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Committee Hearing Focuses on Housing Supply; No Housing Bills in NDAA

December 9, 2025 

On December 3, the House Financial Services Committee held a hearing focusing on housing affordability entitled Building Capacity: Reducing Government Roadblocks to Housing Supply.

Why it matters: Affordability remains a key issue for voters, and the House has been planning to advance its own housing agenda after the Senate passed the ROAD to Housing Act earlier this fall. 

• The hearing included over 40 housing bills, which sets the stage for further committee action later this month. 
• The National Defense Authorization Act (NDAA) was released over the weekend and does not include housing legislation. The House will likely take up a housing package earlier next year.

The big picture: The hearing underscored broad bipartisan agreement that the U.S. faces a significant housing shortage and that permitting and approval processes need to be accelerated to reduce delays and costs. 

• Republicans, such as Reps. Pete Sessions (R-TX) and Andy Barr (R-KY), focused heavily on deregulation, emphasizing the role of state and local zoning limits, red tape, and what they view as inflation-driven interest rate increases.
• Democrats, such as Reps. Nydia Velazquez (D-NY) and Brad Sherman (D-CA), highlighted the impact of tariffs, labor shortages tied to immigration policies, and fair-housing enforcement rollbacks on rising housing costs. 
• Members from both parties, including Reps. Ann Wagner (R-MO) and Bill Foster (D-IL), expressed strong support for allowing smaller lot sizes and increasing density through duplexes, triplexes, and other “missing middle” housing types, an idea that generated virtually no opposition. 
• There was also notable bipartisan alignment around modernizing manufactured housing, including removing the permanent chassis requirement and expanding access to financing for modular and factory-built homes. 
• Republicans frequently used their time to critique rent control, while Democrats largely criticized recent administration policies. To the good, the overall discussion reflected several areas of meaningful cross-party consensus on supply-oriented reforms.

Go deeper: In the multifamily space, Rep. Monica De La Cruz (R-TX) highlighted the Housing Affordability Act (H.R. 6132) aims to update the FHA multifamily insurance program and asked how these changes would leverage and incentivize private investment to expand the housing supply. 

• Witness Kevin Sears – Immediate Past President, National Association of Realtors – affirmed his organization's support for the bill, explaining the program's outdated limits currently block potential financing for projects and prohibit desperately needed construction. He asserted updating the program would unlock private investment and be a key component in resolving the housing crisis. 
• Julie Smith – Chief Administrative Officer, Bozzuto, on behalf of the National Multifamily Housing Council (NMHC) – concurred, emphasizing construction costs have risen so significantly over the past two decades that many projects no longer qualify under the existing loan limits of programs like 221(d)(4). She argued extending these limits is necessary and added expediting the application process and shortening waiting periods would also greatly improve the program's utilization.

GSE Conservatorship: A few members raised questions about potential action on Fannie Mae and Freddie Mac amid broader discussions of reprivatizing the agencies.

• Rep. Scott Fitzgerald (R-WI) discussed his legislation designed to end the conservatorships of the GSEs by transitioning them into utility-style entities. 
  • He asked how this utility model would strengthen stability in the secondary mortgage market and expand access to affordable homeownership. 
  • Mr. Sears affirmed his support for the utility model, but stipulated three conditions: the 30-year fixed-rate mortgage must be preserved as a bedrock financing option, the government guarantee must be maintained, and any revenue generated must be directed toward housing. He specifically recommended using these funds for public-private partnerships, noting such arrangements could attract ten times the amount of private investment for every federal dollar, potentially infusing trillions of dollars into the housing economy.
• Bill Foster (D-IL) inquired about the potential adoption of the Danish mortgage system as a solution to mortgage lock-in and a replacement for Fannie Mae and Freddie Mac. 
  • Nikitra Bailey – Executive Vice President, National Fair Housing Alliance – responded by emphasizing the success of the 30-year fixed-rate mortgage in the U.S., describing it as a hallmark product that has expanded homeownership and provided families with financial stability and predictable mortgage payments. 
  • She acknowledged the system has historically excluded many individuals, but she stressed the need to intentionally ensure this affordable product is accessible to all consumers, particularly those on whom the future health of the housing system will depend.

Please contact David McCarthy (dmccarthy@crefc.org) with questions.

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Economy, the Fed, and Rates…

December 9, 2025

Economic Data & Labor Market

• Consumer spending stalled in September as inflation held firm. Real consumer spending was essentially flat in September, according to the delayed BEA report—the first major release since the 43-day shutdown ended. Core PCE rose 0.2% month-over-month and 2.8% year-over-year, matching expectations but remaining above the Fed’s 2% target. A 0.5% surge in goods prices—the largest since January—drove the pullback.
• Labor market signals are contradictory. Initial jobless claims dropped to 191,000—the lowest since September 2022—yet ADP reported private employers shed 32,000 jobs in November, with small businesses cutting 120,000 positions. The divergence underscores a “low-hire, low-fire” environment. As MacroPolicy’s Julia Coronado put it: “The only thing that matters is the unemployment rate”—which ticked up to 4.4% in September.
• Consumer sentiment improved modestly, but anxiety persists. The University of Michigan’s December index rose to 53.3 from 51—the first increase in five months—with one-year inflation expectations falling to 4.1%.
• Productivity tailwinds are fading; AI won’t rescue growth soon enough. U.S. labor productivity has averaged 2.2% quarterly gains since 2023, but drivers—immigration, new business formation, post-pandemic adjustments—are waning. Only 10% of businesses used AI to produce goods or services in September. The CBO projects productivity gains will average just 1.3% through decade-end—below the 1.4% needed to sustain 2% GDP growth.
• Energy costs are compounding affordability pressures. Wholesale natural gas prices have jumped 70%+ over 12 months, with Henry Hub at $5.29—the highest since December 2022. Record LNG exports are colliding with cold weather and AI data center demand. A Yahoo/YouGov poll found 49% believe Trump has done more to raise prices than lower them.

Federal Reserve Policy

• December cut is all but certain; 2026 is the real question. Fed officials have signaled a quarter-point cut at the December 9-10 meeting, with futures pricing ~90% odds. NY Fed’s Williams sees “room for a further adjustment”; Governor Waller cited a weakening labor market. But the FOMC is deeply divided: regional presidents have turned hawkish, while the Board of Governors favors cuts. Kansas City’s Schmid will likely dissent.
• Hassett as Fed Chair frontrunner is rattling bond markets. Kevin Hassett has surged to ~75% odds on Polymarket. Bond investors have told Treasury officials that he could cut rates aggressively to please Trump. PGIM’s Gregory Peters: “Does he have the credibility within the committee to drive consensus? I don’t think he has that credibility. I think that’s what the bond market is telling you.”
• Fed balance sheet decisions may matter more than rate cuts. The Fed stopped shrinking its $6.5 trillion balance sheet on December 1 amid funding market pressures. BofA expects “reserve management purchases” of T-bills starting in January at $45 billion monthly. PineBridge’s Michael Kelly: “I don’t know why the Fed is so eager to grow its balance sheet, but stingy to cut interest rates.”

Treasury Yields & Bond Markets

• Treasuries logged their worst week since April despite imminent rate cut. The 10-year yield rose 13 bps last week to 4.14%; the 30-year climbed similarly to nearly 4.8%. Deutsche Bank’s Steven Zeng: “Investors are growing skeptical of more rate cuts next year.” The selloff held even after September PCE came in line.
• Fed independence concerns are adding term premium. PGIM’s Peters pointed to rising term premium as reflecting angst about Fed credibility: “Risk premium, term premium is being built into the curve not only in the U.S. but across all sovereign bond markets.” Treasury Secretary Bessent’s push for residency requirements for regional bank presidents has “reinvigorated uncertainty.”

Market Dynamics

• Stocks are pricing in rate cuts with unusual speed. The S&P 500 has risen ~5% since November 20, led by rate-sensitive cyclicals—homebuilders, transports, chemicals. The Dow Transports jumped 3.6% for the week. As FT’s Unhedged noted: “A 25-basis-point change in short-term rates simply isn’t significant to either stocks’ discount rates or their profit prospects.”
• Wall Street expects double-digit gains in 2026. The average forecast of nine major banks puts the S&P 500 at 7,500+ by year-end 2026—roughly 10% higher. Deutsche Bank is most bullish (8,000); BofA is most cautious (7,100). Morgan Stanley cited “the triumvirate of easy fiscal, monetary, and regulatory policy, along with AI tailwinds.”
• Fiscal stimulus narrative is gaining traction. TS Lombard expects U.S. real GDP growth to accelerate from 1.8% to 2.5% in 2026, citing retroactive tax refunds, wage stabilization from lower immigration, and potential “tariff dividend” rebates. The risk: inflation above 4% would immediately halt easing.
• Regulators rolled back Obama-era leveraged lending restrictions. The FDIC and OCC withdrew 2013 guidance limiting banks’ riskier lending—rules that fueled private credit’s rise to nearly $700 billion. Tim Long, the OCC’s former chief examiner, who architected the original guidance: “This stuff is toxic, and at some point it’s going to melt down.”
  

CRE Finance Market Implications

• Fed supervisors are sharpening focus on CRE loan books. The Fed’s latest supervision report cited “elevated interest rates, tighter underwriting standards, and lower commercial property values” as pressure points complicating refinancings. Officials are monitoring CRE trends at community and regional banks, reviewing underwriting practices and credit loss reserves.
• Consumer retrenchment is spreading. Nearly 30% of Americans have dropped or traded down insurance policies in the past year. Copart saw U.S. insurance-sourced volumes decline 9.5% as fewer drivers file claims—mirroring broader affordability pressures rippling through consumer-facing sectors.
• Holiday spending was solid but promotion-dependent. Black Friday sales rose 4.1% YoY per Mastercard, but adjusted for inflation, real growth was weaker. Online spending rose 7.7% during Thanksgiving weekend—slower than last year’s 8.7%. Heavy reliance on promotions raises the risk that spending eases post-holiday.

You can download CREFC’s one-page MarketMetrics, which includes statistics covering the economy and the CRE debt capital markets, here.

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CRE Securitized Debt Update

December 9, 2025

Private-Label CMBS and CRE CLOs

Four transactions totaling $3.3 billion priced last week:

1. BOCA 2025-BOCA, a $1.2 billion SASB backed by a floating-rate, five-year loan (at full extension) for BDT & MSD Partners to refinance The Boca Raton, a 1,014-room resort and club in Boca Raton, FL.
2. AREIT 2025-CRE11, a $951.6 million CRE CLO sponsored by Argentic. The managed transaction comprises 23 loans secured by 53 properties. The pool’s top three property types are multifamily (60.1%), industrial (14.1%), and hotel (13.4%).
3. WFCM 2025-5C7, a $949.9 million conduit backed by 25 five-year loans secured by 265 properties from Wells, Zions, Citi, JPMorgan, UBS, Benefit Street, Goldman, and SocGen. In addition, the transaction includes the junior portions of the Mall at Bay Plaza loan ($110 million) and the Crossgates Mall loan ($68 million), which are separate from the main pool and tied to their own groups of certificates.
4. BAMLL 2025-1105W, a $245 million SASB backed by a floating-rate, five-year loan (at full extension) for Selig Enterprises and the State Board of Administration of Florida to refinance a 654,000 square foot office tower in Atlanta.

By the numbers: Year-to-date private-label CMBS and CRE CLO issuance totaled $148.1 billion, representing a 32% increase from the $112.6 billion recorded for same-period 2024. 

Spreads Hold Steady

• Conduit AAA and A-S spreads were unchanged at +80 and +115. YTD, they are wider by 5 bps and 10 bps, respectively. 
• Conduit AA and A spreads were unchanged at +160 and +210. YTD, they are wider by 25 bps and 45 bps, respectively.
• Conduit BBB- spreads were unchanged at +475. YTD, they are wider by 50 bps.
• SASB AAA spreads were flat, in a range of +115 to +140, depending on property type.
• CRE CLO managed AAA spreads were wider by 5 bps to +140, while static AAA held steady at +135; BBB- spreads held constant at +340 for both.

Agency CMBS

• Agency issuance totaled $4.7 billion last week, comprising $2.5 billion in Freddie Multi-PC transactions, $1.8 billion in Fannie DUS transactions, and $395.6 million in Ginnie transactions.
• Agency issuance for the year totaled $143.3 billion, 27% higher than the $112.9 billion for the same period last year.
  

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