November 25, 2025 – Giving Thanks

Economic Commentary

It certainly has been a very tumultuous year for the real estate sector. And as we approach the Thanksgiving holiday, it makes sense for us all to take a breather and give thanks for the good things in our lives.  The first thing we would like to give thanks for is the end of the federal government shutdown. At least in this one area of our life a good segment of the population can return to normalcy — whether you are flying with less delays or a government employee getting a paycheck for the first time in weeks.

From the perspective of someone who writes economic commentary each week, the data will be flowing again and there is a whole bunch of data to catch up on. We got our first look last Thursday with the delayed September jobs report release. We will call this the data tsunami of 2025.  Certainly, when the Federal Reserve meets in December there will be a lot of statistics to chew on. Hopefully when the data is out there, we will be looking at an economy which is not as weak as some have predicted.  Regardless, the major benefit of a slower economy gives us something else to be thankful for – lower interest rates.

There is no doubt that it has been a tough year with regard to the affordability of real estate. When mortgage rates hit 2.5% during the pandemic, we had a feeding frenzy. Those super low interest rates contributed to higher home prices and made the higher interest rates which followed that much harder to swallow. But we can be thankful that we appear to be coming out of that cycle. If mortgage rates fall in 2026, the same rates at 5.5% which seemed onerously high after the pandemic will seem palatable after the peaks we saw in the past few years. Homeowners are refinancing again and perhaps the buyers will come out of hiding in big numbers.  Here’s hoping for even more thankful news in 2026!

Weekly Interest Rate Overview

The Markets. There are signs that the housing market is awakening in response to lower mortgage rates.  Meanwhile, the first release of delayed data did not seem to affect the markets much initially. According to the Freddie Mac weekly survey, 30-year fixed rates rose to 6.26% last week from 6.24% the previous week. In addition, 15-year loans increased to 5.54%. A year ago, 30-year fixed rates averaged 6.84%, 0.58% higher than today. Attributed to Freddie Mac: “Mortgage rates have been shifting within a narrow ten-basis point range over the last month. This rate stability is a positive sign for both buyers and sellers, as it helps provide greater certainty in the housing markets.” Note: Rates indicated do not include fees and points and are provided for evidence of trends only. They should not be used for comparison purposes.

Real Estate News

Nearly eight in 10 United States metro areas saw home prices rise in the third quarter of 2025, as the market continued to grapple with affordability pressures and uneven regional trends. According to the National Association of REALTORS® (NAR), 77% of metro markets, or 176 out of 230, posted price gains, up from 75% in the previous quarter. However, only 4% of metros recorded double-digit price jumps, down from 5% in Q2, signaling a moderation in the pace of increases. NAR chief economist Lawrence Yun said, “Home sales have struggled to gain traction, but prices continue to rise, contributing to record-high housing wealth. Markets in the supply-constrained Northeast and the more affordable Midwest have generally seen stronger price appreciation.”  Yun added, “Price declines are occurring mainly in southern states, where there has been robust new home construction in recent years. Given the region’s faster job growth, these price drops should be viewed as temporary and as a second-chance opportunity for those previously priced out of the market.”  The national median single-family existing home price grew 1.7% year over year to $426,800, matching the annual pace seen in Q2. Additionally, the NAR recently revealed that the share of first-time homebuyers in the US fell to a historic low of 21% over the past year, while the median age of first-time homebuyers entering the market soared to 40.  Source: NAR

With mortgage rates elevated, more borrowers are turning to adjustable-rate loans for relief. Adjustable-rate mortgages, or ARMs, made up about 10 percent of all mortgage applications in September — the highest share in nearly two years and well above the post-2008 average of 6 percent, according to the Mortgage Bankers Association (MBA).  ARMs, also known as variable-rate mortgages, usually start with lower borrowing costs than fixed-rate mortgages but can increase over time. That step-up in payments is what got many homeowners in trouble two decades ago, when ARMs peaked at 35 percent of all mortgage applications in 2005. We’re a long way from that level today — and there are several reasons it’s a “vastly different environment” now, according to the MBA. “Most ARM loans now have fixed terms of 5, 7, and 10 years, and borrowers are underwritten to the fully indexed rate if shorter-term,” wrote Joel Kan, MBA vice president and deputy chief economist.  Kan said today’s ARM loans are significantly less risky than those originated before 2008, and borrowers who qualify tend to have better credit profiles. In today’s market, moving to an ARM can result in real savings — roughly $200 per month on a $400,000 loan — because the spread between ARMs and fixed-rate mortgages has widened. The recent uptick in ARMs reflects a housing market where borrowers are struggling with affordability and looking for any edge they can get.  The Consumer Financial Protection Bureau urges anyone considering an ARM to understand how high or low their interest rate could move with each adjustment, how frequently the rate can change and whether there’s a cap on how high the rate could eventually go. MBA’s data shows that although ARMs have grown more popular recently, the overall level of ARM loans remained relatively low in September, about one-fourth of the 2008 average.  Source: The Hill

The National Association of Realtors (NAR) has released its 2025 REALTORS Residential Sustainability Report, finding sustainable features, particularly those that reduce costs or offer financial savings, are increasingly influencing home searches and remodeling decisions. For the study, NAR surveyed its residential-focused members about sustainability issues facing the industry, concluding that more than two in five agents (42%) worked with a property that had green features over the past year. Client questions about energy-efficiency are becoming more common, though still not widespread. The share of respondents who said clients never ask about upgrades dropped sharply to 29% from 57% last year. Rarely is now the most frequent response at 42%, up from 7% in 2024. Another 21% said clients ask sometimes, and 6% said always/often. “Housing affordability continues to challenge homebuyers, so sustainability can sometimes be pushed to the back burner as buyers search for the ideal home,” said Jessica Lautz, NAR Deputy Chief Economist and VP of Research. “However, many still seek sustainable home features to reduce their environmental impact as well as heating, cooling, and commuting costs.” Forty-four percent of respondents said their MLS includes green data fields, but nearly half (47%) of those with access do not use them. The most important green home features for clients include windows, doors, and siding, with 37% rating these features as “very important.” Source: MP Daily