past year, according to the National Council of Real Estate Investment Fiduciaries. The Outlook In the near term, economic uncertainty and a stalling labor market will place downward pressure on rental demand, even as the high costs of homeownership keep some more affluent households renting for longer. Slowing household growth and rising vacancies are likely to suppress rent growth or even force down rent levels in some markets. At the same time, rising apartment operating costs may place upward pres sure on rents. Given that cost burdens are persistently high, unaffordability will remain a major challenge for many renters, especially those with lower incomes. Rental Assistance Falls Short of Need The underfunding of rental assistance has left millions of households with severe housing challenges, and recent increases in some forms of assistance will not fully resolve the shortfall. At last count in million renter households had very low incomes, generally making them eligible for federal rental assistance. Yet just over one in four (5.4 million households) received help. Among the 13.8 million unassisted households, 8.5 million were severely cost burdened or lived in housing with severe structural inadequacies. This is an increase of more than 3 million households with worst case housing needs since 2003, despite a decline of 62,000 households from the 2021 peak. The legislation also lowered the threshold to automatically receive the 4 percent non-competitive credit from 50 percent of project financing via tax-exempt private activity bonds to 25 percent. Together, these provisions could produce as many as 1.2 million additional units by 2035, according to Novogradac. Vouchers are often used to make these units afford able to the lowest-income renters. However, funding for vouchers has not increased at the same rate as LIHTC allocations. Indeed, tenant-based assistance through the Housing Choice Voucher program has stagnated at about 2.3 million households since 2020. Other rental assistance programs through HUD have stalled. The public housing program, which serves about renter households, is facing budget reductions, even as about 10,000 public housing units are lost annually to disrepair. The Rental Assistance Demonstration program has facilitated the conver sion of more than public housing units to the project-based Section 8 platform since 2012, enabling housing authorities to leverage private capital to finance redevelopment. But $169 billion is required to preserve the chronically underfunded public housing stock, according to the Council of Large Public Housing Authorities.

[Assistant] At the same time, the already-dwindling USDA Section 515 stock is at risk. Section 515, which finances rental properties that are home to households, has not issued loans for new development since 2011. About 2,000 units are expected to exit the program annually through 2027 due to loan maturities and prepayments, according to the Housing Assistance Council. After that, the pace of losses will increase to 16,000 units annually, with nearly all units exiting by 2050 in the absence of a sizable preservation effort.


[User] Major changes to federal rules that govern subsidized housing could put assisted households at greater risk of housing instability. HUD has proposed a new rule that would make families with mixed immigration status ineligible for rental assistance. Under current policy, these households can receive assistance at a reduced rate based on the number of eligible family members. If finalized as currently written, the new rule would affect nearly 80,000 mixed-status families and impose more burdensome verification requirements on US citizens. A second proposed rule would allow public housing authorities to time-limit rental assistance or make work requirements a precondition. The change could affect as many as 3.7 million people, according to the Center on Budget and Policy Priorities (CBPP). In response to growing calls for renter supports, more state and local governments are exploring limits on rent increases, despite arguments that these policies will slow development, shrink the rental stock, and lead to disinvested properties. In 2025, Washington became the third state, following California and Oregon, to cap rent hikes. Each generally enables rents to rise 5 to 7 percentage points above inflation and substantially exempts new units to address concerns that these policies will dampen new construction. At the end of last year, the Los Angeles City Council tightened the existing rent stabilization ordinance, limiting rent increases to 4 percent on apartments built before 1978. Beyond rent stabilization, 29 states and 51 localities passed some form of tenant supports in 2024 and 2025, according to the NLIHC. Some limit fees or require greater transparency. Others guarantee right to counsel or establish just cause eviction standards. Simultaneously, the social safety net has shrunk, and the cost of other necessities has increased dramatically from inflation and tariffs. Recent federal policy challenges will further strain households’ ability to balance housing costs against other needs. Especially affected will be the 15.6 million low-income households that receive assistance from the Supplemental Nutrition Assistance Program (SNAP) and the 33.2 million that receive Medicaid. The 2025 federal budget reconciliation law reduced SNAP benefits by expanding work requirements and limiting program eligibility.

[Assistant] About 4 million people are expected to lose this vital food subsidy as a result, according to CBPP, and states will have to determine how to cover increased administrative expenses. The reconciliation law also included cuts that will reduce Medicaid and Affordable Care Act (ACA) marketplace coverage. This, combined with expiration of the enhanced ACA premium tax credits at the end of last year, could lead to the loss of health insurance for an estimated 15 million people over the next decade.


[User] U.S. home sales held firm at the tail-end of 2025 following a sluggish year, and are projected to further improve in the coming months. The house price-to-income ratio in the U.S. has remained near historic highs for the last three years. Even though house price inflation has decelerated, the U.S. is the only developed market (DM) outside of Japan that did not see house prices fall during the recent tightening cycle. More recently, the impact of higher mortgage rates has been exacerbated by a labor market hiring rate that has slowed to near recession lows. “This has restricted an important channel that typically spurs both supply and demand in the housing market, as people with jobs and low mortgage rates are now further disincentivized from moving,” Lupton added.

[Assistant] “Lower adjustable-rate mortgage rates and builder buydowns could be enough, along with a rising wealth effect, to shift demand higher while supply increases subside. Consequently, we expect home prices to stall at 0% nationally in 2026.”


[User] U.S. home sales held firm at the tail-end of 2025 following a sluggish year. Sales of existing homes in December grew by 5.1% (seasonally adjusted) to reach a nearly three-year high, while sales of new homes in September and October also exceeded expectations. Looking ahead, home sales are expected to further improve gradually, with mortgage purchase applications ticking up in early January. That said, housing affordability remains a challenge: the National Association of Realtors’ affordability index was still 35% below its pre-COVID level in November. “We will be closely watching upcoming pending home sales data, which lead existing home sales by one to two months, to gauge whether positive momentum will be sustained in the months ahead,” Feroli added.

[Assistant] There could also be other implications for the rental market if the policy successfully drives a meaningful increase in for-sale housing activity. “Our early thought is that the impact on landlords is small — perhaps less than a 1% annual headwind to net operating income (NOI) for a couple of years, in isolation,” observed Anthony Paolone, co-head of U.S. Real Estate Stock Research at J.P. Morgan.


[User] However, this policy might once again have limited impact on the housing market. According to J.P.

[Assistant] Morgan Global Research, the $200 billion purchase accounts for just ~1.4% of the approximately $14.5 trillion mortgage market, and will likely reduce 30-year mortgage yields by only 10–15 bp at most. “Secondly, most homebuilders already offer potential buyers mortgage rate buydowns of 100 bp to as much as 200 bp below the prevailing mortgage rate,” Rehaut said. “As a result, we do not believe a modest lowering of the market mortgage rate will have a material impact on demand.” This material (Material) is provided for your information only and does not constitute: (i) an offer to sell, a solicitation of an offer to buy, or a recommendation for any investment product or strategy, or (ii) any investment, legal or tax advice. The information contained herein is as of the date and time referenced in the Material and J.P. Morgan does not undertake any obligation to update such information. J.P. Morgan disclaims any responsibility or liability, whether in contract, tort (including, without limitation, negligence), equity or otherwise, for the quality, accuracy or completeness of the information contained in this Material, and for any reliance on, or uses to which, this Material, is put, and you are solely responsible for any use to which you put such information. Without limiting any of the foregoing, to the fullest extent permitted by applicable law, in no event shall J.P. Morgan have any liability for any special, punitive, indirect, or consequential damages (including lost profits or lost opportunity), in connection with the information contained in this Material, even if notified of


[User] Macroeconomic volatility and policy uncertainty may put the CRE industry recovery on pause, but not for good I n last year’s commercial real estate outlook, we anticipated that 2025 could mark a recov- ery for the global CRE industry—buoyed by an expected return of deal activity, more favorable lending terms, greater industry collaboration, and advances in artificial intel- ligence. As we write a year later, it hasn’t exactly played out that way, largely due to an unpredictable global macro environment, which may affect how soon, and to what degree, the industry could fully recover in the next 12 to 18 months.

[Assistant] Navigating a pause in the recovery Results from Deloitte’s 2026 commercial real estate outlook survey help us confirm what macroeco- nomic conditions are likely of most concern to global owners, investors, and the CRE industry overall, as well as how they think their businesses, strategies, and technologies might be impacted. The survey collected input from over 850 global chief executives and their direct reports at major real estate owner and investor organizations across 13 countries (see methodology). 3 2026 commercial real estate outlook We noticed a similar pattern around expectations for CRE funda- mentals. Many respondents still expect all conditions surveyed, like rental rates, leasing activity, vacancies, and cost of capital, to improve through compared with last year (68%). Despite macroeconomic uncertainties, CRE fundamentals don’t change overnight, and growth is still expected across most asset classes and most geographies. The index measures what degree of optimism or pessimism our survey respondents identiﬁed for revenue, expense, and CRE fundamental expectations at their organizations over the next 12 to 18 months on a scale from 0 (weakest sentiment) to 100 (highest sentiment). Source: Deloitte Commercial Real Estate Outlook Surveys 2022 through 2026.


[User] 5 2026 commercial real estate outlook Selective, flexible capital commitments could determine success in the property market comeback as early-mover advantages appear to wane Increasing global investment returns and volumes may indicate the pendulum has swung The commercial real estate property markets have seemingly turned a corner on recent performance downturns. Globally, investment volume declines reduced for six consecutive quarters, and in the first quarter of 2025, notched the first year-over-year increase since mid-2022. Through late June, the one-year total return for the S&P Global property index (14.1%), a measure of the global investable universe of publicly traded property companies, outpaced both the S&P 500 (11.7%) and the S&P World equities index (13.8%). And for private real estate, following two years of negative results, total returns have been positive for three consecutive quarters.6 5 Our survey results indicate that many leaders still see CRE as a potential safe investment, given its performance during similar periods of uncertainty in the past.

[Assistant] Increase signiﬁcantly 16% Increase slightly 58% Neither increase nor decrease 19% Decrease slightly 6% Decrease signiﬁcantly 1% What is the greatest reason why your company is looking to increase its level of investment in real estate assets for the coming 12 to 18 months? Hedge against potential inﬂation increases 34% Diversiﬁcation with other held ﬁnancial asset types 26% Returns are more stable than other ﬁnancial asset types 15% Potential tax beneﬁts 13% Greater returns than other ﬁnancial asset types 7% Portfolio balancing with other held ﬁnancial asset types 4% Notes: The responses for reasons to increase investment levels are from those who chose “increase slightly” or “increase signiﬁcantly” as their responses to the question on change in their investment levels. Percentages may not total to 100% due to rounding. Source: Deloite 2026 Commercial Real Estate Outlook Survey.


[User] The United States remains a top investment market for 2026, but investors are also looking elsewhere Through the end of June 2025, property sales activity in the Americas remained on the recovery trajectory that began at the end of last year—up 12% year over year.7 European markets were likely more heavily impacted by shifts in bond rates and trade policy, dropping by 15% annually. Sales declines in Asia Paciﬁc have been the largest year to date, dropping 27% compared to last year. The pipeline of potential deal closings in the region also shrank in the wake of increasing trade uncertainty.

[Assistant] 7 2026 commercial real estate outlook Note: Responses indicating their home market as the greatest opportunity have been excluded. Source: Deloitte 2025 and 2026 Commercial Real Estate Outlook Surveys. Australia Canada France Germany India Japan Mainland China Mexico Singapore Spain The Netherlands The Netherlands Spain United Kingdom United States United States 11% Canada 12% United Kingdom 10% India Germany Australia 9% Singapore 8% Japan France 7% Mexico Mainland China Despite inbound capital dipping in recent quarters, the United States remains the top source of outbound global investment capital, with activity in the ﬁrst quarter of 2025 returning numbers slightly ahead of the ﬁve-year average.10 This trend could strengthen in 2025 and 2026, as US asset managers have ample dry powder11—prop- erty sales are up year over year, and a new executive order could allow individual retirement accounts to invest in private markets, potentially unlocking US$12 trillion in capital.12 Globally, 75% of European and Asia-Paciﬁc respondents expect to increase real estate investment in the next 18 months, especially in India (86%), Canada (80%), and France (78%). 8 2026 commercial real estate outlook Global fundraising through early 2025 is also on track to surpass totals in the previous two years.13 Notably, private credit strategies have drawn signiﬁcant fundraising interest, accounting for a third of new capital raised.14 With relatively high interest rates and debt set to mature in the next few years, investors and asset managers may look to capitalize on emerging opportunities in the real estate debt markets. European respondents expressed the most optimism, with about 70% expecting improvements in leasing, capital markets, and lend- ing. In North America, 25% expect conditions like rent growth, vacancies, and cost of capital to remain ﬂat year over year—reﬂect- ing a more neutral outlook. Asia-Paciﬁc respondents appear more cautious this year: Sixty-three percent expect fundamentals to improve in 2026, but 19% and 20% foresee worsening cost of capital and capital availability, respectively. 9 2026 commercial real estate outlook Data centers remain a top-two property type for opportunity in four of our past five annual outlooks. Demand for data center locations exceeds supply, with fierce competition for space, and are often leased before completion.15 In nine major global markets, 100% of the new construction pipeline is already pre-committed.16 As power constraints may limit growth in some key areas, new markets like Central Washington,17 Berlin,18 and Singapore are emerging owing to advantages such as favor- able power costs (Central Washington), available land (Berlin), and established connectivity and infrastructure (Singapore). Meanwhile, the industrial sector may be nearing an inflection point in the real estate market cycle. The pace of leasing activity has slowed slightly— potentially impacted in part by short-term trade uncertainties as users reassess global supply chain routes.19 However, structural demand patterns for industrial facilities should support measured long- term growth and users seeking specific needs have established a robust built-to-suit development pipeline.20 The continued trend of onshoring and nearshoring of high-value manufacturing is likely to continue and increase demand for specialized manufacturing facilities and advanced logistics. 21 As organizations seek flexibility in their supply chains, short-term overspill space for rerouted shipments may shift traditional logistics facility demand patterns. 3. Consider alternatives or sub-asset types that could be best positioned for a lower-growth environment. Outside of the core four (office, retail, industrial, and multifamily), sectors like health care, grocery-anchored retail, and housing stay in demand even in downturns, likely attracting tough competition. A shift toward alternative or nontraditional property types appears already underway, particularly for properties in the telecommunications, health care, and data center subtypes. The value of alternative property types in commercial portfolios has grown by 10% annually since 2000. We expect this shift to accelerate over the next decade. commercial real estate outlook Upside may be on the horizon as renewed capital and the return of traditional lenders help breathe life into CRE debt markets, even as distress persists L ooking ahead, CRE lending seems to be a tale of two markets: existing loans are often stressed by reﬁnancing and defaults, while new loans often come with better terms and valuations. For leaders, success will likely depend on how well they mitigate loan risk within their existing portfolios while also taking advantage of improved new-loan conditions. Pressure on legacy loans The commercial real estate industry has likely not yet reached the summit of the loan-maturity moun- tain. Over 50% of respondents report that their companies are facing property loan maturity in the coming year. In the United States, there are over US$1.7 trillion in commercial mortgages—many already delayed through “extend-and-pretend” deals that simply push out due dates.25 Whether those proceedings end with the property reverting to the lender is uncertain, as lenders have been as interested as their borrowers to seek out loan resolu- tions.26 Only 21% of respondents expect to be able to pay off their upcoming maturity in full—led by leaders at housing (26%) and retail-focused orga- nizations (24%) (ﬁgure 6). commercial real estate outlook Shorter-term loans that were originated in 2022 comprise the largest portion of those set to mature over the next several years.27 And they were underwritten when the average commercial mortgage rate was as low as 3.9%, at nearly the lowest levels over the past two decades and 270 basis points under the 6.6% rate as of the first quarter of 2025.28 This surge in borrowing costs will likely put pressure on debt-service coverage for many borrowers, especially for loans with floating rates or upcoming resets.


[User] Global CRE refinancing risk is typically concentrated, not wide- spread. Germany and France have the greatest share among European countries at almost 20% each. Only 6% of UK loans are estimated to face refinancing gaps due to early property-value corrections.29 In Asia Pacific, markets did not experience as extreme a debt-fueled boom as other parts of the world, with the trajectory of interest-rate movement varying by country—Japan’s ultra-low rates have eased refinancing, while Australia’s elevated rates have put lenders under pressure.30 New lending opportunities Amid the legacy loans turmoil, a brighter story may be emerging for new CRE debt origination. With property values stabilizing and lenders demanding more robust deal structures, new loans are often originating on more manageable terms. Investors and lenders who have fresh capital, unburdened by yesterday’s troubled loans, could have an opportunity to strategically invest in CRE debt markets. Through the beginning of 2025, new loan volume increased by 13% from the end of 2024 and over 90% from the same time last year—a recovery in lending activity to levels not seen since early 2023.31 Commercial mortgage loans spreads also tightened by 183 basis points, enabling sponsors to potentially pursue early refinancings and debt for property purchases.32 Renewed availability of debt capital Access to debt capital has improved and could become even more robust going forward.33 Property-value resets have helped unlock liquidity, prompting some lenders and borrowers to reengage. All property sectors have seen an increase in active lenders.

[Assistant] Alternative debt sources appear to have been the driving force behind this resurgence. Lenders such as private credit funds or high-net-worth individuals often add to the global pool of available debt capital as they target diversification through high-yielding real estate assets. These sources accounted for 24% of US CRE lending volume last year, exceeding the 10-year average of 14%.34 The global private credit market reached US$238 billion in 2024, and is expected to reach US$400 billion in assets under management (AUM) by the end of the decade.35 As of August 2025, US$585 billion in CRE dry powder is poised for deployment.36 Lenders of all types are often more selective than in previous cycles, targeting stable returns, net operating income growth, and sound property fundamentals for capital preservation. This has heightened competitiveness for high-quality, income-generating assets, likely fostering a more dynamic environment for price discovery. Some traditional lenders are making a cautious return Lenders like banks and commercial mortgage-backed securities (CMBS) lenders are cautiously reentering an evolved CRE debt market following a few years of inactivity. CMBS lending recorded a 110% year-over-year jump driven by single-borrower deals through early 2025.37 Banks are often caught between caution and opportunity, offsetting potential losses from legacy loans with yield opportunities from new loan growth.38 This is reflected in the latest Federal Reserve Senior Loan Officer Opinion Survey, with underwriting standards becoming more relaxed compared to the last few years.39 As of June 2025, just 9% of banks are tightening their lending standards as compared with 30.3% in April 2024, and 67.4% in April 2023.40 Reduced tightening of lending standards has been a reliable precur- sor to capital value improvements in commercial real estate.41 Bank loan loss provisions coming under previous estimates and lower- than-expected net charge-offs both also point toward the improving health of banks’ CRE loan portfolios.42 Lending activity in Europe is also set to grow through the remainder of 2025 and into 2026, with nearly 80% of surveyed lenders plan- ning to boost their loan-origination volumes.43 Moreover, European insurance companies and investment banks are expecting stronger growth in originations, compared to traditional banks.44 About 25% of Asia-Pacific investors increasing their real estate allocation reported doing so to potentially lower debt costs. This measured resurgence appears to be driven by companies wanting to restructure balance sheets, replacing underperforming real estate loans with better-structured, lower-leverage opportunities.45 Actionable guidance to consider 1. Proactively manage new financing (and refinancing) opportu- nities with alternative debt sources. Compared to traditional debt sourcing, commercial real estate owners and investors from our survey plan to work more with private debt (up 4%), private equity (up 2%), and banks (up 2%) for property transaction financing, while potentially dealing less with CMBS lenders (down 10%). commercial real estate outlook 2. Reset investment strategies and underwriting assumptions. CRE leaders should recalibrate how they evaluate deals, properties, and their debt strategies; factor in higher financing and exit cap rates in underwriting; and determine if selling and repurposing projects may be wiser than holding. 3. Strengthen risk management and transparency. Leaders should stress-test property portfolios for adverse scenarios including interest-rate hikes or further dips in property values; identify which loans or assets would be at greatest risk and have contingency plans; focus on improv- ing the underlying fundamentals of potentially distressed properties; and share plans with lenders and investors on how they plan to recover asset value. Some investors are increasingly seeking private markets for their growth potential and low correla- tion with public markets. Structural trends such as low supply in many property types could bolster real estate fundamentals.47 The quest for yield and diversification is likely propelling these partnerships, which can help position them as attractive alter- natives to traditional M&A during this period of elevated interest rates.


[User] Leaning on operating partners Some investors are increasingly focusing on operational real estate sectors such as specialized housing and data centers as income level and growth are driving returns.49 This may be especially true for larger organizations. According to our 2026 outlook survey results, for almost 24% of larger organizations with AUM worth over US$15 billion, gaining access to property types that require more specialized knowledge was the primary motivator for considering joint ventures or partnership agreements, while smaller organi- zations with AUM of less than US$5 billion are also looking for partners to help access new markets (ﬁgure 8).

[Assistant] Some investors are seeking equity ownership in local operating partners with specialized knowledge to help enhance execution and achieve greater returns from equity positions. For instance, Ontario Teachers’ Pension Plan partnered with two specialist real estate investment management companies both as a shareholder in the operating companies and as a capital partner for geographic expansion into Europe. Meanwhile, GIC, the Singaporean sovereign wealth fund and the world’s largest investor by capital deployed in real estate, is actively seeking to add to its existing 400 global partners to help deploy capital into new markets and sectors.50 Note: We have categorized small organizations as those with assets under management less than US$5 billion, medium organizations between US$5 billion and US$15 billion, and large organizations as those with US$15 billion and over. Source: Deloitte 2026 Commercial Real Estate Outlook survey. Access to property type that requires more specialized knowledge Large Medium Small Operational expertise Developing or accessing new technologies Access to markets where we have less expertise Building scalability Risk- or cost-sharing As demand for digital infrastructure surges, some data center oper- ators are forging deeper cross-industry partnerships with energy suppliers and technology ﬁrms to help secure reliable power and manage rising costs. Several data center real estate investment trusts (REITs) are actively partnering with energy suppliers to implement hybrid microgrid solutions and are exploring unconventional energy sources such as geothermal, parabolic solar, and on-premise natural gas production.51 Some hyperscalers are bundling microgrid main- tenance costs into simpliﬁed energy supply agreements and are also looking at energy hedging costs and derivative contracts. For exam- ple, data center REIT Equinix has partnered with Bloom Energy for on-premises natural gas generation,52 and some data center develop- ers are even engaging with microgrid developers such as Enchanted Rock and RPower to help accelerate power deployment.53 Some real estate funds are diversifying their limited partner base Diverse sources of capital are often part of the new playbook for some fund managers, insurance ﬁrms, retirement accounts, and wealth management organizations, with private real estate serving as a key beneﬁciary. Thriving annuity markets,54 aging demograph- ics across regions, and broader sectoral trends like convergence between retirement solutions providers and wealth management55 have led some organizations in private markets to seek out strategic partnerships. The appetite for private assets appears to be growing globally. On average, 82% of wealth managers plan to increase allocations to private equity, venture capital, private credit, and private real estate over the next three years.56 The trend is especially pronounced in the Asia-Paciﬁc region, where 92% of managers anticipate boost- ing their exposure.57 Interest in real estate among high-net-worth individuals is holding at 19%—a level not seen since 2006, when allocations peaked at 24%.58 Some new-age investors are diver- sifying their portfolios compared to prior generations, turning to private market assets to help optimize returns and manage risk.59 The “Great Wealth Transfer” estimates suggest that about US$84 trillion will likely be transferred through 2045, and younger gener- ations such as Generation X and millennials are expected to inherit US$72 trillion of that total.commercial real estate outlook The relationship between alternative asset managers and the insur- ance sector could be shifting. In May 2025, a UK-based insurance organization acquired a 75% stake in real estate investor Proprium Capital Partners to expand its private market investments.61 Blackstone has four strategic relationships and 20 separately managed accounts with insurance companies.62 Asset managers are likely to continue to evaluate and commit capital across the financial services industry, and may seek investments not only in retirement-related balance sheets but may also invest or partner with non-retirement vehicles, such as life and non–life insurers, which could help broaden and diversify the investor base. Some REITs are actively pursuing partnerships with private capital providers In a market often defined by rising competition and evolving inves- tor demands, some publicly traded REITs appear to be increas- ingly turning to partnerships with private capital providers, such as pension funds, sovereign wealth funds, and other institutional organizations, to help scale up, diversify income, and navigate a real estate market in flux. These collaborations often take the form of joint ventures and co-investment vehicles, with REITs serving as general partners. For example, Ventas Investment Management (or VIM) is Ventas’ third-party institutional capital management platform which includes, among other activities, the open-ended Ventas Life Science & Healthcare Real Estate Fund (the “Ventas Fund”) and their ongoing life science development partnership with GIC.63 Investments are focused on core and core-plus assets in life science, outpatient medical, and senior housing real estate assets across North America.


[User] 2.

[Assistant] They should also carefully evaluate where it makes sense to ally with strategic partners to help expand market share, capabilities, access to new markets or property types; weigh their options (M&A, joint ventures, and other partnership agreements); and review interest-rate expectations and central bank stance. commercial real estate outlook The path to turning AI promise into success likely runs through reliable data and application readiness Early days with measured progress According to the 2026 CRE outlook survey results, 19% of respondents believe their organizations are still in the early stages of their AI journey. Interestingly, 27% are experiencing challenges with AI implementation, including technical issues, lack of expertise, or resistance to change (ﬁgure 9). commercial real estate outlook An AI revolution extends far beyond chatbots Smaller, more efficient AI models, with increased sector-speciﬁc specializations, seem to be gaining traction across the industry. Most voice and chat assistants are not novelties; they’re often becoming common tools for engaging prospects and qualifying leads. Survey respondents appeared enthusiastic about different emerging AI tech- nologies, such as multimodal capabilities, multi-agent systems, small language models, AI-powered digital twins, large action models, and agentic AI. No one option for AI technology development was selected by less than 40% of survey respondents. This wide-rang- ing interest suggests that many real estate leaders likely see AI as a transformative force, and could be poised to help reshape everything from property operations to client interactions and decision-making. But do organizations have the right data—not just to train AI models, but to feed inputs for valuable outputs? Volume alone doesn’t guarantee utility for AI. The challenge is often ﬁnding usable, signiﬁcant data without extensive extract, transform, load efforts. Generating synthetic data was highlighted as an area of most interest almost 50% of the time, in our survey. Real estate data often includes sensitive information, including bank account and social security numbers, tenant names, and mortgage loan payment statuses, which cannot be fed into the models for training and may require synthetic data creation. However, generating synthetic data is often tough, needing data science expertise and rigorous quality control to ensure artiﬁcial data is both realistic and useful. Targeted deployments and early wins Some CRE organizations are shifting away from broad, scattershot strategies in favor of more targeted AI deployments in areas with the greatest potential for impact. Survey responses indicate that tenant relationship management, lease drafting, and portfolio management are top priorities for the next 12 to 18 months (ﬁgure 10). However, AI effectiveness in real estate operations varies. Some companies that are seeing limited effects and challenges with implementation highlighted property operations and management and marketing as being particularly problematic. Notes: The classiﬁcation of these focus areas is based on the analysis of data received in responses to the question on overall experience with AI integration in ﬁgure 9. For business functions where organizations are seeing positive results, respondents answered “incremental operation- al improvements” or “transformative impact.” For those seeing challenges, respondents answered “challenges with implementation” or “limited impact.” Source: Deloitte 2026 Commercial Real Estate Outlook Survey. commercial real estate outlook can improve over time with human intervention. Fine-tuning these models could help add extra layers or optimize prompts to guide model responses. Many real estate ﬁrms are likely to use a portfolio of smaller, pretrained models for operational tasks rather than training large models in-house. Rather than focusing on one large monolithic large language model (LLM) that alone acts as the data store, computa- tion layer, and interface to a system, organizations across sectors are likely to explore use cases or build AI agent systems that break the problem apart or orchestrate smaller AI models.65 About 22% of survey respondents globally are leveraging industry-speciﬁc software platforms like Integrated Workplace Management Systems or Computer Aided Facilities Management, and another 20% are using publicly available LLMs (ﬁgure 11). Public LLMs can be ﬁne-tuned to create smaller, more efficient models tailored to speciﬁc real estate tasks, enabling faster infer- ence.66 Fine-tuning takes effort, but human input helps. Alternatively, organizations can develop small language models from scratch by training them on targeted, domain-speciﬁc data sets, which can help ensure the models are optimized for unique operational needs. Open source LLMs customized to the unique needs of the real estate sector may also be popular, especially with public REITs. Small language models, which are built with fewer parameters, could offer a powerful advantage. Instead of relying on massive, general-purpose AI models, real estate organizations can train smaller models using highly curated, industry-speciﬁc data—such as property listings, transaction records, and local zoning regula- tions—to help address targeted business challenges directly on their platform, delivering faster, more relevant results without heavy computing needs.67 Actionable guidance to consider 1. Have a risk management plan for all new tools in conjunction with your Sarbanes-Oxley (SOX) and internal audit teams. commercial real estate outlook audit oversight from the outset, companies can more effectively identify and address potential compliance gaps, safeguard data integrity, and optimize their control environment, which can help make modernization efforts both more secure and sustainable. The opportunities are real T he next chapter for commercial real estate could be best suited for prepared realists. Some of the head- line risks, like macro volatility, policy whiplash, and higher-for-longer rates are real, but so are the openings our 2026 survey and analysis unearthed for the next 12 to 18 months: repriced, better-structured loans; a cautiously reawakening lender pool alongside deep private credit; and selective strength in digital infra- structure, logistics, and office. METHODOLOGY The Deloitte Center for Financial Services conducted a survey of more than 850 C-level executives (chief executive officers, chief financial officers, and chief operating officers) and their direct reports at commercial real estate owners and investment companies with assets under management of at least US$250 million. The survey was conducted in June and July of 2025. Respondents were asked to share their opinions on their organizations’ growth prospects and workforce, operations, and technology plans for the coming 12 to 18 months. We also asked about their investment priorities and anticipated changes for commercial real estate fundamentals. commercial real estate outlook Endnotes 1. Nick Timiraos, “Fed Lowers Rates by Quarter-Point, Signals More Cuts are Likely,” WSJ, September . 2. Jonathan Traub and Anna Taylor, “A closer look: Inside the new tax law,” Deloitte, July 8, 2025. 3. Nicol Dynes, “MSCI: Recovery in European CRE market stalled in Q1 2025,” Real Asset Insight, May 2, 2025. 4. Harry Tan and Leo Chung, “Japan senior living–Capitalizing on structural trends,” Nuveen, Aug. . 5. MSCI RCA Global Volumes standardized download, accessed June . 6. Nuveen, “Q3 2025 Global trends and tactics: Real estate opportunities and risks in the current environment,” accessed Sept. . 7. MSCI RCA Global Volumes standardized download. 8. Ibid. 9. Ibid. 10. Ibid. 11. CRE Daily, “Billions in dry powder poised to hit CRE market in late 2025,” July . 12. Miriam Gottfried, Dylan Tokar, and Matt Wirz, “Trump executive order to help open up 401(k)s to private markets,” The Wall Street Journal, July . 13. Colliers, “Global capital flows: June 2025,” June 2025. 14. Ibid. 15. Cushman & Wakefield, “Global data center market comparison,” May 7, 2025. 16. Ibid. 17. Ibid. 18. CBRE, “Global data center trends 2025,” June . 19. Cushman & Wakefield, “Waypoint: Global industrial dynamics 2025,” June 2025. 20. Ibid. 21. JLL, “Global real estate perspective, August 2025,” accessed Sept. . 22. Cushman & Wakefield, “Midpoint 2025 | U.S. economic & CRE outlook,” accessed Sept. . 23. Nathan Florio, Mark Wojteczko, and Tim Coy, “Next generation leaders may accelerate real estate investment in alternative properties,” Deloitte Insights, April . 24. Ibid. 25. Ciara Long, “Colliers: Loan extensions hit new high of $384B,” Bisnow, March . 26. Ibid. 27. Real Capital Analytics, “The slate of maturing US property loans and extensions,” April . 28. Real Capital Analytics, Debt metrics standardized download, data as of May . 29. Natixis Investment Managers, “AEW research shows European real estate debt funding gap reduces to €86 billion as refinancing challenges ease,” Nov. 9, 2024. 30. Ibid. 31. CBRE, “Commercial real estate lending activity increases in Q1 2025 despite market volatility; Banks top non-agency deals,” May . 33. Savills, “Impacts: Credit where credit’s due in the real estate debt market,” June . 34. Real Capital Analytics; US leading value for non-agency CRE loans. Alternate lenders include private and investor-driven. 35. Henri Vuong, “Private real estate credit: Navigating opportunities in a shifting landscape,” PREA Quarterly, 2024. 36. Lauro Ferroni, “Dry powder for investment,” JLL, accessed Sept. . 37. Orest Mandzy, “CMBS issuance jumps 110% in 1Q 2025, driven again by single-borrower deals,” Trepp, May 7, 2025. 38. Erik Sherman, “Banks tiptoe back into CRE lending, but the game has changed,” Globest, June 3, 2025. 39. Board of Governors of the Federal Reserve System, “Federal Reserve senior loan opinion survey on bank lending practices,” accessed Sept. . 40. Mike Sobolik, “What will happen to commercial real estate values in 2025?” Invesco, June . 41. Ibid. 42. Jarred Schenke, “Banks’ CRE comeback fueled by maneuvering bad loans off their books,” Bisnow, May . 43. Hilde Rusnes, “European lending activity expected to rise, according to new CBRE survey,” CBRE, June . 44. Ibid. 45. Sherman, “Banks tiptoe back into CRE lending, but the game has changed.” 46. Wellington Management, “Wellington, Vanguard, and Blackstone to collaborate on investment solutions combining public and private assets,” press release, April . 47. Ibid. 48. Navigate Affordable Housing Partners, “Executive order includes housing affordability reform,” Feb. 3, 2025. 49. PGIM Real Estate, “2025 Global outlook: Generating resilient income growth amid uncertainty,” May 2025. 50. Evelyn Lee, “GIC Real Estate’s Goh: ‘We will always need new partners’,” PERE, Feb. . 51. Melissa Farney, “The power play: How data centers and utilities are reinventing energy strategies,” Data Center Frontier, March . 52. Bloom Energy, “Bloom Energy expands data center power agreement with Equinix surpassing 100MW,” press release, Feb. . 53. PR Newswire, “Enchanted Rock Bridge-to-Grid solution addresses power demand growth from AI and electrification,” May . 54. Susan Rupe, “Life insurance and annuity sales: What’s ahead for 2025?” Annuity News, Jan. . 55. Fred Barstein, “Is the convergence of wealth and retirement at work insurmountable?” Wealth Management, June . 56. Dhruv Sharma, Joseph Wickremasinghe, Raina Oberoi, and Alex Kokolis, “Emerging trends in wealth management,” MSCI Wealth, accessed Sept. . 57. Ibid. 58. Capgemini, “Sail the Great Wealth Transfer,” accessed Sept. . 59. PR Newswire, “BofA Private Bank study of wealthy Americans finds generational divide in investing, giving and preserving wealth,” June . 60. James Royal, “An $84 trillion wealth shift is underway, and you may soon inherit a piece of it. Here’s what to expect” Bankrate, June . David Ricketts, “L&G acquires real estate group Proprium to fuel private markets push,” Financial News, May . 62. Blackstone Inc., Q1 2025 earnings call, April . commercial real estate . Ventas, “Ventas 2024 annual report,” accessed Sept. . 64. Jim Rowan, Beena Ammanath, Costi Perricos, Brenna Sniderman, and David Jarvis, “Now decides next: Generating a new future—Deloitte’s State of Generative AI in the Enterprise quarter four report,” Deloitte, January 2025. 65. Katherine Noyes, “Small language models: Bringing generative AI to the edge,” The Wall Street Journal, Nov. . commercial real estate outlook Acknowledgments The authors wish to acknowledge Matt Allison, Parul Bhargava, and Gaurashi Sawant for their extensive contributions to the develop- ment of this report. About the Deloitte Center for Financial Services The Deloitte Center for Financial Services, which supports the organization’s US Financial Services practice, provides insight and research to assist senior-level decision-makers within banks, capital markets firms, investment managers, insurance carriers, and real estate orga- nizations. The center is staffed by a group of professionals with a wide array of in-depth industry experiences as well as cutting-edge research and analytical skills. Through our research, roundtables, and other forms of engagement, we seek to be a trusted source for relevant, timely, and reliable insights.