Is the market recalibrating? A chat with Ivy Zelman

The U.S. housing market isn’t undersupplied; it’s under-affordable.

That was the core insight from my latest conversation with Ivy Zelman, EVP and Co-Founder of Zelman, a Walker & Dunlop Company. As we approach the 2025 Zelman Housing Summit, Ivy appeared on the Walker Webcast to dissect the evolving dynamics in housing, from rates and regulations to consumer credit and consolidation. Her perspective, as always, is data-rich and refreshingly direct.

Sector winners and losers in a distorted cycle

So far in 2025, Zelman’s housing index shows mortgage-related companies up 48 percent, furniture up 17 percent, and building products up 13 percent. At the same time, apartment REITs are down 10 percent and SFR operators are off by 6 percent.

Why the divergence? Markets are betting on rate cuts, while fundamentals remain strained, especially in multifamily and single-family rentals. Ivy emphasized that much of the stock performance is driven by future expectations, not present reality. In this environment, public builders continue to lean on rate buy-downs, though even those are losing effectiveness.

Tariffs, rates, and affordability: A complex equation

Tariffs haven’t yet added inflationary pressure to new construction, but they are quietly pushing prices higher in the home improvement segment. While input costs have actually dropped for most large builders, the long-term inflationary impact of tariffs could keep the 10-year Treasury stubbornly high, even if the Fed cuts short-term rates.

That’s a real concern, especially given the “lock-in effect”: 72 percent of U.S. mortgages are below 5 percent, and 39 percent are below 3.5 percent. With affordability at its worst levels since the early 1980s, many would-be buyers simply can’t qualify, even with sub-4 percent builder-sponsored rates. Builders like D.R. Horton are forced to aggressively lower rates just to close sales.

Multifamily momentum and the future of rent growth

While multifamily REITs have underperformed in 2025, Ivy sees opportunity ahead. Despite disappointing Q2 rent growth, absorption is at record highs, and occupancy rates remain strong. Zelman’s forecast calls for rent growth to steadily improve into 2027, particularly as new supply burns off.

Interestingly, the COVID “winner” markets, such as Texas and Florida, are now among the softest, having been hit hard by oversupply and rising costs of living. Markets that lagged during the pandemic are outperforming today, mirroring what we’re seeing in for-sale housing as well.

Builders, consolidation, and the affordability crisis

Today, 57 percent of new home sales come from public builders, a dramatic increase from just one-third post-GFC. That consolidation brings efficiency and pricing power, but it limits the diversity of supply. As Ivy noted, we don’t have a supply shortage. We have an affordable supply shortage.

Land, regulation, and labor costs are still major headwinds. Builders are “de-contenting” homes and expanding to more remote locations, but systemic affordability improvements require policy changes at the state and local levels. Without them, the next generation may remain stuck in rental limbo, especially with student loan delinquencies rising and discretionary income shrinking.

Where Ivy is placing her bets

Despite all the challenges, Ivy sees promise in multifamily. As affordability strains the for-sale market, and as the oversupply in rentals gets absorbed, she expects rent growth to pick up again in 2026 and beyond. If she's right, this could be an inflection point for the multifamily space.

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