New FHFA Rules, HUD Updates, and the End of Seller Dominance

Hello, Real Estate Insiders.

The numbers for 2026 are finally hitting the desk, and the picture is becoming clearer. Today's briefing is headlined by the Federal Housing Finance Agency's official confirmation of new loan limits—a move that signals confidence in home value stability.

Meanwhile, the bond market is giving us a small holiday gift with a slight dip in rates, and the construction sector is posting surprisingly robust numbers despite the winter chill. From the "Great Housing Reset" predicted by industry leaders to significant policy shifts at HUD, here is what you need to know to navigate the market today.

Mortgage Rates Edge Lower to Start December. After a volatile November, mortgage rates have started the month on a friendlier note. As of this week, the 30-year fixed rate has dipped slightly, with the bond market reacting favorably to recent economic data. Lenders are currently quoting rates that are "just a hair lower," providing a small window of opportunity for buyers looking to lock in before the Federal Reserve's next move. Check the latest daily rate index and trends.

MBS Outperform Treasuries as Curve Shifts. In a technical but vital shift for lending liquidity, Mortgage-Backed Securities (MBS) are currently outperforming longer-term Treasuries. This "curve trading bias" is good news for mortgage pricing, as the average implied duration for MBS aligns better with shorter-term yields, which are improving. This dynamic helps stabilize the spreads that often keep consumer rates artificially high. Read the full technical market analysis.

Construction Starts Surge 21% in Late-Year Push. Defying the typical seasonal slowdown, construction starts have jumped 21%, led significantly by multi-billion dollar mega-projects and a resilient residential sector. The data indicates that despite high financing costs, developers are pushing forward to meet long-term demand, with infrastructure and manufacturing projects providing a strong tailwind for the broader building industry. Read the full construction economy report.

Builders Face Rising Costs for 5th Straight Month. While starts are up, the cost of doing business continues to climb. New reports indicate that construction input prices have risen for the fifth consecutive month, putting pressure on builder margins. This persistent inflation in materials—from concrete to finishing goods—remains the primary headwind preventing more aggressive entry-level pricing in the new home market. Review the latest industry cost analysis.

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FHFA Officially Raises 2026 Conforming Loan Limits. The Federal Housing Finance Agency (FHFA) has announced the new baseline conforming loan limit for 2026 will be $832,750, an increase of over $26,000 from the previous year. This adjustment reflects the 2.2% year-over-year rise in home prices and ensures that government-backed financing remains accessible to borrowers in appreciating markets across the country. See the official FHFA news release.

HUD Announces Key Fair Housing & Screening Updates. The Department of Housing and Urban Development (HUD) has released significant new guidance regarding fair housing enforcement and tenant screening. The updates include changes to how disparate impact claims are defended and new protocols for evaluating criminal history in rental applications, aiming to streamline compliance while maintaining safety standards for housing providers. Details on the new HUD regulatory updates.

Zillow Forecast: Home Values to Rise Modestly in 2026. Looking ahead, Zillow's latest research predicts a "steady-as-she-goes" market for 2026, with home values expected to rise by a modest 1.2% over the next 12 months. The forecast suggests that while affordability remains tight, the accumulation of inventory and a slight easing in mortgage rates will support a gradual increase in sales volume, marking a slow recovery from 2024's stagnation. Read the full 2026 market forecast.

Houston Market Cools as Inventory Builds. The Houston housing market provides a clear example of the current correction, with typical home values down 3.2% year-over-year. As inventory sits on the market for an average of 44 days, buyers in this major metro are finding more leverage than they have had in years, contrasting sharply with the tight supply still seen in the Northeast. Explore the Houston market data breakdown.

Redfin CEO Predicts "Great Housing Reset." In a candid new interview, Redfin CEO Glenn Kelman discussed the massive shifts underway, describing the upcoming cycle as a "Great Housing Reset." He highlighted a record number of seller delistings and aggressive price cuts as evidence that sellers are finally adjusting to the new reality of higher rates, a necessary step to unfreeze transaction volume in 2026. Watch the full industry discussion here.

5 Tech Trends Defining Real Estate in 2026. As the market pivots, technology adoption is accelerating. A new report identifies five key trends reshaping the industry, including the rise of "Digital Twins" for property management and the integration of predictive AI for lead generation. These tools are no longer futuristic novelties but essential operational standards for brokerages looking to survive the efficiency crunch. Read about the top proptech trends.

Today's news confirms that the housing market is in the midst of a calculated recalibration. The FHFA's loan limit increase validates the permanence of recent equity gains, while the "Great Reset" described by industry leaders acknowledges that volume will only return when sellers meet buyers at today's affordability reality. With construction starts surprisingly high and mortgage rates offering a brief reprieve, the stage is being set for a more active, albeit competitive, 2026.

Stay sharp, keep your data close, and we’ll see you back here tomorrow.

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