California just hit a new home price record, but Pasadena has been living in that reality for a while.

The statewide median home price climbed to $914,810 in April, Pasadena Now reported, citing new data from the California Association of Realtors. At the same time, Pasadena’s median sale price reached nearly $1.3 million in March, about 37 percent higher than the statewide benchmark and well above Los Angeles County’s $845,410 median in April, which was down 0.6 percent from a year prior.

Statewide home affordability ticked up modestly as 22 percent of households could afford a median-priced home in the first quarter, representing the highest share in four years. Buying in Pasadena still requires a steeper income threshold, with a household needing to earn roughly $259,000 annually to qualify for a home at the city’s median price, assuming a 20 percent down payment and mortgage rates around 6.3 percent.

The statewide jump was fueled in part by an 8.4 percent increase in sales of homes priced above $2 million, according to C.A.R. Existing single-family home sales across California rose 4.1 percent year over year in April, though transaction volume remained historically subdued, staying below 300,000 trades on an annualized pace for the 43rd straight month. Pasadena’s market reflects that high-end tilt more intensely. Homes in the city received an average of four offers and sold in about 32 days in March, per Redfin data cited by Pasadena Now. The median price per square foot climbed 6.4 percent year over year to $844, even as overall sales volume fell to 74 transactions from 92 a year earlier.

“The increase in the median price was driven in large part by the composition of sales, with a greater share of activity occurring in higher-priced segments of the market,” Jordan Levine, C.A.R.’s senior vice president and chief economist, said.

The city’s inventory remains tight more than a year after the Eaton fire reshaped the housing landscape in Altadena and eastern Pasadena. The deadly blazes destroyed housing stock in an already constrained corridor and sparked increased investor activity in fire-impacted neighborhoods. Redfin found investors bought roughly 40 percent of vacant lots sold in Eaton and Palisades fire zones during the third quarter of 2025.— Chris Malone Méndez

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As we navigate the peak spring homebuying season, the economic backdrop remains characterized by a persistent “cloudy” outlook.

While geopolitical tensions in the Middle East have injected a fresh dose of volatility into financial markets, the latest data suggests a housing market that is remarkably resilient, albeit one that is undergoing a complex rebalancing.

In what marked Jerome Powell’s final meeting as Federal Reserve chairman, the FOMC opted to hold rates steady. However, the most telling aspect of that meeting wasn’t the decision itself, but the dissension.

With four members expressing differing views on policy or statement language, it is clear that the consensus within the Fed is fracturing. This internal debate reflects the broader economic tug-of-war we are witnessing: a labor market that remains firm and a GDP that grew by a respectable 2% in the first quarter, fueled by broad-based strength in investment and consumer spending.

For the housing market, this broader stability provides a much-needed anchor, even as mortgage rates continue to dance to the tune of global headlines. We saw rates tick up to 6.3% recently, driven by shifting expectations regarding international peace efforts. Yet, despite these headwinds, April’s housing data shows a market finding its footing.

At Realtor.com, our Market Clock illustrates a national market that is relatively balanced, but that “balance” is an average of extreme regional variations.

We are seeing a healthy infusion of new listings, which is finally providing buyers with the inventory they have craved for years. Consequently, homes are staying on the market slightly longer than last year, and asking prices are beginning to soften.

This isn’t a sign of a crash, but rather a sign of sanity returning. Sellers are entering the market with more realistic price points, which is effectively cooling the frantic price growth we saw in previous cycles.

Interestingly, the rental market is providing a crucial safety valve. With homeowner vacancy rates near historic lows, the gradual recovery of rental vacancies is positioning leasing as a strategic and accessible option for many.

However, the “tale of two cities” narrative is alive and well. In New York City, a supply-demand imbalance pushed rents up over 6%, while in Los Angeles, rents hit a four-year low. This divergence highlights why a one-size-fits-all national perspective often misses the mark.

We see a similar reshuffling in the luxury sector. Our analysis shows that Phoenix has officially overtaken Denver as the pricier luxury hub. While both remain expensive, the shift reflects broader migration patterns and the evolving definition of “luxury” in the Mountain West.

Perhaps the most exciting insight from this quarter is our Housing Market Ranking, produced with the Wall Street Journal.

It is no coincidence that midsized industrial cities like South Bend, IN, and Flint, MI, are dominating the top spots. In an era of 6% mortgage rates, affordability is the ultimate luxury. Conversely, our luxury rankings show that leisure-driven markets like Santa Fe, NM, are the preferred destination for those insulated from interest rate pressures.

Ultimately, the market is weathering the clouds. We are moving away from the frenzy of the COVID-19 pandemic era and into a period of calculated navigation. For buyers and sellers alike, success in this environment requires a deep dive into local data, as the “national” market is truly a collection of very different local stories.

For full reports, the Market Clock, and raw housing data, visit realtor.com/research.

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Aggravation over wildfire rebuilding roadblocks continues to focus on permitting and insurance, as many cite the latter as the top barrier.

Another home completion in the Pacific Palisades’ Alphabet Streets adds to the 24 residential units in total built in unincorporated parts of Los Angeles County as of Tuesday. The blame for the number of rebuilds post-Palisades and Eaton fires has largely focused on government permitting red tape. Many on the ground say not so fast.

Jeffrey Sandorf, Palisades resident and vice president of Southern California division sales at homebuilder Thomas James Homes, said there isn’t a single, straightforward answer for why more residents aren’t back home.  

“It’s a non-linear process,” Sandorf said. “There’s very little predictability of the priorities and roadblocks from family to family.”

Thomas James Homes last November completed 915 Kagawa Street in the Palisades’ Alphabet Streets neighborhood. The city of Los Angeles touted the project as the first completed rebuild, although the developer had planned to tear the original home down and build anew before the blazes broke out. A second home the company owns at 1050 Iliff Street was originally completed before the fires, but subsequently burned. The homebuilder has since rebuilt it and held a grand opening this past weekend to celebrate the space as a community gathering spot.

Locals aren’t counting the developer’s completions as true rebuilds, given an owner isn’t moving in to either. The properties on Kagawa and Iliff streets comprise the handful of post-fires finished homes that have raised questions as to how long rebuilding will take.

As of Tuesday, the Los Angeles Department of Building and Safety reported 2,219 permits issued for 984 different addresses. Individual properties can sometimes require the issuance of multiple permits. It’s a drop in the bucket for the more than 7,800 residential and commercial structures damaged or destroyed in last January’s Palisades fire, according to figures from the California Department of Forestry and Fire Protection, or CalFire. That doesn’t include the wreckage from the Eaton fire, which damaged or destroyed well over 10,000 residential and commercial structures.  

Palisades residents Kambiz Kamdar and Frank Renfro began tracking LADBS data not long after the fires began through their site Pali Builds. Next month, they’ll begin tracking rebuild completions, which has been a murkier number to pin down.

Unlike some permit activity dashboards, Pali Builds scrubs the LADBS numbers to include only Palisades rebuilds on single-family homes to offer a closer view to the residential recovery than other trackers, according to Kambiz.

Filtered data from Pali Builds, which last reported February numbers, tallied 84 applications submitted and 93 permits issued for single-family homes.

Kamdar, who runs Pali Construction and offers advice to homeowners weekly through the Palisades Recovery Coalition, doesn’t see the trickle of completions as a city issue.  

“I’ve been developing and building for 25 years so I know the process, from finding a property to entitling it and building it. I knew the inefficiencies the city has,” he said. “They were slow to start, but the city has made up a lot of ground.”

Pali Builds found permits are taking an average of 90 to 100 days. Kamdar has seen some issued in as fast as 28 days. Others, he said, take significantly longer. He recalled one homeowner who submitted an application in January and received corrections from the city two weeks later but it wasn’t until a week ago the architect resubmitted plans back to the city.

“I said, ‘Listen, the city’s done their part. Your architect took a month to resubmit,’” Kamdar said. “I was very skeptical of the city initially. Now, I’m putting the onus on residents and architects.”

To understand what some perceive as delays means tracing the money for construction financing, he said.  

“The number one issue is insurance,” he said. “They are not paying out, and so homeowners are stuck waiting until they get the payouts to even be able to hire an architect.”

At the rate Pali Builds is tracking permits pulled, Kamdar projected around 40 to 50 percent of the homes lost will have a permit by the end of the year before the market sees a slight slowdown. He estimated the peak is likely to come mid-year when most people will know what they’ll receive from their insurance carriers and can make a decision on whether to rebuild or leave.

While Sandorf echoed the insurance concerns, he pointed out there’s another group afflicted with the “fear of being first” to move back into a community that lacks the commercial infrastructure to support daily needs, from schools to grocery stores.

Developer Rick Caruso’s Palisades Village is expected to reopen this summer in what Sandorf called the “bullseye of the rebuild” that could serve as a catalyst for coming back.  

The Palisades’ real estate market has shifted, Nourmand & Associates’ Rochelle Atlas Maize told The Real Deal earlier this month.

“Since the end of December, the market’s changed dramatically,” she said, noting increased lot activity. “There’s so much more interest coming back.”

It took her bidding on four lots before she was able to secure one for a client in the past five weeks, she said. While much of the activity in the Alphabet Streets section of the Palisades was developer driven six months ago, she noted more families coming back as prices creep up to points that no longer pencil out for builders.

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Homebuilding business executives maintain a guarded outlook on the homebuilding market, amid tepid demand, shrinking profit margins and weak consumer sentiment. The ongoing conflict with Iran could further complicate the outlook for builders. 

The National Association of Home Builders (NAHB)/Wells Fargo Housing Market Index (HMI)’s builder confidence gauge remained subpar in March with a reading of 38. The gauge has been relatively flat since October. The good news is that the index has run notably higher the past few months than the average reading of 32 between June and September of last year. 

The HMI survey reveals that 37% of builders lowered their prices in March, while 64% offered sales incentives, little changed from the prior month. The average price reduction remained steady at 6%, and March marked the 12th consecutive month with more than 60% of builders using incentives. 

“Affordability for buyers and builders remains a top concern,” said NAHB Chairman Bill Owens in a statement. “Many buyers remain on the fence waiting for lower interest rates and due to economic uncertainty. Builders are facing elevated land, labor and construction costs and nearly two-thirds continue to offer sales incentives in a bid to firm up the market.”

Where is demand headed?

During the International Builders’ Show in February, many industry insiders struck a note of cautious optimism and anecdotally reported a slight improvement in traffic and demand from mid-December to February that, in some cases, was beyond what may be expected from typical seasonal shifts. 

While this won’t necessarily translate to a material increase in demand for 2026 as a whole, these reports coincide with what some public builders reported during earnings calls earlier this year. There’s growing hope that, even if the homebuilding market doesn’t rebound right away, it might have already bottomed out. 

Hovnanian Enterprises, for example, reported during its Q1 2026 earnings call that its sales pace in January and the first few weeks of February improved compared to a year ago. Toll Brothers also reported a “modest” increase in traffic and deposits from the same period a year ago. 

The ongoing war in Iran, however, adds a new layer of uncertainty, as the conflict threatens to introduce further supply chain disruptions and erode consumer confidence amid the spring selling season. 

The closure of the Strait of Hormuz has pushed oil prices to neary $100 per barrel, up from roughly $65 per barrel before the conflict began. 

The Trump administration is working on a plan to escort ships through the Strait of Hormuz, and UK Prime Minister Keir Starmer said during a press conference on Monday that Britain is collaborating with allies on a plan to reopen the vital shipping corridor. However, there isn’t a clear timeline for a resolution. 

The average 30-year mortgage rate has also ticked up above 6.0% since the beginning of the conflict, although rates have steadily declined since last summer. 

“While the Freddie Mac 30-year fixed rate mortgage averaged 6.05% in February, the lowest since August 2022, downpayment hurdles and uncertainty from the conflict with Iran and the price of oil will be headwinds going forward,” NAHB Chief Economist Robert Dietz said in a statement. 

Single-family housing starts continue to decline

According to U.S. Census Bureau data released last week, single-family housing starts in January fell 2.8% to a seasonally adjusted annual rate of 935,000, dropping 6.5% year-over-year. This comes after a 7.3% drop in single-family housing starts in 2025.

However, strong multifamily construction performance pushed overall housing starts up 7.2% month-over-month in January. Starts for buildings with 5 units or more increased 29.1% to an annual rate of 524,000 units. 

Permits for single-family homes fell 11.6% year-over-year and 0.9% from last December, while multifamily building permits fell 13.4% month-over-month. According to Dietz, single-family housing starts are expected to stay relatively flat over the course of 2026, before a forecasted increase of 6% in 2027.

Related

Regionally, pending home sales fell month-over-month in the Northeast (58.2) and South (85.3), dropping 5.7% and 4.5%, respectively. In contrast, pending home sales rose on a monthly basis in the Midwest (71.0) and West (57.9), rising 5.0% and 4.3%, respectively.

Year-over-year, pending home sales were down in the Northeast (-8.3%) and Midwest (-3.3%), but up in the south (4.0%) and West (0.3%). 

Despite the national and regional declines, NAR highlighted 10 markets among the 50 largest metro areas that recorded the largest annual price increases in pending home sales in January. These metros included Phoenix-Mesa-Chandler, Arizona (+11.8%), Boston-Cambridge-Newton, Massachusetts-New Hampshire (10.7%), Charlotte-Concord-Gastonia, North Carolina and South Carolina (10.7%), the San Francisco Bay Area (8.9%) and Oklahoma City (8.7%). 

While these markets managed to produce strong results, Lawrence Yun, NAR’s chief economist, does not feel improving affordability conditions nationwide have yet to induce more buying activity. 

“With mortgage rates nearing 6%, an additional 5.5 million households that could not qualify for a mortgage one year ago would qualify at today’s lower rates,” Yun said in a statement. “Most newly qualifying households do not act immediately, but based on past experience, about 10% could enter the market—potentially adding roughly 550,000 new homebuyers this year compared with last year.”

If these additional buyers do decide to enter the market, Yun warns that the housing supply will need to increase or buyers will be again faced with rising affordability challenges. 

Looking ahead, economists do seem to have some reasons to be optimistic about where the housing market is headed.

“It is likely that we will see more home-buying activity over the coming months as inventory improves. Spring is typically the busiest market when homes sell the quickest and offers come in at or above list price. But this year, buyers will have more leverage than they have had in recent years,” Sturtevant said. “Sellers will need to get their home ‘move-in ready’ and priced appropriately if they want a quick sale.”

Even as week-to-week mortgage refinance applications have seen a dip, the overall demand for refinancing homes is still massively higher, sitting at a staggering 117% increase compared to this time last year. This might sound confusing, but it tells a fascinating story about where we are with homeownership and borrowing right now.

It’s easy to get caught up in the week-to-week numbers, and it’s true, mortgage applications took an 8.9% tumble according to the Mortgage Bankers Association (MBA) for the week ending January 30, 2026. This dip wasn’t a surprise to me, given the circumstances. Winter storms can really put a damper on things, especially when the roads are covered in snow and people are hunkered down at home.

Plus, we have to remember that the previous week’s numbers were boosted a bit by the Martin Luther King Jr. holiday. So, while the weekly drop is noticeable, the bigger picture is much more encouraging for homeowners looking to get a better deal on their mortgage.

Mortgage Refinance Demand Drops Weekly But Remains 117% Higher Than Last Year

Why the Weekly Wobble? Factors at Play

Let’s break down what’s causing this slight weekly slowdown. The MBA’s data reveals that the Purchase Index, which tracks applications from people buying new homes, dropped by a notable 14% from the week before. As the MBA’s Deputy Chief Economist, Joel Kan, pointed out, “Winter Storm Fern likely had an impact as much of the country was snowed in, hampering homebuying activity.” This makes perfect sense. When it’s freezing and snowing, most people aren’t exactly eager to go house hunting or deal with closings.

Even the Refinance Index saw a dip of 5% over the week. This is a bit more nuanced. You might think that with mortgage rates inching lower – the average 30-year fixed rate was around 6.21% – more people would jump at the chance to refinance. However, according to my experience in the industry, that slight drop wasn’t quite enough to get a stampede of borrowers to the virtual (or physical) doors of lenders. Refinancing often needs a more significant rate drop to make the costs of doing it worthwhile for the average homeowner.

It’s also important to remember that the numbers we’re comparing this week to included the MLK Jr. holiday, which can skew weekly averages. Think of it like looking at your daily step count; some days you’ll naturally walk more, and others might be a bit less, but the overall trend over time is what truly matters.

The Big Picture: Refinancing is Still Buzzing!

Now, let’s circle back to that incredible 117% increase in refinance demand compared to last year. This is the statistic that truly tells the story. It means that while there might be minor bumps in the road week to week, the underlying desire and opportunity for homeowners to refinance their mortgages is incredibly strong.

So, what’s driving this massive year-over-year surge?

• Lingering Rate Benefits: Even with the recent slight uptick in rates from their absolute lows, they are still significantly lower than what many homeowners locked in a few years ago. Think back to the rates we saw in 2021 or even earlier. Anyone who took out a mortgage then is likely seeing a substantial opportunity to lower their monthly payments.
• Economic Uncertainty: Sometimes, when there’s a bit of economic uncertainty, people look for ways to stabilize their finances. Lowering your mortgage payment can be a great way to free up cash flow and give yourself some breathing room.
• Desire for Payment Reduction: For many, simply reducing their monthly housing expense is a primary goal. Even a half-percent or one-percent decrease in their interest rate can translate into hundreds of dollars saved each month.

Who is Refinancing and Why?

When we look at the refinance activity, we see some interesting trends emerging from the MBA’s data:

• Refinance Share: The share of mortgage activity going towards refinances increased to 57.1% from 56.2% the previous week. This means that for every 100 mortgage applications, over 57 are for refinancing. This is a strong indicator that homeowners are prioritizing this move.
• ARM Share: The share of Adjustable-Rate Mortgages (ARMs) decreased slightly to 7.5%. This suggests that while many are looking to refinance, they are still largely opting for the stability of a fixed-rate mortgage, likely due to interest rate volatility and a desire for predictable payments.

Let’s look at how different loan types are performing:

Mortgage Type	Average Rate (30-yr Fixed)	Change from Previous Week
Conforming	6.21%	Down 0.03%
Jumbo	6.32%	Down 0.02%
FHA	6.04%	Down 0.02%
15-Year Fixed	5.61%	Down 0.03%
5/1 ARM	5.37%	Down 0.19%

These figures show that while rates are slightly down across the board for fixed-rate mortgages, the effective rates (which include fees) have generally decreased. The 5/1 ARM saw a more significant drop. However, as mentioned, the majority of borrowers are still leaning towards fixed rates.

Beyond the Headlines: What This Means for You

As I see it, this data points to a market that’s finding its footing. The intense rush of refinancing seen during the ultra-low rate environment of a few years back has cooled off, but the underlying fundamentals are still very strong.

For homeowners: If you took out your mortgage a few years ago, it’s highly likely you have an opportunity to improve your financial situation by refinancing. Even if rates aren’t at their absolute rock bottom, the savings can be significant over the life of your loan. My advice? Don’t just look at the weekly headlines. Get a personalized quote and see what you can save. It’s worth exploring!

For those buying homes: While purchase applications are down week-to-week, the year-over-year numbers for purchase applications are still up 4%. This indicates that the housing market is still active, albeit at a more measured pace. Buyers might be facing some headwinds with inventory and rates, but the desire for homeownership remains.

For lenders and the industry: This environment means a steady volume of business. While the frenzy might be gone, the consistent demand for refinancing provides a healthy pipeline. They need to be prepared to offer competitive rates and efficient processes to capture this ongoing demand.

In essence, the mortgage market is a dynamic beast. While the weekly numbers can be a bit of a rollercoaster, the 117% year-over-year surge in refinance demand is the real story. It signifies that many homeowners are still actively, and wisely, looking to improve their financial standing by taking advantage of more favorable rates than were available to them in the past.

If you’re thinking about refinancing your mortgage, it’s natural to wonder what the numbers look like right now. Well, the good news for homeowners is that as of Monday, December 29, 2025, the 30-year fixed refinance rate is holding steady, offering a welcome bit of calm as we head into the new year. This stability means you have a clearer picture to work with when planning your financial moves.

My take on this is that it’s a relief to see things aren’t wildly swinging around. We’ve seen some real ups and downs in the mortgage market over the past couple of years, and that kind of volatility can make it really tough to make confident decisions. So, when I see a rate like the one we have today, it feels like a chance to breathe and strategize.

Mortgage Rates Today, Dec 29: 30-Year Fixed Refinance Rate Remains Stable

According to the latest numbers from Zillow, the national average 30-year fixed refinance rate is sitting at 6.63%. You might be thinking, “That doesn’t sound like much of a change!” And you’re right. It’s actually a very tiny dip – just 1 basis point – from last week’s average of 6.64%. While this difference might seem small, it’s a sign that the market has found a bit of footing after a period of considerable movement.

Understanding Today’s Refinance Rates

Let’s break down what these numbers mean for you:

• 30-Year Fixed Refinance Rate: 6.63%
  This is the big one for most people. The 30-year fixed rate makes up a huge chunk of the refinancing market, and it’s staying pretty much where it was. If you’re aiming to shave some money off your monthly payments or want the peace of mind that your interest rate won’t change for the next three decades, this option continues to be a really solid choice. It’s that predictability that homeowners often crave, and it’s what this rate offers.
• 15-Year Fixed Refinance Rate: 5.65%
  For those of you who are looking to pay off your home faster and save a bundle on interest over the life of the loan, the 15-year fixed refinance rate is worth a serious look. At 5.65%, this rate hasn’t budged from last week. What’s really interesting here is that it’s a full percentage point lower than the 30-year rate. This means you could potentially save a lot of money in the long run, though your monthly payments will naturally be higher. It’s a trade-off between lower overall interest costs and a larger monthly commitment.
• 5/1 ARM Refinance Rate: 7.05%
  Now, let’s talk about adjustable-rate mortgages, or ARMs, like the 5/1. These loans start with a fixed rate for the first five years. After that, the interest rate can change every year, going up or down based on market conditions. Right now, the 5/1 ARM refinance rate is standing at 7.05%. As you can see, this is currently higher than both of the fixed-rate options. From my experience, this makes it less appealing for most people unless you have a very specific plan, like knowing you’ll sell your home or refinance again before those initial five years are up. Otherwise, you’re taking on more risk with the possibility of higher payments down the line.

What This Means for You as a Homeowner

So, with 30-year rates hovering in that mid-6% area, is now the time to consider refinancing? I’d say it’s definitely worth exploring if any of these sound like you:

• Your current mortgage rate is much higher. If you got your mortgage a year or two ago, when rates were significantly higher, you could likely see a noticeable drop in your monthly payments with a refinance. Let’s say your current rate is above 7% – you’re probably leaving money on the table.
• You want more stability. If you currently have an ARM and the thought of fluctuating payments makes you nervous, switching to a fixed-rate loan can bring a lot of peace of mind.
• You want to pay off your home sooner. The 15-year fixed rate is a great way to do this, but as I mentioned, it means higher monthly payments. If your budget can handle it, the long-term savings are substantial.

It’s crucial to remember that these national averages are just that – averages. The rate you actually get will depend on a few personal factors. These include:

• Your credit score (higher scores usually mean lower rates).
• Your loan-to-value ratio (how much you owe compared to your home’s value).
• Your debt-to-income ratio (how much of your income goes towards paying debts).
• And, of course, the specific lender you choose. Different lenders have different pricing strategies.

A Look at Market Trends and What’s Happening

It’s always helpful to understand the forces at play behind these numbers. Zillow’s data shows something quite interesting: refinance demand has actually jumped significantly. We’re talking about an 86% increase compared to this time last year! This surge happened as rates briefly dipped to their 2025 lows in late October and November. It shows that many homeowners were indeed waiting for that sweet spot to take advantage of lower payments.

However, a few economic factors are keeping rates from dropping even further. The economy has shown stronger growth than many expected – with a 4.3% GDP increase in the third quarter. Plus, inflation is still a concern. When the economy is robust and inflation is sticking around, it tends to push interest rates up. This is because investors often look for better returns in the stock market instead of lower-yield government bonds, and that can put upward pressure on mortgage rates. We’re hearing that as investors shift their focus during the holiday season, we might see a bit of a rise in rates early in the new year.

The Federal Reserve has also played a role. They’ve cut their benchmark rate three times by the end of 2025. Now, it’s important to understand that the Fed’s rate doesn’t directly set mortgage rates. But it does influence them. These cuts have helped pull mortgage rates down from the dizzying highs of over 8% we saw in late 2023. It’s a reminder that these larger economic policies do trickle down to affect our own wallets.

Looking Ahead to 2026

What’s the crystal ball telling us for the rest of 2026? Major housing economic groups are weighing in:

• Stability is the buzzword. The Mortgage Bankers Association (MBA) is predicting that 30-year rates will likely stay pretty close to 6.4% throughout 2026. This suggests a period of relative calm, which is good for planning.
• A gradual dip. Fannie Mae has a slightly more optimistic outlook. They believe rates will remain above 6% for most of next year, but they might ease down to around 5.9% by the fourth quarter of 2026. That’s definitely a good target to watch.
• The equity advantage. Here’s a fascinating stat from Zillow: a whopping 70% of homeowners still have mortgages with rates below 5%. This means many people have locked in incredibly low rates that they’d be reluctant to give up. Because of this, instead of full-on refinancing, we’re seeing a lot more homeowners opt for things like Home Equity Lines of Credit (HELOCs) or Home Equity Loans. These allow them to tap into their home’s value for cash without sacrificing their existing low mortgage rate. It’s a smart way to access funds when refinancing would mean a higher rate.

Wrapping Up and Planning Your Next Move

As we wrap up 2025, the mortgage rates today are a snapshot of a dynamic economic environment. Inflation, the Federal Reserve’s actions, and the overall health of the housing market are all going to keep influencing where mortgage rates go in the coming months. While the current stability is a good thing, staying informed is key. My best advice? If you’re considering refinancing, talk to a trusted mortgage advisor. They can look at your specific situation and help you determine if now is truly the right time for you to make a move. It’s not just about the headline numbers; it’s about what makes sense for your personal financial journey.

The reverse mortgage portion of the Federal Housing Administration’s (FHA)’s Mutual Mortgage Insurance Fund (MMIF) has reached a positive capital ratio for the fourth year in a row on the overall government-backed portfolio. This is according to the FHA’s Annual Report to Congress, released Friday morning.

In 2023, the HECM capital reserve declined slightly due to weaker levels of home price appreciation. This year, that metric was stronger, leading to a 7.78% increase in the HECM standalone capital ratio compared to one year earlier.

The health of the Home Equity Conversion Mortgage (HECM) book of business remains strong from FHA’s perspective, as its economic value has increased while the portfolio overall has recovered from issues that previously put it on shaky financial footing.

HECM book financial performance

The HECM portfolio accounts for roughly 5% of the total MMI Fund, but is largely indicative of the overall health of the FHA’s reverse mortgage program. In years past, the program was unstable and maintained a negative capital ratio but has stayed in positive territory since 2021.

The HECM portfolio “has a stand-alone capital ratio that increased from 16.72% in FY 2023 to 24.50% in FY 2024,” the report said. “The financial performance of the HECM portfolio improved mostly as the result of higher home price appreciation (HPA) forecasts. The HECM stand-alone capital ratio remained positive for the fourth year in a row.”

The HECM cash flow net present value in 2024, which is a measure reported to Congress by the U.S. Department of Housing and Urban Development (HUD), was estimated to be $8.399 billion, up from $6.742 billion in 2023, according to an actuarial review conducted by IT Data Consulting, LLC.

Compared to the forward book of business, the HECM portfolio is significantly more sensitive to even minor changes in home price appreciation, however the portfolio’s relatively small size relative to the rest of the fund helps to limit “the impact of these fluctuations on the combined MMI Fund capital ratio,” the report said.

The standalone capital ratio of the HECM portfolio not only remained in positive territory in FY 2024 at 24.50%, but it exceeded the previous high observed in 2022 (22.77%). This is despite the fact that overall HECM volume declined in FY 2024 when compared to data from one year earlier.

FHA endorsed 26,501 HECMs totaling $13.36 billion in maximum claim amount (MCA), a 17% reduction from 2023, the report said.

“HECM endorsements increased from FY 2019 to FY 2022 by 106%, when mortgage rates were at historically low levels,” the report said. “Over the past two years in a higher rate environment, HECM endorsements declined by 59%.”

Addressing challenges

The HECM program in recent years has been challenged on the liquidity front as was visible with the 2022 collapse of Reverse Mortgage Funding (RMF), a top-five lender in the space and a major HECM-backed Securities (HMBS) issuer. HUD addressed these challenges in the report, saying that “rising interest rates along with moderating home price appreciation” were major culprits for industry challenges.

HUD described the implementation of changes to the HECM program that were designed to address liquidity concerns, which the Department said “reinforced FHA’s commitment to the HECM program as a means for seniors aged 62 years or older to age in place by tapping into their home’s equity.”

Some of these changes implemented over the past year included updating servicing requirements to reduce costs; allowing occupancy certification via remote video and/or telephonic means; enhancing incentives for servicers and borrowers or heirs to complete alternatives to foreclosure via deeds-in-lieu and short sales; and quicker assignment of loans to HUD following a cure of delinquent loan obligations.

The report also mentioned the long-awaited publication of a streamline HECM section in the Single Family 4000.1 Handbook, guidance the reverse mortgage industry had been seeking for years that consolidated years’ worth of Mortgagee Letters and other policy directives.

In a statement to HousingWire‘s Reverse Mortgage Daily (RMD), Community Home Lenders of America (CHLA) Executive Director Scott Olson lauded the development in the HECM book.

“HECM reverse mortgage loans are an important FHA product and a critical component of our mortgage finance system — so today’s FHA report showing continued solid financial performance for FHA HECM loans is welcome news,” he said. “Moreover, it may reflect in part changes made in recent years to improve loan performance, such as more deed in lieu or short sale alternatives to avoid foreclosure and a faster assignment of loans to HUD.”

As of Sept. 30, FHA has active insurance on an estimated 287,000 HECM loans.

Editor’s Note: This is a developing story, and has been updated with a statement from CHLA Executive Director Scott Olson.

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Reverse mortgage industry performance metrics have been trading gains and losses for several months now, but a more favorable interest rate environment and optimism about the possible trajectory of business in 2025 have arrived alongside some generally positive news for October.

Home Equity Conversion Mortgage (HECM) endorsements increased by 11.1% from September to October, with 2,392 loans endorsed last month, according to data compiled by Reverse Market Insight (RMI).

Meanwhile, HECM-backed Securities (HMBS) issuance posted its largest figure since September 2023, increasing by $98 million during the month for a total of $598 million in October. There were 78 pools issued, one fewer than in September. This is according to Ginnie Mae data and private sources compiled by New View Advisors.

Endorsement volume

When asked about the primary source for the spike, Jon McCue — RMI’s director of client relations — pointed to a previously predicted rise in Federal Housing Administration (FHA) case number assignments.

“As always, we turn to case number assignments to answer this question,” he said. “We predicted a rise in endorsements given the sharp comeback in case numbers shown between June to July, and with another increase in August, we should most likely see another increase next month if this holds true.”

Geographically, volume gains took place across the 10 tracked regions. But the gains were not as pronounced as they might have been if all else were equal, McCue explained.

“Given that all the regions were up, as you’d expect with a nice increase month over month in endorsements, [geographic activity is] not [telling us] much,” he said. “There is one exception to this rule, though, and that is the Southeast/Caribbean region was the only region that was down on the month.

“The only big difference there came from the hurricanes, so you would have to suspect that those storms had a major impact on volumes, but otherwise we saw fairly strong gains across the board.”

Once again in October, Mutual of Omaha Mortgage outperformed Finance of America, with the former overtaking the latter atop the rankings for year-to-date totals. When asked whether this is a sign that Mutual of Omaha is overtaking FOA, McCue said he wasn’t totally sure.

“These are both strong companies that have their own strengths,” he said. “It is tough to say that one is taking over another for a top spot with the numbers so close. It is looking like a neck-and-neck race going into the finish line of 2024, though. I would say that we as an industry are lucky to have two strong companies like this leading the way for others, and hopefully their momentum continues into and through 2025.”

Many analysts are predicting that the Federal Reserve will move to modestly cut rates again on Thursday. When asked if this could have a beneficial impact on the reverse industry, McCue pointed to rates rising again after the previous Fed rate cut. A bigger impact could come from another major event taking place this week.

“It didn’t have the impact that so many people thought it would,” McCue said of the rate cut. “However, one thing that is potentially bigger for rates is what happens in the election. That may have more of an impact than any rate cuts by the Fed. It truly is a waiting game, and election years are always interesting.”

HMBS issuance

HMBS issuance saw a larger bounce in October when compared to other recent months, but that has not changed the overall calculus. Issuance is still at historically low levels, and the final tally for 2024 is likely to be significantly lower compared to the past few years.

“HMBS issuance set a record in 2022, with nearly $14 billion issued,” New View said in its commentary accompanying the data. “Total issuance for 2023 was approximately $6.5 billion. 2024 total issuance through October totals $4.9 billion — $579 million lower than at this time last year and $7.6 billion lower than at this time in 2022.”

But in terms of what has moved the proverbial needle, Mutual of Omaha’s total issuance jumped strikingly — from $75 million in September to $161 million in October.

The biggest issuers for the month remained relatively stable. FOA stayed in the top spot with $170 million (versus $151 million in September), followed by Mutual of Omaha, Longbridge Financial ($126 million, up from $105 million) and PHH Mortgage Corp. ($88 million, down from $108 million).

“Issuer 42,” the designation given to the former portfolio held by Reverse Mortgage Funding (RMF), again issued no pools.

Not only did last month’s gain push Mutual of Omaha to No. 1 in the year-to-date-totals, but its additional activity was given as a key reason for the industry’s overall monthly gain.

“The uptick in October HMBS issuance volume is primarily attributed to Mutual of Omaha’s $88 million in tail pool issuance,” said Michael McCully, partner at New View Advisors.

Tails are not from new loans, New View said, but do represent new amounts lent and consistent of “subsequent participations.” But overall, tail issuance is “burning out,” McCully said.

“Average monthly tail issuance in 2017 was $235 million; 2024 year to date is $174 million,” he said.

One potential spot to keep an eye on remains Ginnie Mae’s planned HMBS 2.0 program.

“If HMBS 2.0 is implemented, expect 2025 HMBS volume to increase over 2024, as many loans will be securitized twice,” McCully explained.

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