Back to View all
Chart of the week

Commercial real estate sentiment jumps in Q2

Are Fed rate cuts reinvigorating the U.S. housing market? This week’s chart highlights recently renewed confidence in the multifamily market.

September 27, 2019 | 2 minute read
  • The Fed’s accommodative shift amid an already-low interest rate environment appears to have begun reinvigorating the U.S. housing market.
  • This week produced strong new home sales data while new mortgage activity remains elevated for this time of year. Recent data in parts of the commercial real estate (CRE) market has shown similar strength. August housing starts and building permits came in well above expectations, and both numbers were driven by significant activity in the multifamily market.1
  • To this end, the National Association of Home Builders (NAHB) provided further evidence that activity within the multifamily market has recently jump-started.
  • The NAHB Multifamily Production Index (MPI), which is a broad measure of multifamily builder and developer confidence, jumped 40% in Q2 from a quarter earlier.2 In the same time frame, the Multifamily Vacancy Index declined 15%.2
  • It’s important to note among these statistics that the pace of price growth across the multifamily sector has slowed this year along with most other segments of the CRE market. However, today’s rate and employment environments should both provide a layer of support to this sector, as well as the broader CRE market, moving forward.

  • Bloomberg Finance, L.P., as of September 19, 2019.

  • National Association of Home Builders, http://bit.ly/2wmfpVO.

The chart of the week and any accompanying data is for informational purposes only and shall not be considered an investment recommendation or promotion of FS Investments or any FS Investments fund. The chart of the week is subject to change at any time based on market or other conditions, and FS Investments and FS Investment Solutions, LLC disclaim any responsibility to update such market commentary. The chart of the week should not be relied on as investment advice, and because investment decisions for the FS Investments funds are based on numerous factors, may not be relied on as an indication of the investment intent of any FS Investments fund. None of FS Investments, its funds, FS Investment Solutions, LLC or their respective affiliates can be held responsible for any direct or incidental loss incurred as a result of any reliance on the chart of the week or other opinions expressed therein. Any discussion of past performance should not be used as an indicator of future results.

This information is educational in nature and does not constitute a financial promotion, investment advice or an inducement or incitement to participate in any product, offering or investment. FS Investments is not adopting, making a recommendation for or endorsing any investment strategy or particular security. All views, opinions and positions expressed herein are that of the author and do not necessarily reflect the views, opinions or positions of FS Investments. All opinions are subject to change without notice, and you should always obtain current information and perform due diligence before participating in any investment. FS Investments does not provide legal or tax advice and the information herein should not be considered legal or tax advice. Tax laws and regulations are complex and subject to change, which can materially impact any investment result. FS Investments cannot guarantee that the information herein is accurate, complete, or timely. FS Investments makes no warranties with regard to such information or results obtained by its use, and disclaims any liability arising out of your use of, or any tax position taken in reliance on, such information.

Any projections, forecasts and estimates contained herein are based upon certain assumptions that the author considers reasonable. Projections are necessarily speculative in nature, and it can be expected that some or all of the assumptions underlying the projections will not materialize or will vary significantly from actual results. The inclusion of projections herein should not be regarded as a representation or guarantee regarding the reliability, accuracy or completeness of the information contained herein, and neither FS Investments nor the author are under any obligation to update or keep current such information.

All investing is subject to risk, including the possible loss of the money you invest.

Print this page Email this page

Related Insights

Chart of the week

CRE investors see an improved market, but prices to lag

Sentiment has improved across the CRE market, as this week’s chart shows. But investors feel better about broad market conditions than asset prices.

Chart of the week

Private CRE debt offers a hefty yield premium to cash

This week’s chart looks at private CRE debt’s notable yield premium to cash, even as cash yields are elevated.

Chart of the week

Rising home prices support multifamily market

Home prices are rising again, despite elevated mortgage rates. This week’s chart looks at declining home inventories and rising home prices.

Search our site