🍵 Market Update 12/08 │ It's Fed Week & Purchase Apps Near 2-Year Highs!

Macro
• Stocks finished the week modestly higher as markets priced in a near-certain 25 bps Fed cut.
• The 10-year Treasury hovered around 4.1% and drifted slightly higher by week’s end.
• Mortgage News Daily 30-year fixed averaged roughly 6.27% across the week.
• Mortgage purchase applications hit a new 2025 high for the second week in a row, up 2.5% WoW and 15.2% YoY.

Central OH
• Rolling 4-week closings up 3.5% YoY and new listings up 18.9% YoY.
• Active inventory up 58.6% YoY with months of supply at 2.4 and median price at $335,000.
• Franklin County affordability index running above last year, with showings per listing up sharply WoW, as expected after Thanksgiving, but still well below 2024 levels.

Mortgage rates held in the low 6’s last week as markets locked in expectations for a December Fed cut. Mortgage purchase applications hit new 2025 highs again and now sit near 2-year highs, showing that real buyer demand continues to build even before meaningful rate relief. While a Fed cut this week is likely, it is largely priced in by markets, which means consumers should not expect sustained or dramatic drops in mortgage rates from the decision alone. Any lasting move lower will depend more on cooling inflation and slower economic growth than on the cut itself. In Central Ohio, supply remains well above last year, prices are still rising modestly, and longer days on market are giving buyers more leverage while rewarding sellers who price realistically.

Tailwinds
• Mortgage rates hovering near 6.27% keep payments below recent peaks.
• Mortgage purchase applications up 2.5% WoW and 15.2% YoY, highest levels of 2025.
• Fed cut odds near 90% for December, which anchors expectations for lower funding costs.
• Central Ohio median prices and $/SF still up low single digits over last year.

Headwinds
• 10-year Treasury yield ticked higher, which limits further near-term rate relief.
• National affordability sentiment remains weak, with buyers still calling it a “bad time to buy.”
• Central Ohio months of supply at 2.4 and nearly 60% of active listings with price cuts signal more negotiation and slower velocity.
• Showings per listing in Central Ohio remain well below last year, even with a strong WoW bounce.

The December 5th release of the Personal Consumption Expenditures report showed that inflation remains above the Fed target but continues to cool. Note - the reporting was for September, delayed due to the government shutdown. PCE stands for Personal Consumption Expenditures, and it measures how much consumers pay for goods and services across the entire economy. CPI, or Consumer Price Index, measures out-of-pocket price changes for urban consumers. The Federal Reserve targets PCE, not CPI, when it defines its 2% inflation goal, because PCE covers a broader range of spending, adjusts more quickly for changes in consumer behavior, and aligns more closely with GDP and income data. This latest report helped reinforce expectations for a 25 bps rate cut at the December 10th meeting.

Headline PCE rose 0.3% month over month in September and 2.8% year over year, up from 2.7% in August. Core PCE, which excludes food and energy, increased 0.2% month over month and slowed to 2.8% year over year from 2.9%. Short-term trend measures matter more to the Fed, and the three-month annualized core rate is running near 2.4%, much closer to target. Median PCE came in at just 0.1% month over month, which suggests broad-based price pressures are easing even though some categories remain sticky.

Highlights
• Headline PCE: 2.8% YoY, still above target but far below 2022 levels.
• Core PCE: 2.8% YoY, first decline since April, with monthly gains near 0.2%.
• 3-month annualized core PCE: ~2.4%, close to the Fed’s target range.
• Median PCE: 0.1% m/m, pointing to cooling underlying inflation.
• Real consumer spending: Flat in September, a sign that demand is slowing.
• Fed expectations: Nearly 90% odds of a 25 bp cut priced in for December.

Takeaway: The PCE report supports a December rate cut, but it also suggests future mortgage rate moves will depend more on continued inflation cooling and slower growth than on the cut itself.

Realtor.com’s 2026 forecast calls for a modestly better affordability picture, with mortgage rates averaging about 6.3% and monthly payments slipping below 30% of household income for the first time since 2022. National home prices are expected to rise 2.2% next year after a 2% gain in 2025, while incomes and inflation grow slightly faster, which helps real purchasing power. Existing-home sales are projected to inch higher to about 4.13 million in 2026, still below the 2013–2019 average of 5.28 million, which means volume remains constrained. Inventory is expected to rise again, with existing-home supply up 8.9% and new construction starts up 3.1%, pushing the market toward a more balanced 4.6 months of supply. Rents are forecast to decline another 1% nationally as multifamily supply continues to hit the market, keeping renting relatively attractive in the short run. This setup creates a slow, stepwise move toward a healthier, more balanced housing market, not a rapid reset.

Highlights
• Mortgage rates: Forecast average of 6.3% in 2026 vs 6.6% expected for 2025.
• Affordability: Typical payment projected to fall to 29.3% of median income.
• Home prices: National prices expected to rise 2.2% in 2026 after 2% in 2025.
• Sales volume: Existing-home sales projected at 4.13 million, up 1.7%, but still below the 5.28 million pre-2020 average.
• Inventory: Existing-home inventory expected to grow 8.9%; still about 12% below pre-2020 norms by end of 2026.
• New construction: Single-family starts projected to grow 3.1% to 1 million units.
• Rents: National rents expected to decline another 1%, following an estimated 1.6% drop in 2025.

Takeaway: For agents, buyers, sellers, and investors, 2026 looks like a “grind back toward normal,” where modest rate relief, slow price gains, and rising inventory reward smart strategy and patience more than perfect timing.

Markets spent the week sharpening expectations for a December rate cut. Mortgage rates stayed anchored in the low 6’s, which is still restrictive by pre-2022 standards but better than the peaks buyers saw in 2023. Mortgage purchase applications continued to climb, hinting that even small improvements in rates can unlock meaningful housing demand.

• Dow Jones: ⬆️ 0.5% WoW
• S&P 500: ⬆️ 0.3% WoW
• Nasdaq: ⬆️ 0.9% WoW

Modest gains reflect growing confidence in a controlled slowdown, with a potential Fed cut seen as supportive for risk assets and, indirectly, housing demand.

• Dec 01 → Dec 02 → Dec 03 → Dec 04 → Dec 05
• 4.087% → 4.079% → 4.076% → 4.093% → 4.137%

• Weekly average: About 4.09%

• Dec 01 → Dec 02 → Dec 03 → Dec 04 → Dec 05
• 6.31% → 6.30% → 6.23% → 6.24% → 6.27%
• Weekly average: 6.27%

Last 4 Weeks
• 172.7 → 168.7 → 181.6 → 186.1
Same period 2024
• 133.3 → 136.0 → 152.9 → 161.5

• ⬆️ 2.5% WoW (most recent week vs prior week)
• ⬆️ 15.2% YoY (same week vs last year)

Takeaway: Purchase applications hit their highest level of 2025 two weeks in a row, and are approaching 2-year highs, suggesting that as buyers see rates in the low 6’s, they move quickly to secure homes.

• Mortgage balances rose $137B in Q3 2025, reaching $13.07T
• HELOC balances rose $11B, now at $422B, fourteen quarters of growth
• HELOCs are $105B above the Q1 2022 low
• Credit card balances increased $24B to $1.23T, ⬆️ 5.75% YoY
• Auto loan balances held steady at $1.66T
• Other consumer loans rose $10B to $550B
• Student loan balances increased $15B to $1.65T
• Total non-housing balances rose $49B, ⬆️ 1.0% from Q2 2025

Source: Federal Reserve Bank of New York

Foreclosure activity rose again in October 2025, marking the eighth straight month of year-over-year increases. ATTOM’s latest report shows that foreclosure filings continue to trend upward as some homeowners adjust to higher borrowing costs and economic pressure. Activity is still below historic highs, but the steady increase signals a gradual normalization rather than a crisis. The Midwest and South remain comparatively stable, while Florida leads in both foreclosure rates and foreclosure starts. Major metros saw mixed results, with some MSAs (Metropolitan Statistical Area) showing sharp declines, indicating uneven stress across markets.

Key Stats – October 2025 (Source: ATTOM)
• Total foreclosure filings: 36,766, ⬆️ 3% MoM, ⬆️ 19% YoY
• Foreclosure starts: 25,129, ⬆️ 6% MoM, ⬆️ 20% YoY
• Completed foreclosures (REOs): 3,872, ⬆️ 2% MoM, ⬆️ 32% YoY

Market Dynamics: A Seller’s Market shifting toward Buyer-friendly conditions.

Central Ohio continues to move toward a more balanced market, with inventory and new listings well above last year while prices and $/SF grind higher. Buyers now have more choices, more room to negotiate, and more time to make decisions, but they still face payment pressure from higher rates than the pre-2022 period. Sellers can still achieve solid prices if they nail pricing and presentation, yet longer days on market and a high share of price reductions show that overpricing is getting punished.

Stats from the Last 4 Weeks (Nov wk 2 – Dec wk 1, 2025)
• Closings: 2,047, ⬆️ 3.5% over last year
• New listings: 1,884, ⬆️ 18.9% over last year
• Active inventory: 4,744 homes, ⬆️ 58.6% over last year, ⬇️ 0.5% WoW
• Median sales price (Rolling 4): $335,000, ⬆️ 3.5% over last year
• Price reductions: 59.2% of active listings have reduced price
• Average DOM (Rolling 4): 39 days, ⬆️ 25.8% over last year
• Months of supply: 2.4

Year-to-Date (YTD) Snapshot
• YTD closings: 26,876, ⬆️ 0.8% over last year
• YTD median sales price: $338,000, ⬆️ 3.4% over last year
• YTD average $/SF (sold): $212.77, ⬆️ 2.7% over last year
• Last 4 weeks average $/SF (sold): $210.46, ⬆️ 3.4% over same period last year
• YTD LP/SP ratio: 97.8%, ⬇️ 0.5% over last year
• Last 4 weeks LP/SP ratio: 97.9%, ⬆️ 1.0% over last year
• YTD new listings: 30,266 units, ⬆️ 8.8% over last year

Showings & Affordability

Question: Where would rates need to be for Franklin County to have an Affordability Index of 100? 🤔

Answer: Assuming a median home price of $340,000 & a median income of $76,536, mortgage rates would need to be at 5.80% to achieve an Affordability Index of 100 - ie, a family with the median income can afford the mortgage payment on a median-priced home. The average weekly Affordability Index for 2025 in Franklin Co. is 98.2. As of July 2025, the National Affordability Index is 98.8 (Source: National Association of Realtors via FRED®).

Here’s the data:

Side-By-Side Data, Dec Week 1, 2025 - Central Ohio (2023-2025)

Central Ohio Market Update, Dec Week 1, 2025