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Economy, the Fed, and Rates…

July 14, 2026

Economic Data & Labor Market

• Inflation sits at a three-year high, but June should bring the first headline relief. May CPI held at 4.2% year-over-year, with core CPI at 2.9% and core PCE at 3.41%. Bloomberg Economics expects the June report (July 14) to show headline CPI falling roughly 0.1% month-over-month on a 9.2% drop in gasoline prices, easing the annual rate to about 3.9% and confirming May as this year’s peak, with core up a subdued 0.2% (roughly 2.8% year-over-year). The pressure points are rotating from energy toward memory-chip-driven electronics, elevated airfares, portfolio-management fees, and World Cup travel costs. Watch: June PPI follows on July 15, with the headline rate standing at 6.5% year-over-year.
• Consumers are refusing the price increases companies are trying to pass through. PepsiCo’s North American snack volumes were flat and organic revenue fell 2% after price cuts, even as management warned that fuel, packaging, and logistics costs will lift input-cost inflation in the second half; its international divisions all grew revenue at least 10%. U.S. households are still spending but trading down – limiting energy and tariff pass-through and squeezing corporate margins instead.
• The labor market is stable on the surface and stagnant underneath. Unemployment held at 4.2%, but the broader dashboard is soft: the share of consumers calling jobs plentiful keeps falling, the Atlanta Fed wage tracker continues to slow, service-sector employment surveys remain in contraction, small-business hiring plans are tepid, and JOLTS hires and separations describe a low-churn standstill. The Fed’s semiannual monetary policy report judged wage growth consistent with 2% inflation for the first time in five years – today’s inflation is not a labor-cost story, which strains the Fed’s usual analytical models.

Federal Reserve Policy

• The June minutes put a rate increase on the table without a consensus to move. A few participants saw a case for hiking at the June meeting, the committee viewed inflation risks as skewed to the upside, and nine of 19 officials penciled in at least one 2026 hike in the June projections. The underlying arithmetic: with the funds rate at 3.50%–3.75% and inflation running between 3% and 4%, the real policy rate is near zero – policy may be delivering stimulus the economy no longer needs.
• A July 28–29 hike is possible but not the base case. Markets entered the week pricing roughly a 24% probability of a July move and nearly 50 bps of cumulative tightening through April 2027. Bloomberg Economics counters that tightening into a supply-driven, likely transitory shock would trim inflation by only about 0.1 percentage point while adding roughly 680,000 to the unemployment rolls by 2027–2028, and expects the Fed to hold this year. Governor Waller – who led the case for last year’s three cuts – now says the risk balance has flipped entirely. Tuesday’s CPI and Warsh’s July 14–15 testimony are the immediate tests of whether July is live.
• Warsh’s no-guidance experiment is becoming a market variable of its own. Eliminating forward guidance is one thing; withholding the reaction function – how the Fed would respond to different inflation, labor, and growth outcomes – is what has investors and colleagues, Governor Waller included, publicly frustrated. Until the reaction function is legible, data surprises will produce outsized moves in Treasury yields and SOFR expectations. New York Fed President Williams offered one marker: monthly core PCE of 0.2% or less in the second half keeps policy on hold; persistently faster readings would require a response. He also named AI-driven demand – the one pressure interest rates can actually restrain – as his principal inflation concern.
• Institutional change is coming – task forces plus a PCE makeover. Warsh’s five task forces are led by fifteen credible, bipartisan heavyweights (Rajan, Stein, King, Fraga, Chetty, Mankiw, and Sargent among them), and the communications group is stacked with figures likely to recommend replacing the dot plot with a scenario-based quarterly report. Separately, the BEA’s September update to PCE methodology could have lowered measured core inflation by roughly 0.1–0.3 percentage point had it applied to current data – a timely assist for officials who want to stay on hold.

Treasury Yields & Bond Markets

• The selloff ran across the entire curve. Per Bloomberg: the 2-year rose to 4.21% from 4.14%, the 10-year to 4.56% from 4.48%, the 30-year to 5.06% from 4.99%, and the 3-month to 3.78% from 3.75%. Yields have risen for two consecutive weeks – for the 10-year, the largest two-week climb since May 2026 – leaving it up 21 bps from a year ago and roughly 10 bps below its 52-week high (May 19, 2026). The 30-year is back above the 5% threshold, up 19 bps year-over-year, and the 2-year sits within a few basis points of its own 52-week high.
• The curve steepened at the front, and real yields did the damage. The 3-month/10-year differential widened to 78 bps from 73 bps – a spread that stood at zero a year ago – while the 10-year/30-year gap held at 50 bps. The more consequential move is in inflation-adjusted terms: 10-year real yields reached an 18-month closing high near 2.3%, up roughly 40 bps year-to-date, and 30-year TIPS yields are at 18-year highs approaching 3%. Real yields are the discount rate for long-duration assets, and they are grinding higher even with last year’s three Fed cuts in the books.
• Floating-rate relief has stalled. 1-month Term SOFR ticked up to 3.68% from 3.67% and sits 66 bps below its year-ago level – but the descent has stopped, and with markets pricing net tightening into 2027, the forward curve no longer offers borrowers a credible near-term story of falling coupons.

Dollar, Commodities & Market Dynamics

• Hormuz is back as the dominant near-term macro risk. The U.S. and Iran exchanged fresh strikes over the weekend while issuing conflicting declarations on whether the Strait is open to shipping; Brent rallied about 5% at Monday’s open (July 13) toward $79 per barrel after WTI closed Friday at $71.52. Markets increasingly treat the Strait as a continuum rather than a binary open-or-closed question – the 1980s Tanker Wars template – which explains the muted pricing, but second-round inflation exposure runs through jet fuel, fertilizer, plastics, aluminum, and natural gas.
• The food-price channel is the sleeper risk. Fertilizer prices rose more than 30% early in the conflict – New Orleans urea touched $780 in mid-April – and a prolonged Gulf disruption layered on El Niño crop risks across Asia and Africa could keep food inflation sticky well after the energy impulse fades. For a Fed already debating a hike and an administration facing midterms, stubborn grocery inflation is the politically loudest kind.
• Equities are priced for perfection into earnings season. The S&P 500 rose to 7,575 from 7,483 and the Nasdaq to 26,282 from 25,833, while the Dow slipped to 52,637 from 52,900. Analysts have raised earnings estimates for all 11 S&P 500 sectors – a configuration last seen in late 2021, just before the 2022 rate shock and earnings recession – at the same time real yields sit at multi-year highs. Maximal expectations plus rising discount rates leave little room for disappointment when banks kick off reporting on July 14.

Policy & Politics

• The White House is trying to jawbone prices down. With inflation at a three-year high and 67% of polled voters disapproving of the administration’s cost-of-living record, President Trump has claimed credit for Walmart’s markdowns and told fuel retailers to target $2.50 per gallon – gasoline averages $3.88, roughly 30% above its level before the war began in February, and the conflict has cost the average household more than $500 in fuel. Targeted discounts may follow, but jawboning does not remove the underlying energy, tariff, and freight drivers – and economists across the spectrum warn the interventions distort markets in ways that outlast any administration.
• Japan is prodding capital home – a global long-end story. Tokyo announced it will push its large institutional investors, including the $1.6 trillion Government Pension Investment Fund, to bring money back onshore, triggering the largest one-day move in 10-year Japanese government bonds since last year’s tariff shock. A durable shift of Japanese capital homeward would remove a marginal buyer of global duration – Treasuries included – just as U.S. supply and term-premium concerns re-emerge.

CRE Finance Market Implications

• Both legs of the financing stack moved against borrowers. A 10-year at 4.56% – up 8 bps on the week and 21 bps year-over-year – directly pressures proceeds, debt-service coverage, and the refinancing math on 2026–2027 maturities, while 1-month Term SOFR at 3.68%, with markets pricing possible hikes rather than cuts, removes the floating-rate glide path many bridge and construction borrowers underwrote.
• Rate volatility is now a standalone execution cost. An opaque Fed reaction function plus a live geopolitical shock means wider swings around Treasury locks and hedges – a real cost for CMBS loan aggregation, conduit pricing, and borrowers deciding when to come to market. Expect wider bid-ask on both loans and bonds around Tuesday’s CPI-plus-testimony collision and again into the July 28–29 meeting.
• AI is simultaneously CRE’s strongest demand engine and a new cost channel. Meta committed an additional $40 billion to its Louisiana data-center campus, taking the site past $250 billion – emblematic of the capital wave supporting data centers, power infrastructure, and advanced manufacturing. But the same demand is driving unusually steep price gains in semiconductors and electrical equipment, raising hard costs for any development budget that touches power or electronics and competing with the rest of CRE for labor, equipment, and capital.
• Consumer-facing assets warrant conservative underwriting. PepsiCo’s U.S. results are a clean read on stretched household budgets: needs-based and grocery-anchored retail remain better positioned, while discretionary retail, restaurants, and lodging stay exposed if fuel prices spike again or the low-churn labor market weakens further.
• Housing strain supports the multifamily demand channel, not multifamily economics. With the average 30-year mortgage at roughly 6.58% in early July, applications falling, and builder sentiment still depressed, elevated rates keep would-be buyers renting – supportive for apartment demand at the margin – even as skilled-trade shortages and elevated trucking spot rates keep development and operating budgets under pressure; builders themselves are tilting toward multifamily starts, particularly in the Northeast.

Sources: Financial Times; Bloomberg; Wall Street Journal; Dow Jones/Tradeweb.

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

Contact Raj Aidasani (raidasani@crefc.org) with any questions.

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Spotlight on Servicing: The State of CRE Servicing – Midyear 2026

July 14, 2026

On July 10, 2026, CREFC released The State of CRE Servicing – Midyear 2026, the second report in our Spotlight on Servicing educational series focused on the loan servicing business.

Drawing on discussions from last month’s CREFC Annual Conference, the report discusses the key servicing themes that emerged across multiple sessions and explores what they reveal about the current state of CRE servicing. The report covers the emergence of new servicers in the market and evolving investor expectations due to the growing demand for timely, transparent loan reporting, and provides a timely overview of the issues shaping today's servicing landscape.

One highlight of the report is the creation of a new Data Center property type as part of the investor reporting package (IRP), including a new Operating Statement Analysis Report (OSAR) and property-specific watchlist criteria and guidelines.

The IRP committee leadership is establishing a data center working group consisting of servicers, issuers, investors and rating agencies to formulate a reporting framework and timeline for implementation. 

Interested parties should reach out to Rich Carlson (rcarlson@crefc.org) to be included.

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CRE Securitized Debt Update

July 14, 2026

Private-Label CMBS and CRE CLOs

Two transactions totaling $1.2 billion priced last week:

1. LBA 2026-LBA6, a $950 million SASB backed by a floating-rate, interest-only loan that Wells Fargo and JPMorgan Chase are originating for LBA Logistics, Blackstone, and GIC to refinance 41 industrial properties totaling 8.3 million sf across 10 states. The portfolio, managed by LBA, is 84.8% occupied by 66 tenants with a 4.7-year WALT; top markets are Chicago (17.3% of NOI), Philadelphia (12.6%), and Seattle (8.6%), and top tenants include Amazon (6.3% of gross rent), Sonoco Products, DHL, Global Mail, FedEx, Samsonite, and Dollar General. The loan has a two-year initial term plus three one-year extensions; proceeds retire $930.3 million of existing debt, including the prior BX 2022-LBA6 CMBS loan, and cover closing costs. Blackstone and GIC each hold 45% of the portfolio equity, with LBA holding the remaining 10%.
2. RWC 2026-1, a $285.1 million small-balance multifamily CMBS backed by 54 fixed-rate, five-year, interest-only loans that RWC Lending recently originated on 54 properties across 17 states. The loans average $5.3 million, with 37.3% of the pool concentrated in the Greater New York City area; the collateral primarily comprises garden-style (41.6%), midrise (28.1%), and townhouse (18.5%) properties. The largest loan is a $26.3 million mortgage on a 55-unit apartment building at 15 Bond Street in Great Neck, N.Y. Nomura was the sole lead manager, and RWC is retaining Classes E through G for risk retention.

By the numbers: YTD 2026 private-label CMBS and CRE CLO issuance totaled $100.3 billion, up 21% from the $82.9 billion for the same period last year.

Spreads Hold Steady, Except Data Centers

• Conduit AAA and A-S spreads were unchanged at +70 and +100, respectively.
• Conduit AA, A, and BBB- spreads were unchanged at +130, +175, and +415, respectively.
• SASB AAA spreads ranged from +85 to +175 across property types and structures. Data-center bonds were the exception to the otherwise steady market, with fixed-rate AAA through A widening 5 to 13 bps and floating-rate AA through BBB widening 2 to 5 bps.
• CRE CLO AAA spreads were unchanged at +130/+135 (static/managed); BBB- spreads were unchanged at +300 for both.

Agency CMBS

• Agency issuance totaled $3.4 billion last week, comprising $2.5 billion in Freddie Multi-PC transactions, $546.9 million in Fannie DUS, and $356.9 million in Ginnie transactions.
• Agency issuance for YTD 2026 totaled $89.3 billion, 26% higher than the $71.1 billion recorded for the same period in 2025.
  

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CREFC's BOG Sentiment Index Remains Steady

July 14, 2026

CREFC’s 2Q26 BOG Sentiment Index rose slightly to 101.0, indicating a shift from shock to caution in the commercial real estate finance sector. The index rose 0.9% to 101.0 from 100.1 in 1Q26, holding near the survey's 4Q17 baseline of 100.0 after the prior quarter's 20.2% decline. Beneath the modest headline move, results were mixed. Five of nine core questions improved – led by the economic outlook – while four softened, led by borrower and investor demand, which moderated from 1Q26's elevated readings.

Why it matters: This stabilization suggests a cautious optimism in the market, with demand for financing still net positive despite recent geopolitical shocks. Liquidity remains steady, offering a crucial buffer against ongoing interest rate uncertainties.

The big picture: Economic sentiment has improved significantly, with 58% expecting the U.S. economy to perform consistently over the next year. However, interest rates continue to pose a challenge, with 53% anticipating negative impacts from elevated rates.

Access the full survey results here.

Contact Raj Aidasani (raidasani@crefc.org) with any questions.

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Federal Legislation on Data Center and Energy Usage

July 14, 2026

Data center development has become the marquee issue in many communities across the country, and the political nature is beginning to creep into federal legislative efforts. Among the efforts, The House Energy and Commerce Subcommittee on Energy advanced legislation on June 24 that would build in cost recovery for large energy users.

Why it matters: The rapid innovation in artificial intelligence and the exploding demand for data centers are creating political incentives for policymakers to push back or take action on voter’s concerns, including demands for water and power. While the issue is largely at the local level, Congress has begun to focus on key issues related to energy consumption. 

The Ratepayer Protection Act (H.R. 9340), would allow the Public Utility Regulatory Policies Act of 1978 (PURPA) to establish a federal standard directing state utility regulators to adopt cost-allocation rules for "large-load customers" (100 MW+ demand) — aimed squarely at AI data centers. 

• The bill would have state regulators establish recommendations for integrating new large-load customers with 100 MW or more of demand onto the grid. 
• Key mechanisms: Recovery of the full incremental cost of grid upgrades from the large-load customer over a long period via a special rate charge or similar agreement, protecting ratepayers if that customer later scales down or exits; and financial assurance requirements obligating the large-load customer to fund generation, transmission, or other infrastructure needed to serve its load. 

What they’re saying: Committee members expressed bipartisan support for the bill and many echoed concerns expressed by their constituents. Rep. Paul Tonko (D-NY) said the bill is a good first step, but had concerns the threshold was too high and 50 MW would be more appropriate. 

Yes, but: Rep. Frank Pallone (D-NJ), the lead Democrat on the full committee, expressed his support for a nationwide moratorium on data centers: 

And that's why I am in favor of a national AI data center moratorium until we can find a way to ensure they don't harm our nation's air, water, and power bills.

Towns in my district are way ahead of this Congress and seeking a moratorium. Asbury Park, Red Bank, Old Bridge, and Sayreville all have taken this bold step. The city of New Brunswick put a stop on a planned data center after the community stood together to oppose the project, and we need to follow in their footsteps here in Congress.

The big picture: Data center and related issues will continue to be a key item on voters and politicians minds as the sector grows. CREFC will continue to monitor federal efforts that impact the asset class. 

Contact David McCarthy (dmccarthy@crefc.org) with questions.

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Senate Midterm Update

July 14, 2026

The midterm battle for the Senate has had a few shakeups recently. Democrats need to flip four seats to take control of the chamber, which the GOP controls at 53-47.

Maine

The biggest development in the battle for the Senate emerged in Maine last week, when Democratic nominee Graham Platner withdrew from the race in light of sexual assault allegations, which he denies. 

• Senior Democratic leaders publicly called for him to step aside, and the Democratic Senatorial Campaign Committee suspended support for his candidacy 
• This seat has been considered a top pickup opportunity for Democrats as incumbent Senator Susan Collins (R-ME) is the only Senate Republican in office who represents a state that Vice President Kamala Harris won in 2024. 

The Maine Democratic Party is holding a special nominating convention on July 25, when roughly 600 delegates will hear from candidates and vote in successive rounds until one candidate wins a majority. Names in the mix include: 

• Nirav Shah: The highest-profile entrant. He became widely known in Maine for his COVID-19 briefings and has broad name recognition.
• Troy Jackson: A longtime labor-backed progressive from rural Maine with support from many Sanders-aligned activists and strong ties to organized labor.
• Shenna Bellows: A statewide elected official with an established political network and high visibility from election administration and voting-rights issues. 

Some Democrats continue to highlight that Platner won with grassroots support and was a progressive populist. They argue if Democrats want to have any chance at winning they need to ensure that the new nominee can entice the same voters.

Michigan: Michigan is of the few Democratic-held Senate seats located in a state won by President Trump in 2024. The state is currently represented by retiring Senator Gary Peters (D) and is a must win for Democrats in their quest to control the Senate.

• Following the withdrawal of Mallory McMorrow, the contest has narrowed to a two-way battle between progressive candidate Abdul El-Sayed and moderate Rep. Haley Stevens (D-MI-11)
• The race reflects a broader debate inside the Democratic Party. El-Sayed has consolidated support from the Democratic Socialists of America and the progressive wing, while Stevens is backed by many establishment Democrats who view her as the stronger general-election candidate against Republican nominee Mike Rogers. 
• Polling on the race currently has El-Sayed ahead by five points against Stevens. 
• The GOP nominee is former Rep. Mike Rogers, who was also the 2024 GOP nominee in Michigan, losing the general election to current Senator Elisa Slotkin (D-MI)

Top Swing States: While the map has favored Republicans, political headwinds and strong candidate recruitment has made for more competitive races. 

North Carolina: North Carolina remains one of the nation's most competitive swing states, with rapidly growing suburban areas that have trended toward Democrats in recent cycles. 

• Former Governor Roy Cooper (D-NC) has wide name recognition and is leading polls against former RNC Chairman Michael Whatley by an average of 7 points. 
• This race is by far the most likely to flip to Dems this fall, as many have even moved into a safe column for Democrats. President Trump won the state by four-point in 2024.

Ohio: While Ohio has shifted heavily Republican the last few cycles, Democrats believe the state's strong union tradition and history of supporting populist candidates create opportunities under the right political environment. 

• Former Senator Sherrod Brown (D-OH) was the Democrat’s top recruit and has a great chance to beat incumbent Jon Husted (R-OH). 
• Husted, the sitting Lieutenant Governor, was appointed to take the seat vacated by then Senator JD Vance (R-OH) upon his election to Vice President in 2025.

Alaska: Alaska's ranked-choice voting system puts all candidates on the same ballot for the general election. This has thrown a wrench into what should be a conventional Democrat vs. Republican matchup in a red state.

• Former Representative Mary Peltola (D-AK-AL) is emphasizing her bipartisan appeal and strong support among Alaska Native communities. Incumbent Senator Dan Sullivan (R-AK) enters the race with the advantages of incumbency and a state that leans Republican.
• Recently, the Alaska supreme court allowed two candidates with the same name “Dan Sullivan” to remain on the ballot this fall. The ranked choice voting system could possibly divide support for the GOP’s Dan Sullivan, and push some voters to the independent Dan Sullivan. If this happens, Peltola has an easier path to win the election.

Texas: The state has become steadily more competitive as its metropolitan areas grow and diversify, narrowing Republican margins over the past decade, though statewide victories remain elusive for Democrats. 

• State Representative James Talarico (D-TX) is offering Democrats a youthful, compelling statewide candidate capable of energizing suburban voters. 
• On the GOP side, nominee Ken Paxton won a nasty primary against incumbent Senator John Cornyn (R-TX), dividing the party and forcing a runoff election. Paxton secured the support of President Trump and MAGA while Cornyn was seen as the more establishment and traditional candidate.
• Paxton brings some scandals with him, as he recently went through a messy public divorce and was impeached by his own party while serving as Texas Attorney General. Democrats were hoping for the chance to campaign against Paxton, believing it gave them the best shot at winning the seat.

Iowa: Iowa’s open Senate race features Democrat Josh Turek against Republican nominee Rep. Ashley Hinson. 

• Democrats view Turek’s working-class message, background as a Paralympic athlete, and appeal to independents as a path to flipping a state that has moved right in recent years. 
• While Hinson benefits from Iowa’s Republican lean and strong GOP organization, polls currently have the race as a tie. President Trump won the state by 14 points in 2024.

Georgia: Democratic incumbent Senator Jon Ossoff has been pitted against Republican nominee Mike Collins. Collins just finished a bruising primary on June 16, while Ossoff faced no primary opponents and has been able to campaign full time as the nominee.

• Democrats see Georgia as a key defensive race where Ossoff can rely on strong suburban support and the state’s increasingly competitive electorate, while Collins will try to consolidate Republicans with backing from the Trump and the MAGA contingent. Ossoff currently leads polls by an average of five points.
• Ossoff’s fundraising ability has put this race in a safer spot for Democrats, with $37 million cash on hand compared to Rep. Mike Collin’s $1.2 million. 

What’s next: As primaries wrap up by the end of the summer, the general election field will soon be set, and the battle for the Senate will head into a new phase. 

There are 112 days until election day. Democrats seem to be poised to win seats, but how many they retake will depend heavily on the results of Maine and Michigan’s nominating contests. 

Please contact James Montfort (jmontfort@crefc.org).

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Administration Posts Updated Unified Regulatory Agenda 

July 14, 2026

The Office of Information and Regulatory Affairs (OIRA) recently released its (theoretically) semiannual Unified Agenda of Regulatory and Deregulatory Actions (Agenda). It is the first update since October 2025. 

• While the Agenda is not meant to be a precise policy road map, it does provide insight into the administration’s regulatory priorities. 

The regulatory agencies of most importance to CREFC and our members include the Securities and Exchange Commission (SEC), the banking agencies, and the Federal Housing Finance Agency (FHFA). 

• The revised Agenda shows financial regulators' active dockets expanding sharply: the SEC’s grew from 23 items to 38, the Fed’s from 5 to 13, the FDIC’s from 7 to 14, and the OCC’s from 6 to 22. Only the FHFA’s agenda contracted.
• However, most new items unwind or loosen existing requirements. Deregulation generates its own paperwork and each rescission, re-proposal, and recalibration is a new agenda line.

SEC: The ABS registration and disclosure item now targets an October 2026 proposal, which should incorporate feedback that CREFC and other industry participants submitted late last year on the ABS Concept Release. (See here and here for the two letters that CREFC submitted to the SEC.)

• The Agenda also formalizes the climate-rule rescission and adds proposals scaling back executive compensation disclosure and quarterly reporting (optional semiannual) requirements. 

Banking agencies: Capital confirmed, supervision rewritten. 

• The March capital re-proposals (Basel III Endgame, the GSIB surcharge, and the standardized approach) appear across all three agencies in lockstep at proposed stage.
• On the supervision side, what examiners can cite, how criticisms are labeled, and how banks are rated are all being rewritten by rule. This could bind future administrations in a way guidance doesn't.

FHFA: The agenda shrank to 11 items, but the consequential moves, including housing goals, run through directives and orders, often announced first on X.

• One agenda item of note: A credit risk-retention item that appears to focus on residential assets and was included on the October 2025 agenda remains on the current agenda. 

CREFC is carefully monitoring regulatory developments across all relevant agencies and will apprise members of any significant updates.

Contact Sairah Burki (sburki@crefc.org) with questions.

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Housing Bill Becomes Law; SFR Limits Begin in 180 Days

July 14, 2026

The 21st Century ROAD to Housing Act (H.R. 6644) became federal law on Saturday, July 11 without President Donald Trump’s signature. The president chose not to sign the bill out of protest that the Senate has yet to pass election legislation, but he never publicly threatened a veto. 

Why it matters: The ban on large institutional investors purchasing single family homes takes effect 180 days after enactment. Click here for more detail on the SFR ban.

• While build-to-rent and other certain single-family purchases are intended to be exempt, the law will ban institutions owning more than 350 single-family homes from purchasing more. 
• Existing SFR is counted toward the threshold, but large institutional investors are allowed to keep it on their books. Selling or transferring the properties may be subject to certain limits.

The big picture: The bill’s numerous other provisions aim to increase housing supply through a mix of:

• Targeted regulatory relief on federal projects and loan-limit increases on federally-supported affordable housing construction,
• Incentives for local government in easing development rules, 
• Federal pilot projects for boosting housing construction, and 
• Reforms allowing greater use of manufactured housing. 
  

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CREFC's 2Q 2026 BOG Sentiment Index Steadies Near Baseline as CRE Finance Sentiment Moves from Shock to Caution

July 13, 2026

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The CRE Finance Council (CREFC), the trade association for the commercial real estate finance industry, today released its Second-Quarter 2026 (2Q26) Board of Governors (BOG) Sentiment Index survey results.

The index rose 0.9% to 101.0 from 100.1 in 1Q26, holding near the survey's 4Q17 baseline of 100.0 after the prior quarter's 20.2% decline. Beneath the modest headline move, results were mixed. Five of nine core questions improved – led by the economic outlook – while four softened, led by borrower and investor demand, which moderated from 1Q26's elevated readings.

Conducted from June 25 – July 6, 2026, the survey captured a market stabilizing after the geopolitical shock that drove last quarter's decline – but stabilizing into caution rather than conviction. Neutral was the most common answer on seven of the nine core questions, and views on interest rates remained the weakest reading for a second consecutive quarter. The survey consists of nine core questions and additional topical questions, which are not factored into the BOG Index. Ninety-five percent of the BOG responded to the 2Q26 survey.

Demand-side readings, while cooler than 1Q26, remained net positive: 42% of respondents expect stronger investor demand for CRE and multifamily assets versus 11% expecting less, and 45% expect higher borrower demand for financing versus 13% expecting less. This suggests the pullback reflects moderation from unusually elevated expectations rather than a retreat from the market.

Key Highlights from 2Q26 Index Core Questions:

• Economic Outlook: Economic sentiment recovered meaningfully from 1Q26's sharply negative reading. A majority (58%) now expect the U.S. economy to perform the same over the next 12 months, while 24% expect worse (down from 54% in 1Q26) and 18% expect improvement.
• Federal Policy: Policy expectations are evenly divided. Nearly half (47%) of respondents expect a neutral impact from federal legislative and regulatory actions, with the remainder split equally between positive and negative at 26% each.
• Interest Rate Impact: Rates remained the most negative core question for a second consecutive quarter. A majority (53%) expect a negative impact from elevated mortgage and cap rates, while 37% are neutral and just 11% expect a positive impact.
• CRE Fundamentals: Expectations firmed on balance. Thirty-seven percent expect improving fundamentals (occupancy, rents, NOI), 53% expect no change, and 11% expect deterioration – a negative tail half the size of 1Q26's 22%.
• Transaction Activity: Investor demand expectations moderated but remain net positive. Forty-two percent expect increased demand for CRE and multifamily assets over the next 12 months (47% no change; 11% less demand), down from 61% in 1Q26.
• Financing Demand: Borrower demand saw the most significant decline of the nine core questions but remains net positive. Forty-five percent expect increased borrower demand for CRE and multifamily financing (42% no change; 13% less), down from 71% in 1Q26.
• Market Liquidity: Liquidity expectations stabilized after 1Q26's caution. A large majority (71%) expect no change, while 24% expect improved liquidity – up from 20% – and just 5% expect worse conditions, down from 23%.
• CMBS and CRE CLO Outlook: Views on CMBS and CRE CLO demand and spreads firmed. Thirty-seven percent expect a positive impact – up from 33% in 1Q26 – while half (50%) are neutral and 13% expect a negative impact, down from 18%.
• Overall Industry Sentiment: Sentiment consolidated at neutral. Sixty-eight percent hold a neutral outlook for CRE finance businesses, while 24% are positive and just 8% are negative – a smaller negative tail than 1Q26's 22%.

Additional Topical Insights:

The survey's topical questions point to a market whose central preoccupations have rotated from geopolitical shock toward interest-rate uncertainty, regulatory capital, and the changing structure of CRE credit.

Asked which rate-related factor will most constrain CRE lending and investment in the second half of 2026, respondents split almost evenly between rate volatility and uncertainty about the path (47%) and the level of rates staying higher for longer (45%). Hedging and rate-cap costs, wide lender spreads, and the view that rates are not the binding constraint drew 3% each. Taken together, 92% of respondents identified either the level or the volatility of rates as the binding constraint on activity in the second half of 2026.

On how banks will deploy capital into CRE debt over the next 12 months, half (50%) expect banks to grow back-leverage and repurchase (“repo”) lines to private credit and debt funds, while 37% expect banks to expand direct loan originations to regain market share. Only 8% expect banks to stay defensive with flat-to-declining CRE allocations. The result points to a change in the channel through which bank capital reaches the market – increasingly financing nonbank lenders – rather than a retreat from CRE credit.

With roughly 28% of SASB loans reaching their 2026 maturities having refinanced to date, according to J.P. Morgan research, respondents were split on what the widespread reliance on loan extensions signals. Twenty-nine percent see deferred distress – extensions masking losses that will surface later – while 26% view extensions as a temporary bridge until rates and values stabilize, 24% as a lasting borrower preference for low-cost extensions over refinancing, and 21% as constructive resets increasingly paired with paydowns or new equity. The dispersion suggests that the industry has not yet settled on whether the extension wave is a warning sign or a workout succeeding.

On the multiyear question of artificial intelligence and office demand, half (50%) expect AI and automation to drive a modest reduction in corporate office space requirements concentrated in specific sectors, while 29% expect a roughly neutral net effect as efficiency gains are offset by headcount growth and new uses. Thirteen percent expect a significant net reduction across multiple industries, and 8% expect a net positive as AI-centric firms expand and favor premium space.

Asked which policy or regulatory issue is most likely to affect CRE debt availability over the next 12 to 24 months, respondents pointed first to bank capital rules for CRE, including securitization risk weights (36%), followed by insurance-company capital treatment (31%) and the capital treatment of warehouse, repo, and back-leverage facilities (22%). GSE multifamily loan caps and mission requirements (8%) and state or local housing, tax, or land-use policy (3%) trailed.

Open-ended commentary reinforced the rotation in focus. First-quarter 2026 commentary centered on geopolitical shock and rate volatility. This quarter's responses emphasized regulatory capital and credit mechanics – potential scrutiny of bank back-leverage, insurance capital treatment, underwriting quality in multifamily conduit structures, and instances of inadequate property insurance coverage – alongside political uncertainty heading into the midterms and 2028 election cycles. The refinancing tone improved, with one respondent noting that the refinancing "curtain" has finally stopped moving and that borrowers have accepted the current rate environment.

Lisa Pendergast, President and CEO of CREFC, commented:

"After last quarter's shock, this is what a market catching its breath looks like. The index is back near its baseline, and our members have moved to the middle – neutral was the most common answer on seven of nine core questions. That is not complacency; it is discipline. Demand for financing remains net positive, liquidity is steady, and the questions our members are focused on – capital rules, underwriting standards, and how bank capital reaches the market – are the right ones for this stage of the cycle. What the second half of 2026 needs most is rate clarity."

About CREFC and the Board of Governors Sentiment Index:

The CRE Finance Council (CREFC) is the trade association for the over $6 trillion commercial real estate finance industry with a membership that includes more than 400 companies and 19,000 individuals. For over 30 years, CREFC has promoted liquidity, transparency, and efficiency in the commercial real estate finance markets, acting as a legislative and regulatory advocate for the industry, playing a vital role in setting market standards and best practices, and providing education for market participants.

The Board of Governors consists of senior executives representing every sector of the commercial real estate lending and mortgage-related debt investing markets, including balance-sheet and securitized lenders, loan and bond investors, mortgage bankers, private equity firms, loan servicers, rating agencies, attorneys, accountants, and others.

CREFC's BOG Sentiment Index, launched in 2017, tracks quarterly shifts in commercial real estate finance sentiment through nine equally weighted core questions, supplemented by topical questions that are not factored into the index. Blank responses are excluded from question denominators, and percentages may not sum to 100% due to rounding. The 2Q26 survey achieved a 95% response rate with 38 of 40 BOG members participating.

For more information about the 2Q26 BOG Sentiment Index and the full survey results, please click here or contact Raj Aidasani at raidasani@crefc.org.

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