CRE This Week - What's impacting the United States market?
May 25, 2026 - US commercial real estate news, macroeconomic indicators and market analysis.
Week of May 25, 2026
Welcome to the latest edition of CRE This Week, curated by Altus Group’s US research team.
Our team has handpicked pertinent and noteworthy market indicators, articles, original research, and significant industry dates that are critical to the US commercial real estate sector. We understand that your time is valuable, so we're excited to deliver research that helps you stay informed and saves you some time each Monday morning.
For more key economic indicators that matter to commercial real estate, see Top Indicators by Major Asset Type.
Economic print
Macro economic factors impacting CRE
The National Association of Realtors released the Pending Home Sales Index for April on May 19. Pending home sales rose 1.4% month over month and were up 3.2% year over year, with gains in the Northeast, Midwest, and West partially offset by a 0.7% monthly decline in the South. Among the 50 largest metros, Boston (+10.3%), Miami (+9.4%), and Oklahoma City (+8.6%) led annual gains.
The modest improvement points to stabilizing but not accelerating housing demand. NAR Chief Economist Lawrence Yun noted that mortgage rates, which have ticked up from earlier-year levels, remain the primary constraint on activity. Because pending sales lead closings by one to two months, the April data suggest existing-home sales volumes will hold roughly steady into June. For multifamily, continued affordability friction keeps renter tenure extended and supports occupancy in markets where for-sale supply remains tight. A meaningful acceleration in transaction activity is unlikely until mortgage rates retreat, which in turn depends on the Fed's rate path and longer-term Treasury yields.
The Census Bureau released April 2026 residential construction data on May 21. Total building permits came in at a seasonally adjusted annual rate of 1.442 million, up 5.8% from a revised March rate of 1.363 million but essentially flat year over year. Single-family authorizations fell 2.6% to 872,000, while multifamily permits reached 514,000, up 21.8% from March. Housing starts totaled 1.465 million SAAR, down 2.8% from March but up 4.6% year over year. Single-family starts fell 9.0% to 930,000, giving back much of March's gain, while multifamily starts rose 14.3% to 529,000. Completions came in at 1.449 million, up 4.8% from March but 2.0% below a year ago.
The 9.0% single-family starts drop is the headline. Mortgage rates holding in the mid-6% range continue to sideline buyers, and the spring selling season has run below expectations. On the multifamily side, starts and permits both jumped, and builders are deliberately shifting toward larger multifamily projects where margins are easier to protect. That said, the multifamily starts figure warrants some skepticism. The Census survey samples existing permitholders and the monthly multifamily data are notoriously volatile, and the 14.3% gain runs counter to what other data providers are showing on actual ground breakings. The more durable signal here is on the single-family side: persistent affordability constraints and cautious buyers mean the ownership market is unlikely to pull renters away at any meaningful pace, which limits downside risk for landlords even in markets still working through elevated supply.
US Flash Purchasing Managers Index
S&P Global released its flash PMI data for May 2026 on May 21. The Composite Output Index held steady at 51.7, unchanged from April, masking a widening split between sectors. The Manufacturing PMI rose to 55.3, a 48-month high, up from 54.5 in April, while the Services Business Activity Index slipped to 50.9, a 2-month low, from 51.0. Manufacturing output hit its fastest pace since April 2022, partly driven by precautionary inventory building. Services growth was its weakest in nearly three quarters. Input cost inflation surged to its highest since November 2022, driven by war-related supply disruptions and rising energy prices, and selling price inflation reached its highest since August 2022. Overall employment fell for the second time in three months, with service sector job losses near their worst pace since May 2020, while manufacturing payrolls grew.
The divergence between sectors carries uneven implications for CRE. Manufacturing strength supports near-term demand for industrial and logistics space, but much of the output gain reflects precautionary stockpiling rather than durable end-demand, so the signal for sustained warehouse leasing is limited. Service sector weakness is more consequential: slowing new business inflows, falling export activity, and job losses in services point to softening occupier demand in office, hospitality, and consumer-facing retail. The surge in input and output price inflation complicates the Fed's path, reinforcing a higher-for-longer rate posture that keeps borrowing costs elevated and caps cap rate compression. S&P Global estimates Q2 GDP growth will struggle to top 1% annualized, which, if realized, would further weigh on transaction volume and leasing momentum across most property types heading into the second half of the year.
The University of Michigan released its final Consumer Sentiment Index for May 2026 on May 22. The headline index fell to 44.8, down 10.0% from April's 49.8 and 14.2% below May 2025, putting sentiment just below the prior historical trough of June 2022. Year-ahead inflation expectations reached 4.8%, up from 4.7% in April and well above the 3.4% reading in February before the Iran conflict began. Long-run expectations climbed to 3.9%, above the 2.8% to 3.2% range seen throughout 2024. Fifty-seven percent of consumers cited high prices as a drag on personal finances, with lower-income households posting the sharpest declines.
A supplementary chart in this month's release showed that long-run expectations for personal finances, business conditions, and inflation are now deteriorating in tandem with short-run expectations, after holding relatively stable through April. Sentiment at these levels points to continued caution across discretionary spending categories, with downstream implications for retail and hospitality demand. If markets begin pricing in structurally higher inflation, longer-term rates could stay elevated or move higher, adding additional pressure to CRE borrowing costs and deal underwriting. Release commentary suggests that the K-shaped divide remains intact as well. Stress is concentrated among lower-income consumers, pointing to continued pressure on value-oriented retail and Class B and C multifamily, while higher-end experiential assets may retain relative insulation. Gasoline price increases tied to Strait of Hormuz supply disruptions add further operating cost risk for logistics tenants and consumer-facing businesses.
News
News to know
News to know
Small colleges are dying. Developers see opportunity | Bisnow, May 18, 2026
Nearly 300 colleges closed between 2008 and 2023, and Huron Consulting Group projects more than 400 additional private, nonprofit four-year schools will shutter over the next decade. Outcomes split by location: well-sited campuses are attracting university buyers and residential conversions, including a Salem State and AvalonBay project approved for 340 apartments, while rural and deferred-maintenance-heavy properties remain largely vacant. Enrollment declines in the Northeast and Midwest, down 5% and 3.1% respectively since 2014, are the primary driver, with the South and West trending in the opposite direction.
Retail real estate leaders brace for inflation risks | CRE Daily, May 19, 2026
ICSC Las Vegas opened May 18 with roughly 25,000 attendees and 800 exhibitors across 610,000 net SF. Executives at the industry's flagship event warned that accelerating inflation, $5/gallon gas, the Fed pausing rate cuts, and tariff uncertainty could slow deal velocity and development pipelines. Headline metrics remain strong with occupancy at or near records and limited new construction. JLL data shows institutional bid volume on retail up 102% over two years, and REIT bid volume up 117%. Tariff uncertainty dominated conversations. Build-out costs and timelines are rising. ICSC and McKinsey released a joint report projecting $1T in U.S. retail revenue from agentic AI commerce by 2030.
Nonconforming mortgages hit highest share since housing crisis | Wall Street Journal, May 19, 2026
Nonconforming loans accounted for nearly 6% of all home loan originations in 2025, the highest share since the pre-crisis peak of 22% in 2007, according to Inside Mortgage Finance. Lenders including Rocket Mortgage and LoanDepot are expanding into these products to generate volume in a stalled housing market, with LoanDepot reporting a 68% year-over-year production increase. The loans use alternative income documentation, allow higher debt loads, and carry no government guarantee, leaving lenders exposed to direct portfolio risk or volatile private secondary markets. Fitch noted delinquency rates on nonconforming loans originated in 2023 or later are rising faster than on conventional mortgages. Roughly two-thirds of nonconforming borrowers are financing rental properties, consistent with investors representing about 30% of home purchases in 2025, a record high per Cotality.
Between 22 million and 36 million square feet of bank branches have closed nationwide over the past decade, with drugstore closures adding another 10 million to 15 million square feet. Combined with obsolete office, cold storage, and freight space, total purpose-built commercial vacancy is estimated at roughly 580 million square feet across 13 building types. Adaptive reuse is gaining interest, but lenders remain reluctant to finance such projects given conversion complexity and cost. Sun Belt markets including Phoenix, Dallas-Fort Worth, Atlanta, and Charlotte face the heaviest concentration of stranded vacancy after overexpanding earlier this century. Zoning and entitlement timelines of one to two years add further friction, keeping many properties caught between viable reuse and demolition.
Housing affordability bill advances in house, heads back to senate | Bloomberg, May 20, 2026
The House passed sweeping housing legislation 396-13, sending the bill back to the Senate for further changes. The package aims to increase housing supply, expand homeownership, and reduce regulatory costs. A provision that would have required investors to sell newly built rental homes within seven years was stripped before passage; a broader ban on large institutional investors purchasing single-family homes remains intact. Senate Banking Committee Chairman Tim Scott and ranking member Elizabeth Warren signaled additional amendments are likely before the bill reaches the president's desk. The White House estimates the U.S. is short roughly 10 million single-family homes, and the legislation is partly driven by midterm election pressure as inflation and the Iran war weigh on consumer sentiment. The 30-year fixed mortgage rate stands at 6.36%, and the PCE index rose 3.5% year over year in March.
Los Angeles's Measure ULA levies 4% on property sales above $5.3 million and 5.5% at or above $10.6 million, with proceeds earmarked for affordable housing and rental assistance. Over three years, the tax has collected $1.19 billion, well below initial projections of $600 million to $1.1 billion annually. Multifamily-zoned parcel sales above the threshold have fallen nearly two-thirds since passage, per RAND Housing Center data, and the city issued permits for just 7,363 multifamily units in 2025, down 46% from 2022. A Harvard Business School study estimated the tax's drag on property-tax revenue will offset roughly 80% of collections. A City Council committee is reviewing potential modifications, including exemptions for newly built multifamily properties, while a Howard Jarvis-backed repeal measure has qualified for the November ballot.
Growing community and legislative opposition to AI-driven data center development is creating regulatory friction across the U.S., with more than 300 bills introduced in over 30 states and nearly 70 local moratoriums enacted in 2026. Primary concerns include electricity rate increases for residential ratepayers, water usage, tax incentive costs, and environmental impacts. Denver passed a one-year construction halt on May 18; Maine's legislature approved an 18-month ban before the governor vetoed it; Ohio voters may face a ballot measure in November. Even the two largest markets are tightening rules: Virginia enacted 15 bills requiring large users of 25 MW or more to fund their own capacity upgrades, while Texas's Senate Bill 6 requires facilities of 75 MW or more within ERCOT to bear full grid interconnection costs. Both states are also reviewing billions in annual tax exemptions for the sector.
INSIGHTS Spotlight
Catch the latest research and insights from Altus
Podcast | A split market: Commercial real estate lending trends from Q1 2026
Lender quotes up 24% quarter-over-quarter, multifamily delinquencies at a new high, and hotels seeing the biggest spread compression of any sector. What is the Q1 2026 CRE debt data actually telling us?
Andrew Pabon, Altus Group's Director of Debt Advisory, joins the podcast to work through the results of the Q1 2026 US Debt Capital Markets Survey and what they mean for borrowers, lenders, and anyone navigating the current financing environment.
The conversation covers benchmark divergence between SOFR and treasuries, the maturity wall and its current impact on client conversations, the growing role of debt funds as banks rebalance their CRE exposure, and what private credit stress may mean moving forward.
Insight | Under the hood of niche valuations: The income side of the story
New data from Altus Group’s US Research and Valuation Advisory teams examines the underwriting assumptions behind niche property valuations. Contract rents, operating expenses, and NOI growth have all changed over the past five quarters, narrowing the cushion beneath niche's premium pricing stance. With niche assets still commanding the tightest cap rates in the market, this analysis provides a closer look.
Important dates
Upcoming data releases and events
Data releases (Times in EST)
Tuesday, May 27
9:00 AM: S&P Case-Shiller Home Price Index, 20 cities (Mar)
10:00 AM: Consumer Confidence (May)
Thursday, May 29
8:30 AM: Initial Jobless Claims (May 23)
8:30 AM: Durable Goods Orders (Apr)
10:00 AM: New Home Sales (Apr)
Friday, May 30
8:30 AM: GDP, Second Revision (Q1)
8:30 AM: Personal Income & Spending (Apr)
8:30 AM: PCE Price Index (Apr)
8:30 AM: Advanced U.S. Trade Balance in Goods (Apr)
8:30 AM: Advanced Retail Inventories (Apr)
8:30 AM: Advanced Wholesale Inventories (Apr)
9:45 AM: Chicago Business Barometer/PMI (May)
Upcoming Industry Events
May 28 – May 29: AREUEA National Conference (Washington, DC)
June 1 – June 4: NAREIT REITweek 2026 (New York, NY)
June 1 – June 4: NAREE 2026 (Miami, FL)
June 3 – June 4: Realcomm IBcon 2026 (San Diego, CA)
June 8 – June 10: CREFC Annual Conference (New York, NY)
June 27 – June 30: BOMA International Conference & Expo (Long Beach, CA)
About our research team
Omar Eltorai
Senior Director of Research
Altus Group
Omar Eltorai is a Research Director at Altus Group. With more than a decade of experience in the industry in investment management and financing roles,
Omar's focus is on macro, capital and market trends affecting the US CRE market. Beyond regularly authoring articles and reports, his commentary and analysis has been featured in various media publications, including: Wall Street Journal, Globe Street, and Yahoo! Finance.
Cole Perry
Associate Director of Research
Altus Group
Cole Perry is a Associate Director of Research with Altus Group's Research team. In this role, Cole delivers key insights into macroeconomics, capital markets, and the broader commercial real estate sector.
Cole boasts a rich background in Commercial Real Estate analytics with previous roles at CompStak and Brixmor Property Group. He holds dual M.S. degrees from Columbia University in Urban Planning and Real Estate Development.
Disclaimer: The opinions expressed in this newsletter are solely those of the authors and are not endorsed by Altus Group Limited, its affiliates and its related entities (collectively “Altus Group”). This publication has been prepared for general guidance on matters of interest only and does not constitute professional advice or services of Altus Group. You should not act upon the information contained in this publication without obtaining specific professional advice. No representation or warranty (express or implied) is given as to the accuracy, completeness or reliability of the information contained in this publication, or the suitability of the information for a particular purpose. To the extent permitted by law, Altus Group does not accept or assume any liability, responsibility or duty of care for any consequences of you or anyone else acting, or refraining to act, in reliance on the information contained in this publication or for any decision based on it. The distribution of this publication to you does not create, extend or revive a client relationship between Altus Group and you or any other person or entity. This publication, or any part thereof, may not be reproduced or distributed in any form for any purpose without the express written consent of Altus Group.
Resources
Latest insights
