Housing Market Enters 2026 With Improving Balance and Opportunity
Inside Lending For the week of JANUARY 5, 2026
QUOTE OF THE WEEK
“’Expert: a person who makes three correct guesses consecutively.”—Laurence J. Peter, Canadian educator and “hierachiologist”
NATIONAL MARKET UPDATE
The Pending Home Sales index of signed contracts on existing homes shot up more than 3% in November and is up almost 3% annually. That’s its strongest performance of the year and the best performance in nearly three years.
Home price gains continue to slow, with the October Case-Shiller Index up only 1.4% nationally, and some markets posting small declines. Housing affordability is improving, with wage growth rising faster than home prices.
Realtor.com reports homebuyers now need about 7 years to save for a down payment. Timelines have shortened considerably from a peak of 12 years in 2022, and vary from under 2 years in affordable metros to longer in pricier cities.
REVIEW OF LAST WEEK
SLIPPING INTO 2026… After a solid Christmas week rally, Wall Streeters couldn’t hold onto the gains during another holiday-shortened week, thanks to low trading volumes and the absence of any market-moving catalysts.
Still, the three major stock indexes all booked double-digit annual gains for the year—a threepeat for the broadly-based S&P 500. We also saw initial jobless claims fall to 199,000, far below the level signaling recession.
It was no surprise the markets closed the year at near-record highs, as the prior week’s GDP report showed the U.S. economy expanded at a 4.3% annual rate in Q3, well ahead of expectations and its strongest growth in two years.
The week ended with the Dow down 0.7%, to 48.382; the S&P 500 down 1.0%, to 6,858, and the Nasdaq down 1.5%, to 22,236.
Bond prices slipped overall, but the 30-Year UMBS 5.0% was UP 8 basis points, to 99.29. Freddie Mac reported the national average 30-year fixed mortgage rate “moved to its lowest level in 2025…an encouraging sign for potential homebuyers.” Remember, mortgage rates can be extremely volatile, so check with your mortgage professional for up-to-the-minute information.
DID YOU KNOW… 2025 was a year of normalization for the U.S. housing market. 39% of listings saw price cuts, while active inventory rose by 16.4%, as conditions shifted toward balance between buyers and sellers.
THIS WEEK’S FORECAST
HOME BUILDING, PRODUCTIVITY, JOBS… Forecasts call for Housing Starts and Building Permits to continue moving up in both the October and the delayed September reports. The Preliminary Q3 Productivity read should show that key economic measure continuing up at a strong rate. Analysts expect a modest gain in Nonfarm Payrolls for December, which could keep the Fed on a rate-cutting tack.
FEDERAL RESERVE WATCH
Forecasting Federal Reserve policy changes in coming months. The futures market currently expects a hold on rates later this month, then a rate cut in March, and another hold in April. Note: In the lower chart, the 17.2% probability of change means there’s an 82.8% probability the rate will stay the same. Current rate is 3.50%-3.75%.
AFTER FOMC MEETING ON:CONSENSUSJan 283.50%-3.75%Mar 183.25%-3.50%Apr 293.25%-3.50%
Probability of change from current policy:
AFTER FOMC MEETING ON:CONSENSUSJan 28 17.2%Mar 18 54.0%Apr 29 15.3%
BUSINESS TIP OF THE WEEK
To succeed, you don’t need a five-year plan—you just need to take the next best step. Don’t overanalyze every move. Success is built on being able to pivot through a series of course corrections. Don’t fall victim to analysis paralysis.
Thinking about buying, selling, refinancing, or planning your next move in 2026? Market conditions are shifting, and small changes in rates, pricing, and strategy can make a big difference.
If you’d like help understanding how today’s market impacts your situation, let’s schedule a quick Mortgage Strategy Call. We’ll review your goals, walk through your options, and build a clear plan—no pressure, no guesswork.
👉 Schedule your mortgage strategy call here: https://kevinbrierton.com/call
