Borrowing Power Skyrockets as Builders Hit the Brakes

Happy Tuesday! As we settle into December, the housing market is digesting some major numbers released over the holiday weekend. The headline news is a significant boost in borrowing power for 2026, but the construction sector is flashing warning signs.

Today, we’re unpacking the new $832k+ conforming loan limits, analyzing the "refi boom" taking hold of the investor class, and looking at the latest inventory spikes in the Sun Belt. Grab your coffee—let’s get to work.

Capital markets, mortgage rates, and the Fed.

Mortgage Rates Hold the Line at 6% Threshold Mortgage rates are making a stand right at the psychological 6% line to start the month. While some lenders are offering deals slightly below this mark, the national average for a 30-year fixed loan is hovering around 6.3%, with volatility expected as the bond market reacts to upcoming economic data. Check today's rates at Bankrate

MBS Prices Weaken, Signaling Rate Pressure Mortgage-Backed Securities (MBS) opened the week significantly weaker, a trend that typically foreshadows a bump in consumer interest rates. Analysts at Mortgage News Daily report that the "narrow, sideways range" we've seen recently might be breaking, urging originators to lock in loans sooner rather than later. Read the daily market analysis at Mortgage News Daily

Supply chain, builder sentiment, and infrastructure.

Housing Starts Slump as Builders Pull Back New privately-owned housing starts have dipped again, clocking in at a seasonally adjusted annual rate of roughly 1.3 million units. This pullback reflects growing builder caution regarding labor shortages and material costs, signaling that the supply crunch may persist well into the 2026 spring buying season. View the official data at FRED

New Home Features Shift: Decks on the Decline In a move to cut costs and streamline production, the share of new single-family homes built with decks has edged lower, according to recent NAHB analysis. As affordability remains the primary hurdle for buyers, builders are stripping back non-essential exterior features to keep list prices competitive. Read the builder trends report at NAHB

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Policy, regulation, and legislative updates.

Fannie & Freddie Loan Limits Boosted to $832,750 for 2026 The Federal Housing Finance Agency (FHFA) officially announced that the conforming loan limit for single-family homes will rise to $832,750 in 2026, a 3.3% increase. This adjustment reflects the continued rise in home prices and will allow more buyers in high-cost markets to access conventional financing without resorting to jumbo loans. Read the full report at AP News

GOP Pushes Supply-Side Solutions for Housing Crisis As the national affordability debate heats up, Republican lawmakers are rallying behind a "supply-first" agenda. The proposed strategy focuses on deregulation and increasing manufacturing to boost housing production, countering opposing calls for rent controls and public housing expansions. Read the policy breakdown at Washington Examiner

General market trends, inventory, and regional shifts.

US Home Prices Up 2.2% Year-Over-Year Despite high rates, the FHFA House Price Index (HPI) reveals that U.S. house prices rose 2.2% between Q3 2024 and Q3 2025. Prices climbed in 44 states, with the Middle Atlantic division seeing the strongest appreciation, proving that the "lock-in" effect is still keeping a floor under values. See the HPI news release at FHFA.gov

Inventory Climbs 7.8% as Sellers Return Redfin's latest market update shows a welcome sign for buyers: the number of homes for sale is up 7.8% year-over-year. While still below pre-pandemic levels, this accumulation of active listings—particularly in the Sun Belt—suggests that the "forever hold" mentality is beginning to thaw. Analyze the market data at Redfin

Corporate updates, PropTech, and brokerage moves.

The "Refi Boom" is Here—For Investors While homeowners wait for lower rates, real estate investors are triggering a refinancing boom to unlock record levels of equity ($34.5 trillion). Smart brokerages are pivoting their strategy to help these "equity-rich, cash-poor" landlords liquefy assets to fund new acquisitions before the new year. Read the investor strategy guide at Scotsman Guide

Compass vs. Zillow: The Battle for the Agent Desktop Tensions between industry giants escalated this week as Compass executives testified on the "weapons of choice" used by portals like Zillow. The ongoing legal and public relations battle highlights the intensifying race to control the "agent desktop" and the flow of consumer data in 2026. Follow the industry coverage at Real Estate News

Tuesday, December 2, 2025, marks a turning point for borrowing power. The headline is the $832,750 Conforming Loan Limit, a move that will grease the wheels for move-up buyers next year. However, with housing starts slipping, the supply constraints that have defined this cycle aren't vanishing anytime soon.

Watch the MBS market closely this week—if the current weakness persists, we could see rates tick up before they settle down.

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