The real estate development sector is currently grappling with geopolitical instability and macroeconomic uncertainty, which are driving up material costs and maintaining high property prices.

Tighter capital sources and reduced credit availability are likely to suppress sales activity in the industry until these conditions stabilize.

Current macroeconomic uncertainties, particularly surrounding trade policy and government spending, are expected to hinder the industry's growth in the near term.

The Federal Reserve's interest rate cuts in late 2024 are anticipated to be fewer in 2025 due to expected high inflation, which may affect client behavior and transaction timelines.

As a result of these factors, sales activity in the real estate sector is expected to remain low until macroeconomic conditions improve.

The industry is primarily classified as financial rather than construction-focused, emphasizing leasing and management services over actual building.

The Zacks Real Estate – Development industry includes firms involved in the ownership, development, and management of commercial, residential, and mixed-use properties.

Despite the challenges, some developers are engaging in strategic activities like infrastructure improvement and land planning to stimulate economic growth in their regions.

There remains healthy demand in various real estate categories, and a slowdown in new property deliveries could support growth for companies like Howard Hughes and Landsea Homes.

Zacks Equity Research highlights Howard Hughes Holdings Inc. and Landsea Homes Corporation as potentially strong performers in the current market.

Geopolitical instability, including conflicts in various countries, is significantly impacting the global economic environment and leading to supply-chain disruptions.

Tariff policies affecting imported goods are expected to raise costs and contribute to investor skepticism regarding the economy's outlook.