Hello Brick Brief readers, 

Happy Monday. In recent news, Nareit sees stronger REIT performance in 2026, existing home sales rose in November despite a sluggish housing market, and multifamily construction is stabilizing.

🏢 REIT cash flow holds up into year end

Nareit reported strong operating performance for REITs in 2025, with FFO up 6.2%, NOI up 4.7%, and dividends up 6.3%. REITs now trade at crisis like discounts versus the S&P 500 and private real estate, which Nareit believes sets up relative outperformance in 2026 as public and private valuations converge.

🏡 Affordability lifts existing home demand

Improving affordability is bringing buyers back as existing home sales rose 0.5% MoM in November to a 4.13M pace, the highest since February, driven by lower mortgage rates and payments falling to 32.6% of income. Tight supply is keeping the market constrained as new listings fell 30% MoM, although Zillow expects sales to rise 4.3% in 2026 if rates drift toward 6%.

🏘️ Multifamily shifts from pullback to stabilization

Multifamily construction is stabilizing as NMHC reports starts holding roughly flat while easing material and labor costs offset weak rent growth after a two year pullback. That leveling sets up a steadier 2026 as industry leaders expect flat rents and near equilibrium vacancies while Sun Belt oversupply clears.

Jobs anxiety could soon replace inflation fears – With price pressures cooling, attention is shifting toward the labor market as the real driver of affordability and economic risk (WSJ)

NY Fed’s Williams says November CPI was distorted lower and sees no urgency to cut again – Data collection issues likely shaved about 0.1% off the 2.7% reading; he argues policy is already well positioned after recent easing (CNBC, Reuters)

Fed’s Hammack signals rates on hold into spring – Cleveland Fed President Beth Hammack says inflation remains too high and takes November’s cooler reading with a grain of salt after opposing the past 75 bps of cuts (WSJ)

Apollo cuts risk and stockpiles cash ahead of potential market turmoil – Marc Rowan says the firm is cutting leverage, trimming CLO exposure, boosting Treasury liquidity at Athene, and running private credit more conservatively to be ready when markets crack (FT)

REIT operating growth remains strong in 2025 with FFO up 6.2% – Nareit says NOI rose 4.7% and dividends climbed 6.3% even as higher rates and trade friction held valuations back (Nareit)

REIT valuations at crisis-like discounts set up 2026 upside – Gap versus the S&P 500 and private real estate is among the widest since the GFC and COVID, positioning listed REITs for relative outperformance as multiples converge (Nareit)

Nareit’s 2026 Outlook expects stronger relative performance for listed REITs next year after a prolonged stretch of public market underperformance. Operating performance remained strong in 2025: REIT FFO rose 6.2%, NOI increased 4.7%, and dividends climbed 6.3% even as higher rates and trade friction weighed on sentiment. Despite that operating strength, REITs are trading at crisis-like discounts versus both the S&P 500 and private real estate, with gaps rivaling the GFC and early COVID. Nareit argues that as multiples converge, listed REITs could see relative outperformance in 2026.

That said, Nareit has clear incentives to lean bullish, while REITs have lagged for real reasons: elevated leverage, looming refinancing risk at higher rates, and persistent negative sentiment from the CRE valuation reset.

Still, the size of the public-private valuation gap is hard to ignore, and private capital has been aggressively targeting smaller, discounted REITs.

Recent REIT Deal Activity Includes:

House panel advances housing bill to cut zoning red tape – The Housing for the 21st Century Act would streamline infill approvals, ease NEPA reviews and lower construction costs as lawmakers push supply-side reforms into 2026 (Bisnow)

Mortgage rates hit a one-year low but owners still won’t sell – Nearly 30M households or 54% of mortgage holders are locked into 4% or lower loans, keeping listings tight despite improved affordability (WSJ)

Existing-home sales rise 0.5% MoM in November – Sales hit a 4.13M annual pace, the highest since February, as lower mortgage rates drove a third straight monthly gain in a still-sluggish market (WSJ)

New listings fell 30% MoM in November as affordability hit a 3-year high – Price cuts normalized to 21% of listings while mortgage payments dropped to 32.6% of income (Zillow)

U.S. home values were flat at 0.2% YoY in November as the market rebalanced – Inventory improved, affordability edged lower with payments down $105 YoY; Zillow expects sales to rise 4.3% in 2026 if rates drift toward 6% (Zillow)

Housing inventory growth slows to 13.54% YoY into year end – Down from over 30% earlier in 2025 as new listings normalized and improved mortgage spreads and sales momentum absorbed supply (HousingWire)

50% of affordable housing developers see deal pipelines pressured in 2026 – TD Bank survey shows rising construction costs, tariffs, and policy uncertainty weighing on projects even as 62% still expect sector growth (HousingWire)

Multifamily construction may be stabilizing after two-year pullback – NMHC’s December survey shows starts holding roughly flat versus three months ago as lower material and labor costs offset still-weak rent growth (ConnectCRE)

Multifamily outlook points to stabilization in 2026 – Industry leaders expect rents to flatten, vacancies to hold near equilibrium, and construction to slow further as oversupplied Sun Belt markets work through inventory and investors pivot to value-add and workforce housing (ConnectCRE)

70% of real estate leaders plan to add space in 2026 but favor flexibility – Visual Lease and CoStar survey shows firms may delay moves and upgrades as economic uncertainty persists (BusinessWire)

Investors return to U.S. malls as deal activity rebounds into year-end – Altus projects more than 50 single-asset mall sales in 2025, marking one of the strongest years in two decades as occupancy tightens at top-tier centers (Bisnow)

Clarks opens first U.S. 1,255 SF Cloudsteppers store in Corpus Christi, TX - The flip-flop brand debuts at La Palmera mall and plans to reach 12 U.S. locations by the end of 2026 (CoStar)

Starbucks leads NYC chain-store closures as retail footprints shrink – The city lost 112 chain locations YoY or 1.3%, marking the sixth decline in eight years as big brands scale back amid shifting demand (CommercialObserver)

AI boom pushes data center dealmaking to record $61B in 2025 – More than 100 transactions through November already topped last year’s high as hyperscaler demand and private equity capital flood the sector (Reuters)

Google Cloud lands security deal approaching $10B with Palo Alto Networks – The expanded multi-year partnership marks Google Cloud’s largest security contract as AI drives demand for cloud-based cyber defenses (Reuters)

U.S. hotel RevPAR fell 1.1% in the week ending Dec. 13 – Demand declined for a fifth straight week as hurricane-hit markets and Las Vegas drove most of the drop, partially offset by strength in New York City and Baltimore (CoStar)

Office REIT Paramount Group shareholders approve $1.6B sale but reject $34M exit package – Investors greenlit the merger with Rithm Capital while voting down CEO Albert Behler’s golden parachute amid governance concerns (Bisnow)

UDR expands LaSalle multifamily JV to $850M – The REIT added four properties across Portland, Orlando and Richmond in a $230M upsizing and will receive $200M in cash while retaining a 51% stake in the venture (Bisnow)

PNC closes $175M LIHTC Fund 100 to finance affordable housing nationwide – The multi-investor fund will support nearly 1,500 income-restricted homes across 17 properties in 10 states (ConnectCRE)

Pimco and Witkoff default on $400M loan for 249-unit multifamily property in Santa Monica, CA – The Park Santa Monica debt has climbed to about $439.5M including interest and late charges after being upsized last year (Bloomberg)

Dornin Investment Group buys $78M nonperforming note on 131-unit multifamily development in Brooklyn, NY – The distressed loan is secured by the in-progress 57 Caton Avenue project in Windsor Terrace (CommercialObserver)

US lenders are using insurance for AI mortgage screening errors – Banks are buying cover from insurers like Munich Re to backstop AI underwriting mistakes, cut capital requirements, and write more home loans if the models misjudge borrowers (FT)