CHM Blog

The housing market's best kept secret

In the movie “Wall Street,” Gordon Gekko famously declared, "The most valuable commodity I know of is information." Right now, however, the information homebuyers need most is the knowledge that the housing market is quietly tilting in their favor as 2025 draws to a close.

Dave Gallagher, writing for Real Estate News, reports that the 30-year fixed-rate mortgage was down slightly from the week before. That puts rates right around their lowest level of the year, first seen back in late October. According to Freddie Mac, these rates have hovered in a remarkably narrow range for nearly three months now.

Jake Krimmel, senior economist at Realtor.com, explains how Fed policy expectations are already priced in, with few signals about January motives. Add limited new data amid the government shutdown and thin holiday trading, and mortgage rates continue to drift rather than break sharply in either direction.

So what should you watch instead? Bright MLS’ Lisa Sturtevant, suggests focusing on local market signals such as (1) the level of inventory at different price points (2) the pace of local market activity, and (3) how often homes sell below asking price. All are about to become key pieces of information buyers will want as they consider their purchase in the months ahead. Most economists expect rates to remain around current levels in early 2026, barring any big surprises from upcoming reports, the jobs report on January 9, and the major inflation report on January 13.

While mortgage applications dropped 5% overall in the week ending December 19, along with seasonally adjusted purchase applications down 4%, according to the Mortgage Bankers Association, the slowdown appears seasonal. MBA chief economist Mike Fratantoni acknowledges a softening job market and sticky inflation will continue to be issues, but his organization is still forecasting modest growth in home sales next year.

If you are a buyer ready to act in January, here’s where it gets interesting: Redfin estimates there are currently 37.2% more sellers than buyers in the U.S. housing market, more than double last year's gap. Austin, Texas, has the strongest buyer's market, with 114% more sellers than buyers in November.

Asad Khan, Redfin's senior economist, notes that a modest improvement in housing affordability could bring some homebuyers off the sidelines in 2026. But the housing market is likely to remain in buyer's market territory for the foreseeable future, with sellers cutting prices or offering concessions to lure buyers. Chen Zhao, Redfin's head of economics research, adds that wage growth is expected to outpace home price growth next year. Even though prices remain high, buyers have a chance to negotiate with sellers and get some concessions.

RealEstateNews, TBWS

How Rates Move:

Conventional and Government (FHA and VA) lenders set their rates based on the pricing of Mortgage-Backed Securities (MBS) which are traded in real time, all day in the bond market. This means rates or loan fees (mortgage pricing) moves throughout the day, being affected by a variety of economic or political events. When MBS pricing goes up, mortgage rates or pricing generally goes down. When they fall, mortgage pricing goes up. Tracking these securities real-time is critical. For more information about the rate market, contact me directly. I'm among few mortgage professionals who have access to live trading screens during market hours.

Rates Currently Trending: Neutral

Mortgage rates are getting a little support today. The MBS market improved by +17 bps last week. This was not enough to decrease mortgage rates or fees. The market experienced moderate volatility last week.

This Week's Rate Forecast: Neutral

These are the three things that have the greatest ability to impact rates this week. 1) The Fed, 2) Manufacturing and 3) Geopolitical.

1) The Fed: We will get the Minutes from the last FOMC meeting on Tuesday (normally hits on a Wednesday). These Minutes are key as they are from a meeting that released the Economic Projections (dot plot chart), lowered the interest rate and had some dissenting votes.

2) Manufacturing: Chicago PMI on Tuesday is a pivotal read in the manufacturing sector.

3) Geopolitical: We would normally have Big Jobs Friday this week but it has been pushed to next week so we really don't have much to digest this week which means more attention will go to Geopolitical events.

This Week's Potential Volatility: Neutral

This morning markets continue to see some support. Volatility has started at moderate to low levels.

Bottom Line:

If you are looking for the risks and benefits of locking your interest rate in today or floating your loan rate, contact your mortgage professional to discuss it with them.

Richard Sardella has been actively managing and providing services in the mortgage industry for over 30 years. Richard serves on the board of directors as President of Colorado Home Mortgages Inc.

All information furnished has been forwarded to you and is provided by thetbwsgroup only for informational purposes. Forecasting shall be considered as events which may be expected but not guaranteed. Neither the forwarding party and/or company nor thetbwsgroup assume any responsibility to any person who relies on information or forecasting contained in this report and disclaims all liability in respect to decisions or actions, or lack thereof based on any or all of the contents of this report.

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