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U.S. existing home sales dropped to the lowest level in more than 13 years in October as the highest mortgage rates in two decades and a dearth of houses drove buyers from the market, Reuters reported. The report from the National Association of Realtors on Tuesday also showed that the median house price last month was the highest for any October. Barring a rebound in November and December, home resales this year are on track for their worst performance since 1992. Existing home sales tumbled 4.1% last month to a seasonally adjusted annual rate of 3.79 million units, the lowest level since August 2010 when the sales were declining following the expiration of a government tax credit for homebuyers. Home resales are counted at the closing of a contract. October's sales likely reflected contracts signed in the prior two months, when the average rate on the popular 30-year fixed-rate mortgage jumped to levels last seen in late 2000.

Brigade Capital Management, Capital Research and Management Co. and Sculptor Capital are among now-bankrupt WeWork Inc.’s biggest creditors, court papers show, Bloomberg News reported. The firms are part of a group of seven asset managers and hedge funds that have banded together to negotiate with the the failed co-working firm. Together, they hold more than $1.1 billion of WeWork’s secured notes, according to a Thursday bankruptcy court disclosure. Other members include King Street Capital Management, Aristeia Capital, Silver Point Capital and BlackRock Financial Management, Inc., according to the court filing. By joining forces and sharing the cost of attorneys, such groups can hold significant sway in major corporate bankruptcies. Hashing out deals can take months, which can quickly rack up big professional fees.

The office sector’s credit crunch is intensifying. By one measure, it’s now worse than during the 2008-09 global financial crisis, the Wall Street Journal reported. Only one out of every three securitized office mortgages that expired during the first nine months of 2023 was paid off by the end of September, according to Moody’s Analytics. That is the smallest share for the first nine months of any year since at least 2008 and well below the nadir reached in 2009, when 47% of these loans got paid off. That share is also well below the rate before the pandemic, when more than eight out of every 10 maturing securitized office mortgages were paid back in some years. While the numbers cover only office mortgages packaged into bonds — so-called commercial mortgage-backed securities — they reflect a broader freeze in the lending market for office buildings. Many office owners can’t pay back their old loans because they can’t get new mortgages. Remote work and rising vacancies have hit building profits, making it harder to pay interest. Higher interest rates have pushed debt costs up and building values down.

A venture of two nonprofits and Related Fund Management is poised to win an auction for billions of dollars of Signature Bank loans backed by New York apartments, the Wall Street Journal reported. The venture’s leading bid of less than 70 cents of the loan’s face value shows how much the value of New York’s rent-regulated apartment sector has deteriorated in recent years. A formal winner could be awarded as early as Monday, according to a person familiar with the auction of real-estate assets once owned by the failed bank. New York state legislation enacted in 2019 made it much tougher for multifamily owners to raise rents, a development that has greatly reduced the worth of these buildings. Higher interest rates have also weighed on property values. The Signature loan sale of $33 billion in real-estate loans and other assets has been the largest commercial-real-estate transaction of the year. It was conducted by the Federal Deposit Insurance Corp., which seized Signature earlier this year. About half of the bank’s assets in the closely watched auction fall into the rent-regulated category. The other half consists of assets backed by a range of commercial property including nonregulated apartments. Most of the loans are performing.

WeWork’s chapter 11 filing last week marked at least the seventh large bankruptcy filed in New Jersey since last November, signaling the Garden State’s increasing popularity as a destination for companies seeking to restructure their debt, WSJ Pro Bankruptcy reported. Judges with many years on the bench have accumulated a stack of decisions, which helps bankruptcy advisers to pick a venue for their clients, said Prof. Robert Lawless, of the University of Illinois College of Law. The companies and their advisers are “obviously happy with the New Jersey court” in terms of how it rules, Lawless said. Historically, bankruptcy courts in Wilmington, Del., and New York attracted major corporate filings, but other venues also gained traction. For New Jersey, the most recent large filings began last November with cryptocurrency lender BlockFi, followed by four major cases in April: the second bankruptcy filing of Johnson & Johnson’s LTL Management, wedding-gown chain David’s Bridal, home-goods chain Bed Bath & Beyond and Berkshire Hathaway-owned former talcum powder supplier Whittaker, Clark & Daniels. Last month, Rite Aid, a Philadelphia-based drugstore chain, filed for bankruptcy in New Jersey to deal with hundreds of federal, state and private lawsuits alleging the company oversupplied prescription painkillers that helped fuel the nation’s opioid epidemic. While BlockFi, LTL Management and Bed Bath & Beyond listed New Jersey as their main addresses, the other four filers are based primarily outside of the state.

The Fed might be done raising rates. But can the cost of debt drop fast enough to save struggling landlords? Property stocks are up 5.4% since Tuesday’s consumer-price index data showed that U.S. inflation is easing. Commercial real estate has been a big casualty of higher interest rates. Property values have fallen by a fifth since the Fed began hiking in March 2022 and almost 8% of securitized property loans are in distress, according to CRED iQ data, the Wall Street Journal reported. Interest rate cuts can’t come fast enough for landlords who grew addicted to cheap money in recent years. Between now and the end of 2025, $390 billion of securitized commercial real-estate debt matures and needs to be refinanced at higher rates. Another wave of bank debt also comes due. Refinancing has become a real headache, and not just because of interest costs. Falling property values have required owners to inject equity to meet lenders’ loan-to-value thresholds, which have become more conservative. “You can’t get the same leverage and debt is more expensive. So you are getting hit on both sides,” says James Millon, president of U.S. debt and structured finance at CBRE. Landlords are tapping their investors to fill this funding gap, or looking for expensive mezzanine loans.

A real estate investor facing scrutiny from lenders and investors is now the subject of a government inquiry into an offer to buy shares in WeWork Inc., Bloomberg News reported. The U.S. Securities and Exchange Commission has sent inquiries to Jonathan Larmore, the founder of Arciterra Cos., about a Nov. 3 press release in which an entity called Cole Capital Funds said it was seeking to buy shares in the coworking company at a significant premium, according to a person familiar with the matter who asked not to be named citing private information. The inquiry includes Larmore’s trading history in WeWork stock and options, the person said. A company filing links Larmore to Cole Capital Funds, which was registered in October with the Arizona Corporation Commission. The real estate investor was already facing an SEC inquiry about Arciterra, which had owned as many as 80 properties including strip malls. In an interview, Larmore said that he planned to make all of the required filings related to his purchase of WeWork shares and that he couldn’t comment further on the matter until he had done so. He declined to comment on the SEC inquiry, and said that he was working through lawsuits filed by private parties and was confident in their outcome. “Many of the lawsuits have been resolved and we will continue to resolve the rest,” he said.

Foreclosures are surging in an opaque and risky corner of commercial real-estate finance, offering one of the starkest signs yet that turmoil in the property market is worsening, the Wall Street Journal reported. Lenders this year have issued a record number of foreclosure notices for high-risk property loans, according to a Wall Street Journal analysis. Many of these loans are similar to second mortgages and commonly known as mezzanine loans. Mezzanine loans have high interest rates and offer a faster and easier path to foreclose than mortgages. The Wall Street Journal analysis found notices for 62 mezzanine loans and other high-risk loans this year through October. That is more than double the number for all of last year, and likely the highest total ever for a single year, as higher interest rates and rising vacancies punish the property sector. The increase in mezzanine-loan foreclosure announcements — while not large in absolute numbers — matters because it offers a more immediate measure of commercial real-estate distress than mortgage foreclosure rates.

Global ratings agency Fitch said today that it plans to withdraw all the ratings on China's Country Garden Services Holding on or about Dec. 12 for commercial reasons, Reuters reported. "Fitch believes that Country Garden Services investors benefit from increased rating coverage by Fitch and is providing approximately 30 days' notice to the market of the rating withdrawal," the ratings agency said in a statement on Monday. Fitch had downgraded Country Garden Services to BB+ and placed its rating on negative watch last week. Chinese courts had ordered a freeze on 63.68 million yuan worth of shares in two units of Country Garden Service, a sister company of China's property giant Country Garden Holdings, the nation's biggest private property developer. Country Garden Holdings missed its coupon payment in October, triggering default terms. Reuters' had earlier reported citing sources that the company aims to have an offshore debt restructuring plan by year end.

Total spending on home improvement and repairs is projected to drop 7.7% over the next four quarters to $452 billion, researchers from Harvard University’s Joint Center for Housing Studies’ latest Leading Indicator of Remodeling Activity showed, YahooFinance.com reported. "The decline [expected] in 2024, if that comes to pass, would be the first decline in more than a decade," Abbe Will, associate project director of the Remodeling Futures Program, told Yahoo Finance in an interview. A second measure of remodeling activity also captured the slowdown. Data from the National Association of Home Builders showed remodeler confidence slipped in the third quarter of this year, with the index measuring current conditions falling for projects of all sizes and the index gauging future activity — rate at which leads and inquiries are coming in and the backlog of jobs — also declining. Still, the overall index signals that more remodelers view remodeling market conditions as good than poor.