The Fed didn’t cut rates this week—and that’s not the bad news it might sound like. The Fed meeting and decision this week left the Fed’s policy rate unchanged after a three-meeting streak of cuts. While this may be a disappointment to home buyers and sellers, it is a vote of confidence in the U.S. economy.
Even though inflation is still too high, some components are easing; the labor market is cooler, but steady; and economic growth remains on track even if recent consumer confidence measures are low.
Once again there were dissents from the decision, but on the whole this meeting was not a game changer for the mortgage market. One development that arose early Friday morning is President Donald Trump’s announcement of Kevin Warsh as his Fed chair nominee.
Underscoring that the Fed decision was not a mortgage rate mover, this week mortgage rates were essentially unchanged, ticking up just 1 basis point. Although mortgage rates remain above 6%—high enough for the lock-in effect to continue to keep many homeowners in place–they are in the low 6s, and down 85 basis points from a year ago, which has boosted purchasing power.
November Case-Shiller data based on fall home closings show that nationwide home price growth continued on par with what we saw in the prior month. Slower home sales price growth over the last 18 months reflects more market balance between buyers and sellers.
A rising number of homes for sale has improved the balance between buyers and sellers, and Realtor.com® weekly data show that trend generally continuing. Fortunately, new listing growth continues to bring buyers more options, and list price softening suggests that sellers are approaching the market with moderate expectations in 2026.
Notably, listing price softening is showing up in the luxury market as well, with the biggest softening in the ultra- and high-end luxury tiers in December. Still, entry level luxury pricing nationwide starts at 3 times the median list price, with luxury markets like Bridgeport CT, Naples, FL, and Miami seeing pricing multiples of roughly 5 times the median price.
Finally, I want to turn from luxury to housing affordability, a unifying theme that runs through two of our recent reports.
In the first, we focus on homeowners associations, finding that a larger share of for-sale listings in 2025 included an association fee, those fees were higher, and they are more common in the West and South. Importantly, HOA fees tended to boost the cost of buying a home the most in the South, especially Florida.
In the second, we examine the state of real estate in California, finding that the Golden State’s structural housing shortage has pushed up both home prices and rents. The good news is that construction in the Golden State has been more affordable, but it is insufficient, and migration data show that housing-driven moves out of California rose 43% after the pandemic as housing costs soared.