Beyond Rates: FHFA, Zillow, and NAR Reshape the 2026 Landscape

Hello Housing Professionals.

Welcome to the Friday edition of HousingMarket Daily. As we wrap up the first week of December 2025, the market is signaling a shift that could define the upcoming winter season. For the first time in over a year, the 30-year fixed mortgage rate has broken definitively below the 6.2% floor, a psychological barrier that has kept millions of potential buyers on the sidelines.

The timing couldn’t be more critical. With the Federal Reserve set to meet next week, the industry is holding its breath for a potential rate cut that could further grease the wheels of a sluggish transaction engine. But it's not just about money; it's about where that money is going. New forecasts suggest a pricing "correction" is finally coming to the overheating Sunbelt, while starter homes are seeing a resurgence in volume.

From Washington’s latest regulatory hearings to Zillow’s controversial data decision, today’s briefing is packed with the intelligence you need to navigate the close of Q4.

Let’s dive into the headlines.

Borrowing costs soften as the market prices in a December Fed cut.

The bond market is rallying, pulling mortgage rates down in anticipation of the Federal Reserve's final meeting of the year. This relief in borrowing costs is providing a late-year boost to affordability, though volatility remains a constant companion for lenders managing pipelines.

Mortgage Rates Hit New 2025 Low: The 30-year fixed-rate mortgage averaged 6.19% this week, dropping below the 6.20% threshold for the first time in over 12 months, creating a significantly more favorable environment for buyers looking to lock before the new year. Read the full weekly mortgage rate analysis at Realtor.com.

Fed Meeting Anticipation: With the next Federal Open Market Committee (FOMC) meeting scheduled for next week, markets are largely pricing in a quarter-point rate cut, which analysts believe could further ease pressure on mortgage rates and boost buying power heading into 2026. Check the latest rate forecast and Fed analysis from Real Estate News.

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Supply constraints spur innovation while regulatory battles heat up.

The construction sector is facing a dichotomy: demand for affordable inventory is pushing builders toward modular solutions, while regulatory friction continues to slow down traditional ground-up development in key markets.

Modular Housing Expansion: In a move signaling a broader shift toward off-site construction to solve the affordability crisis, new modular housing projects are coming online in the Southeast, offering a faster, cost-effective alternative to stick-built homes. Explore the details on the new modular construction program expansion.

Multifamily Slowdown in SoCal: High interest rates and legislative hurdles like Measure ULA are taking their toll, with new reports indicating a notable deceleration in apartment construction starts across Southern California, potentially tightening rental inventory further in 2026. Review the commercial real estate trends and construction updates at Bisnow.

Washington sets the stage for 2026 with higher limits and regulatory scrutiny.

Federal agencies are active this week, with major announcements regarding loan limits that will reshape the "jumbo" landscape next year, alongside congressional hearings aimed at cutting the red tape that stifles housing supply.

2026 Conforming Loan Limits Announced: The Federal Housing Finance Agency (FHFA) has officially raised the conforming loan limit values for 2026 to $832,750, a 3.26% increase that reflects the continued home price appreciation seen throughout the past year. View the official press release on 2026 loan limits from the FHFA.

Hearing on Regulatory Roadblocks: The House Financial Services Committee held a critical hearing this week focused on "Building Capacity," where lawmakers and industry witnesses discussed dismantling the federal and local regulatory barriers that are currently throttling housing development. Read the committee chairman's statement on housing supply roadblocks.

A tale of two markets: Price dips in the South and a starter-home surge.

Real estate is hyper-local, and the latest data reveals a fascinating divergence. While some pandemic-era boomtowns are bracing for price corrections, the entry-level market is seeing a healthy rebound in transaction volume.

Forecast: Prices to Dip in 22 Cities: A new 2026 housing forecast predicts that home prices are poised to decline in 22 major U.S. cities, largely concentrated in the Sunbelt and West, as inventory rises and demand normalizes from the frenetic pace of recent years. Analyze the full 2026 housing market forecast report at CBS News.

Starter-Home Sales Surge: Defying the broader market sluggishness, sales of starter homes jumped nearly 5% year-over-year, driven by first-time buyers who are aggressively targeting the most affordable inventory tiers despite elevated rates. See the latest starter-home sales data report from National Mortgage Professional.

Data transparency debates and major association policy shifts.

The industry is grappling with how to present risk to consumers, while the National Association of Realtors (NAR) continues to evolve its policies in response to the changing legal landscape, reshaping how agents access critical tools.

Zillow Removes Climate Risk Data: In a controversial reversal that has sparked debate about transparency, Zillow has removed certain climate risk data points from its property listings following pushback that the information was harming sales in sensitive markets. Read the full story on Zillow's data policy change at The Guardian.

NAR Decouples MLS Access: Following its annual conference, the National Association of Realtors has moved to no longer require agents to be Realtor members to access Realtor-owned Multiple Listing Services, a significant policy shift designed to mitigate antitrust risks. Read the editor's note on the latest NAR policy updates.

As we pivot toward 2026, the data indicates a market in transition. The "lock-in" effect is slowly thawing as rates drift down, and the increase in conforming loan limits will give buyers in high-cost markets more breathing room. However, the predicted price dips in the Sunbelt serve as a reminder that real estate is cyclical. The winners next year will be the professionals who can guide clients through these regional nuances—helping sellers price realistically and buyers identify the windows of opportunity that are just now opening up.

We’ll be back Monday with a full breakdown of the Fed's decision.

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