Episode 101: May Housing Starts Drop 15% as Multifamily Craters

Episode 101: May Housing Starts Drop 15% as Multifamily Craters

May housing starts fell 15.4% to a seasonally adjusted annual rate of 1.18 million units, but the headline understates the real shock: multifamily construction cratered 40.2% in a single month to an annualized pace of just 295,000 units — down 14.2% year-over-year. For LIHTC developers, syndicators, and lenders, the data lands at a critical moment, signaling that the construction pipeline is under serious stress from elevated interest rates, rising costs, and persistent labor shortages. Key Takeaways: * Overall May housing starts fell 15.4% to a 1.18 million seasonally adjusted annual rate (HUD/Census Bureau). * Multifamily starts dropped 40.2% in May to a 295,000 annualized pace — the sector is down 14.2% vs. May 2025. * Single-family starts declined 1.9% to an 882,000 annualized rate, down 6.7% year-over-year; homes under construction at 587,000, off 5.9% from a year ago. * Multifamily permits fell 2.8% to a 527,000 annualized pace in May, though they remain up 2.5% vs. May 2025 — a modest forward-pipeline signal worth watching. * The Northeast is the only region running positive on both starts (+17.5% YTD) and permits (+10% YTD); the South is down 6.7% on permits YTD. * NAHB's June builder sentiment survey weakened further, with elevated mortgage rates and affordability challenges cited as primary headwinds. * New LIHTC transactions underwriting today face elevated feasibility risk — the starts-to-permits gap indicates financing and cost execution, not demand, is where deals are stalling. The divergence between permits (relatively stable) and starts (sharply lower) is the key signal for affordable housing finance professionals. It suggests developers intend to build but cannot make the numbers work at current cost and rate levels — a dynamic that directly pressures LIHTC equity pricing, increases gap financing needs, and may drive further requests for basis boosts or state subsidy layering. Teams actively underwriting new transactions in the South and West should stress-test construction budgets more aggressively and revisit financing structures before locking commitments. Subscribe to The Spring Street Brief for daily updates on affordable housing in America.

Episode 100: Fed Rate Hike Risk and the LIHTC Development Outlook

Bond markets have shifted from pricing in Fed rate cuts to assigning greater-than-even odds to a rate hike — a reversal with direct consequences for LIHTC developers, syndicators, and lenders. With core inflation at a three-year high of 3.3%, headline CPI at 3.8%, and the two-year Treasury up more than 70 basis points since March, the rate environment for affordable housing finance has materially tightened. This episode breaks down the macro forces behind the shift and what they mean for deals in the pipeline today. Key Takeaways: * The two-year Treasury has risen more than 70 basis points since March, reflecting a bond market repricing from easing to potential tightening. * Core PCE inflation is running at 3.3% — a three-year high and well above the Fed's 2% target — eliminating near-term justification for rate cuts. * Headline CPI reached 3.8% year-over-year, also a three-year high, driven in part by energy and commodity prices tied to the Iran conflict and lingering tariff impacts. * Q1 and Q4 2025 GDP averaged just 1% annualized growth, while the personal saving rate fell to 2.6% — the lowest since June 2022 — signaling household financial stress relevant to rental demand underwriting. * Single-family built-for-rent starts fell 26% on a four-quarter basis to 62,000 homes, reflecting broad developer caution that should be mirrored in affordable pipeline assumptions. * Mortgage rates are expected to remain above 6% through 2026, keeping pressure on 4% LIHTC bond pricing and debt service coverage in new construction deals. * Residential construction added only 900 jobs in May, led by remodeling — a signal of constrained new-build capacity that affects affordable housing timelines and labor cost assumptions. The rate environment has changed faster than many pipeline deals were underwritten to handle. With no credible near-term catalyst for Fed easing and geopolitical uncertainty keeping inflation elevated, LIE-tek developers and their capital partners should be revisiting interest rate stress tests before commitment, not after. A resolution of the Iran conflict remains the most plausible inflation relief valve, but the timeline is unpredictable. Deals that are thin at today's rates deserve a hard look now. Subscribe to The Spring Street Brief for daily updates on affordable housing in America.

Episode 99: Cinnaire Closes $307M LIHTC Equity Fund

Cinnaire has closed Fund for Housing Limited Partnership 45 (Fund 45), a $307 million LIHTC equity fund targeting the creation and preservation of 2,259 affordable housing units across 27 properties in 10 states. The fund will directly benefit an estimated 5,196 residents and represents one of the larger single-fund LIHTC equity closes in Cinnaire's history — a notable signal of sustained institutional appetite for affordable housing tax credit investment. Key Takeaways: * Fund 45 closed at $307 million in LIHTC equity — a significant raise in the current rate environment. * The fund will finance 2,259 affordable housing units across 27 properties in 10 states. * An estimated 5,196 residents will benefit directly from Fund 45 investments. * The fund explicitly blends new construction with preservation, giving Cinnaire pipeline flexibility across deal types. * Geographic diversification across 10 states signals a risk-management structure designed for institutional corporate investors. * The close indicates continued investor demand for LIHTC equity despite tax policy uncertainty and compressed deal economics. * Developers in Cinnaire's Midwest, Mid-Atlantic, and Southern footprint should engage now on fund allocation and deal timing. Fund 45's close arrives at a moment when preservation pipelines are competing aggressively for equity capital alongside new construction. Cinnaire's ability to blend both deal types into a single $307 million vehicle — and close it — suggests the fund structure resonated with investors seeking diversification. Developers and syndicators should treat this as both a market signal and a near-term equity access opportunity, particularly as deployment timelines will shape deal economics for participating properties through the remainder of the year. Subscribe to The Spring Street Brief for daily updates on affordable housing in America.

Episode 98: Shaheen & McCormick Push HUD for BABA Reforms

Senators Jeanne Shaheen (D-NH) and Dave McCormick (R-PA) have sent a bipartisan letter to HUD Secretary Turner calling for administrative reforms to the Build America, Buy America (BABA) waiver process. The current system — designed to accommodate products not domestically available in sufficient supply — has instead created significant delays and, in some cases, hard stops for affordable housing construction and preservation projects. For LIHTC developers, syndicators, and lenders working on federally assisted deals, this letter signals real momentum toward procedural relief that HUD can deliver without waiting for Congress. Key Takeaways: * Bipartisan Senate pressure targets HUD's BABA waiver backlog, which has caused significant project delays and blocked some affordable housing deals entirely. * The letter calls on HUD Secretary Turner to improve communication around waiver request status — a basic transparency gap developers have flagged for months. * Senators are pushing for faster action on completed waiver submissions, meaning requests already in queue should not be stalled by administrative inaction. * HUD is asked to assess the actual availability of BABA-compliant housing products — addressing the root supply chain disconnect driving most waiver requests. * All three requested reforms are administrative in nature, meaning HUD can act without new legislation — a faster potential path to relief than a statutory fix. * Projects using HOME funds, CDBG dollars, or other federal financing that triggers BABA applicability are most directly affected. * New Hampshire developers with active BABA concerns should contact Ilana Morof directly for advocacy and technical support. The bipartisan framing here is significant. When both sides of the aisle are putting the same ask in writing to a cabinet secretary, it increases the likelihood of an administrative response. Developers and sponsors with deals stalled on BABA waivers should document the specific timeline and cost impacts — that data is exactly what congressional offices and HUD need to justify accelerated action. Watch for HUD guidance or a public response from Secretary Turner's office in the coming weeks. Subscribe to The Spring Street Brief for daily updates on affordable housing in America.

Episode 97: Bill Pulte Named Acting Director of National Intelligence

President Trump appointed FHFA Director Bill Pulte as Acting Director of National Intelligence on June 2 — while keeping him in place as FHFA Director and chairman of both Fannie Mae and Freddie Mac. The dual role raises immediate questions about leadership bandwidth at the agency that oversees the GSEs, with direct implications for multifamily lenders, LIHTC syndicators, and affordable housing developers who rely on Fannie and Freddie for bond credit enhancement and loan execution. Key Takeaways: * Pulte retains all three roles simultaneously: FHFA Director, Fannie Mae chairman, and Freddie Mac chairman, in addition to his new acting intelligence post. * Senate Majority Leader John Thune (R-SD) warned Pulte would face a "lengthy road" to Senate confirmation if nominated permanently — Trump has indicated no permanent nomination is planned, bypassing a confirmation vote. * Bipartisan criticism came from Sen. Chuck Schumer (D-NY) and Sen. John Cornyn (R-TX), the latter saying he sees "no evidence of any qualifications for that job." * Section 702 of FISA — authorizing warrantless surveillance of foreign targets — expires June 12; Pulte's appointment threatens to complicate bipartisan reauthorization efforts ahead of that deadline. * FHFA leadership distraction carries downstream risk for multifamily deal structures that depend on GSE execution certainty, including bond credit enhancement and LIHTC equity transactions. * Acting status insulates the appointment from a Senate vote, meaning no near-term forcing function for leadership change at FHFA. For affordable housing deal teams, the practical question is whether FHFA's multifamily and affordable housing agenda maintains momentum under a director now carrying a second, high-profile national security portfolio. Developers and lenders with active GSE-dependent transactions should monitor for any signs of policy slowdown or delegated authority at the agency level. If GSE engagement softens on bond or LIHTC deals in the months ahead, Pulte's divided attention will be the first variable to examine. Subscribe to The Spring Street Brief for daily updates on affordable housing in America.