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Residential construction slumps as CRE debt funds hold record dry powder
Housing starts fell 2.6% in August and multifamily starts dropped nearly 22%, while commercial real estate debt funds had $56 billion in dry powder as of late August.
U.S. residential construction weakened in August, with housing starts overall down 2.6% and multifamily starts plunging nearly 22%, according to Housing completions declined nearly 12%, reaching what Bloomberg described as the slowest pace since the start of the pandemic, the Commercial Observer reported, citing First American Financial Corporation data.
At the same time, commercial real estate debt funds had record liquidity, with $56 billion in dry powder as of late August, and about $16 billion raised in the first half of 2026, according to CRE Daily, citing Green Street data.
Commercial Observer also noted that private credit funds have expanded their commercial real estate portfolios by roughly $104 billion since 2019, and that more lenders and other capital providers are looking to fund construction, even as fewer projects qualify.
The outlet cited Eric Cohen, managing director and co-head of debt origination for Affinius Capital, saying the market is flush with capital from banks and private lenders, which has created a more selective environment for developers.