Brookfield Residential Executive Signals Shift in U.S. Housing Demand Amid Elevated Mortgage Rates

Brookfield Residential's executive Lui pointed to a sustained slowdown in housing demand, attributing the trend to elevated borrowing costs and tightening affordability. With the average 30-year fixed mortgage rate now at 7.2%, down slightly from peak levels but still well above historical norms, consumer demand has cooled across most U.S. markets. Despite this, the company reported that new home pricing in high-demand urban corridors held steady, with median list prices rising 2.1% year-over-year in Q4 2025. The pricing stability observed in select markets reflects a narrowing inventory gap, with new home supply increasing by 11% compared to Q3 2025. However, Lui noted that absorption rates have declined by 18% year-over-year, indicating that rising rates are outpacing demand. This dynamic has triggered a shift in buyer behavior, with more households opting for deferred purchases or downsizing, particularly in regions with above-average price-to-income ratios. The commentary carries implications for related financials: mortgage REITs such as DHR and PGR may face margin compression due to slower refinancing activity and higher funding costs, while homebuilder equities like BAM.AX have seen quarterly earnings reports reflect softer backlogs and margin pressures. Industry analysts are now reassessing near-term forecasts, with some revising 2026 housing starts projections downward by 5–7%. Market participants are closely monitoring the interplay between rate policy, wage growth, and housing supply. Any sustained reduction in mortgage rates below 6.5% could reinvigorate demand, but current expectations point to a prolonged period of elevated financing costs.