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Existing Home Sales Rose in February – Eye On Housing

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Following the sharp decline last month, existing home sales bounced back in February as housing affordability improved. Lower mortgage rates and moderating home price growth helped pull buyers back to the market. However, tight inventory will likely continue to push home prices higher if demand outpaces supply growth.

Total existing home sales, including single-family homes, townhomes, condominiums, and co-ops, rose 1.7% to a seasonally adjusted annual rate of 4.09 million in February, according to the National Association of Realtors (NAR). On a year-over-year basis, sales were 1.4% lower than a year ago.

The existing home inventory level was 1.3 million units in February, up 2.4% from January and 4.9% from a year ago. At the current sales rate, February unsold inventory sits at a 3.8-months’ supply, unchanged from last month but up from 3.6-months in February. Inventory between 4.5 to 6 months’ supply is generally considered a balanced market.

Homes stayed on the market for a median of 47 days in February, up from 46 days in the previous month and 42 days in February 2025.

The first-time buyer share was 34% in February, up from 31% in January and one year ago.

The February all-cash sales share was 31% of transactions, up from 27% in January but down from 32% a year ago. All-cash buyers are less affected by changes in interest rates.

The February median sales price of all existing homes was $398,000, up 0.3% from last year. This marks the 32nd consecutive month of year-over-year increases. However, the year-over-year growth has moderated since peaking in December 2024, suggesting that price appreciation may continue to slow. The median condominium/co-op price in February was up 0.9% from a year ago at $358,100. Recent gains for home inventory will put downward pressure on resale home prices in most markets in 2026.

Three of the four major regions saw sales increases in February, ranging from 1.1% in the Midwest to 8.2% in the West. Sales in the Northeast fell 6.0%. On a year-over-year basis, sales rose only in the South (+0.5%), while sales in the West, Midwest, and Northeast all declined (-1.3%, -4.1%, and -4.1%, respectively). 

The Pending Home Sales Index (PHSI) is a forward-looking indicator based on signed contracts. The PHSI fell from 71.5 to 70.9 in January. On a year-over-year basis, pending sales were 0.4% lower than a year ago, according to the National Association of Realtors’ data. The decline suggests buyers are holding back due to limited inventory choices.



This article was originally published by a eyeonhousing.org . Read the Original article here. .

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AD&C Loan Volume Falls Despite Declining Financing Costs – Eye On Housing

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Single-family construction lending fell in the fourth quarter, according to data released by the Federal Deposit Insurance Corporation (FDIC). The decline in the outstanding volume of acquisition, development and construction (AD&C) loans occurred even with two Federal Reserve rate cuts in the fourth quarter. Additionally, NAHB’s AD&C Financing Survey points to continued tightening in credit conditions in the fourth quarter notwithstanding the latest decline in financing rates. Economic uncertainty remains a leading factor behind the persistence of tighter financing conditions for residential construction.

In the fourth quarter of 2025, the total level of outstanding AD&C loans fell to $456.3 billion, down 1.5% from the third quarter. The quarterly decline was led by a drop in other real estate development loans, which decreased 1.8% over the quarter to $365.2 billion. Meanwhile, the volume of 1-4 family residential construction and land development loans declined to $91.1 billion in the fourth quarter, down 0.2% from a quarter earlier. Although the volume of 1-4 family residential construction loans fell over the quarter, the outstanding amount was up 1.7% from last year. This marked the second straight quarter showing a year-over-year increase.

It is worth noting that the FDIC data represent only the stock of loans, not changes in the underlying flows, so it is an imperfect data source. Nonetheless, lending remains much reduced compared with years past. The current amount of existing 1-4 family residential AD&C loans now stands 56% lower than the peak level of residential construction lending of $204 billion reached during the first quarter of 2008. Alternative sources of financing, including equity partners, have supplemented this capital market in recent years.

Quality Metrics of Construction Loans

The volume of loans that are 30+ days past due or nonaccrual status fell for the third consecutive quarter, to $985.3 million. As a share of the total 1-4 family residential construction loan volume, this accounts for 1.1%.

Breaking this out further, the level of loans 30-89 days past due was $414.6 million, while the volume in nonaccrual status was $522.1 million. The nonaccrual loan volume fell from $593.4 million in the third quarter and the 30-89 past due volume fell from $418.5 million.

Loans are classified as nonaccrual when one or more of the following conditions apply: the loan is 90 days or more past due on principal or interest (unless it is well-secured and in the process of collection); the bank no longer expects full repayment of principal and interest; or the borrower’s financial condition has significantly deteriorated, warranting cash-basis accounting.

Which Size Banks are Lending?

Of the outstanding $91.1 billion in 1-4 family residential constructions loans, banks between $1 billion and $10 billion in total assets held the largest share at $32.2 billion (35.3%) at the end of 2025. Banks with assets between $10 and $250 held the next largest share at $30.1 billion (33.0%). The smallest banks, those with under $1 billion in assets, held $19.8 billion (21.7%) while the largest banks, with over $250 billion in total assets, had $9.0 billion (9.9%).

The distribution of banks holding 1-4 family residential construction loans is significantly different from the composition of all bank assets. At the end of 2025, the total amount of assets held by FDIC-insured banks was $25.26 trillion. Most of the banking industry’s assets are held by banks with over $250 billion in total assets, at 60.3%. This large bank asset group is comprised of just 16 banks as of the fourth quarter of 2025. Banks with between $10 billion and $250 billion in total assets held 25.3% of the industry’s total assets, as banks with $1 billion to $10 billion held 10.1%. Banks with under $1 billion in total assets had a market share of 4.3%.



This article was originally published by a eyeonhousing.org . Read the Original article here. .

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Lower Mortgage Rates Boost Refinancing While Purchase Activity Slows – Eye On Housing

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Mortgage application activity increased month-over-month as the 30-year fixed mortgage rates reached a three-year low. The Mortgage Bankers Association’s (MBA) Market Composite Index, a measure of total mortgage application volume, increased 1.5% from January on a seasonally adjusted basis and was 56.3% higher than a year earlier.  The data also indicated a rising adjustable-rate mortgage (ARM) share, increasing from 5.7% of mortgages to 8.3% over the past year.

The average contract interest rate for 30-year fixed mortgage rates declined a further seven basis points (bps) to 6.14%, tracking the decline in the 10-year treasury yield. Compared with February 2025, the 30-year fixed mortgage rate was 73 bps lower. The decline in mortgage rates supported the continued strength in refinancing activity, which increased 11.3%. On the other hand, purchase applications decreased 12.3% as tight existing-home inventory and winter storms dampened home-buying activity. Relative to February 2025, refinance and purchase activities are up 121.1% and 9.0%, respectively.

By loan type, applications for adjustable-rate mortgages (ARMs) increased 18.0% month-over-month while fixed-rate mortgages (FRMs) held steady. On a year-over-year basis, FRM applications were up 51.8%, while ARM applications more than doubled, rising 129.9%. As of February 2026, ARMs accounted for an average of 8.3% of total applications on a non-seasonally adjusted basis, up 1.2 percentage points from January and 2.6 percentage points higher than a year earlier.

Loan sizes across all loan types increased in February with the total market increasing by 3.2% to $414,800. Average purchase loan sizes increased 2.5% to $446,300, while the refinance loan size increased by 3.7% to $391,800. The average ARM loan size climbed 4.6% to $968,300.



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U.S. Economy Loses 92,000 Jobs in February – Eye On Housing

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The U.S. labor market weakened in February, as payroll employment declined and the unemployment rate rose to 4.4%. The cooling labor market could place the Federal Reserve in a challenging position as policymakers weigh slower job growth against inflation pressures from rising oil prices.

Wage growth accelerated slightly in February, with average hourly earnings rising 3.8% year-over-year. This pace is 0.3 percentage points lower than a year ago. Importantly, wage growth has been outpacing inflation for nearly two years, which typically occurs as productivity increases.

National Employment

According to the Employment Situation Summary reported by the Bureau of Labor Statistics (BLS), total nonfarm payroll employment fell by 92,000 in February, following a downwardly revised gain of 126,000 jobs in January. This marks the sixth monthly decline since January 2025 and the second-largest monthly job loss during that period.

Estimates for the previous two months were revised lower. The monthly change in total nonfarm payroll employment for December was revised down by 65,000 from +48,000 to -17,000, while the change for January was revised down by 4,000 from +130,000 to +126,000. Combined, these revisions reduced previously reported employment by 69,000 jobs.

The unemployment rate ticked up to 4.4% in February from 4.3% in January. Over the month, the number of persons unemployed rose by 203,000, while the number of persons employed declined by 185,000.

Meanwhile, the labor force participation rate—the proportion of the population either looking for a job or already holding a job—declined 0.1 percentage points to 62.0%. This was the lowest rate since January 2022 and remains below its pre-pandemic level of 63.3% recorded at the beginning of 2020. Among prime working-age individuals (aged 25 to 54), the participation rate decreased to 83.9%.

Health care, which has been the primary growth driver of payroll growth in recent months, lost 28,000 jobs in February, largely due to a strike at Kaiser Permanente during the BLS survey period. Employment in the information sector also trended down, shredding 11,000 jobs, while federal government cut another 10,000 jobs.  Meanwhile, the social assistance sector added 9,000 jobs, driven by gains in individual and family services (+12,000).

Construction Employment

Employment in the overall construction sector declined by 11,000 jobs in February, following an upwardly revised gain of 48,000 in January. Within the industry, residential construction shed 7,100 jobs, while non-residential construction lost 3,800 positions.

Residential construction employment now stands at 3.3 million in February, including 929,000 workers employed by builders and remodelers and nearly 2.4 million residential specialty trade contractors.

The six-month moving average of job gains for residential construction remains negative, at a loss of 533 per month, reflecting losses in three of the past six months. Over the last 12 months, residential construction has seen a net loss of 46,100 jobs, marking the twelfth consecutive annual decline and the longest stretch of annual losses since the Great Recession. Since the low point following the Great Recession, residential construction has gained 1,306,900 positions.

In February, the unemployment rate for construction workers edged down slightly to 4.6% on a seasonally adjusted basis, remaining relatively low compared with historical norms.



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Builders Identify Key Long-Term Forces Shaping Housing Demand and Industry Health – Eye On

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Home builders are keenly aware of the complex long-term outlook ahead for the home building industry. A recent NAHB/Wells Fargo HMI survey asked builders to assess the impact of 14 major trends and forces on the health of the industry and housing demand over the next 10 years. Results show that home builders expect a mix of demographic, economic, and technological forces to exert significant, long-term influence on the industry. 

At one end, most builders consider five forces as strong or somewhat negative long-term risks to the industry and housing demand:

Government debt levels: 82%

Declining fertility rate: 78%

Long-term inflation outlook: 70%

Declining marriage rate: 67%

Energy costs: 61%

At the same time, builders identified several forces they expect to have a strong or somewhat positive impact on the health of the home building industry and housing demand over the next decade, led by structural and technological shifts:

Aging housing stock: 73%

Work-from-home trends: 65%

Artificial intelligence: 52%

Modular and panelized construction: 45%

These findings reveal that while long-term demographic trends and fiscal pressures are considered serious headwinds, builders also see meaningful opportunities to adapt related to an aging housing stock, evolving work patterns, and artificial intelligence. For additional details and results, please consult the full survey report.



This article was originally published by a eyeonhousing.org . Read the Original article here. .

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Affordability Posts Mild Gains in Second Half of 2025 but Crisis Continues – Eye On Housing

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Though new and existing homes remain largely unaffordable, the needle moved slightly in the right direction in the second half of 2025, according to the latest data from the National Association of Home Builders (NAHB)/Wells Fargo Cost of Housing Index (CHI). The CHI results from the fourth quarter of 2025 show that a family earning the nation’s median income of $104,200 needed 34% of its income to cover the mortgage payment on a median-priced new home. Low-income families, defined as those earning only 50% of median income, would have to spend 67% of their earnings to pay for the same new home.

In the last three quarters of 2025, the income share needed to buy a new home declined from 36% in the second quarter, to 35% in the third quarter and 34% in the final quarter of 2025. These figures indicate a slight improvement in affordability.

The same trend holds true for existing homes. A typical family would have to pay 37% of their income for a median-priced existing home in the second quarter, 36% in the third quarter and 34% in the final three months of 2025. A low-income family would need to pay 69% of their earnings to make the same mortgage payment on an existing home in the fourth quarter.

The U.S. data for the percentage of earnings needed to purchase a new home in the fourth quarter is based on a national median new home price of $405,300 and median income of $104,200. The fourth quarter median new home price is down 1.2% from $410,100 in the third quarter. The corresponding price for an existing home in the fourth quarter fell to $414,900, 2.8% down from $426,800 in the previous quarter. The average 30-year mortgage rate moved lower from 6.65% in the third quarter to 6.32% in the fourth quarter.

CHI is also available for 175 metropolitan areas, calculating the percentage of a family’s income needed to make the mortgage payment on an existing home based on the local median home price and median income in those markets.

In eight out of 175 markets in the fourth quarter, the typical family is severely cost-burdened (must pay more than 50% of their income on a median-priced existing home). In 69 other markets, such families are cost-burdened (need to pay between 31% and 50%). There are 98 markets where the CHI is 30% of earnings or lower.

The Top 5 Severely Cost-Burdened Markets

San Jose-Sunnyvale-Santa Clara, Calif., was the most severely cost-burdened market in the CHI, where 80% of a typical family’s income is needed to make a mortgage payment on an existing home. This was followed by:

Urban Honolulu, Hawaii (69%)

San Francisco-Oakland-Fremont, Calif. (63%)

San Diego-Chula Vista-Carlsbad, Calif. (62%)

Barnstable Town, Mass. (56%)

Miami-Fort Lauderdale-West Palm Beach, Fla. (56%)

Naples-Marco Island, Fla. (56%)

Low-income families would have to pay between 111% and 159% of their income in all seven of the above markets to cover a mortgage.

The Top 5 Least Cost-Burdened Markets

By contrast, many of the least cost-burdened markets were located in Illinois. In the top five least cost-burdened markets, typical families needed to spend just 16-18% of their income to pay for a mortgage on an existing home. These markets are:

Decatur, Ill. (16%)

Elmira, N.Y. (16%)

Springfield, Ill. (17%)

Peoria, Ill. (17%)

Davenport-Moline-Rock Island, Iowa-Ill. (18%)

Low-income families in these markets would have to pay between 32% and 36% of their income to cover the mortgage payment for a median-priced existing home.

Visit nahb.org/chi for tables and details.



This article was originally published by a eyeonhousing.org . Read the Original article here. .

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Mortgage Rates Dipped Below 6% in February Amid Treasury Rally – Eye On Housing

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Mortgage rates continued to decline in February, dipping below 6% in the last week of February. According to Freddie Mac, the 30-year fixed-rate mortgage averaged 6.05% last month, 5 basis points (bps) lower than January. Meanwhile, the average 15-year rate declined only a basis point to 5.43%. Compared to a year ago, the 30-year and 15-year rates are lower by 79 bps and 60 bps, respectively.

The 10-year Treasury yield, a key benchmark for long-term borrowing, held relatively steady for most of February with an average 4.18% – a marginal decrease of 2 bps from the previous month. However, yields fell significantly in the final week of February as investors moved to secure U.S. Treasuries amid rising risk aversion in corporate credit markets, widening the spread between corporate bond yields and U.S. Treasuries. Investor concerns centered on the large capital expenditures by major technology firms to finance artificial intelligence infrastructure, much of which has been funded through corporate bond issuance, contributing to rising debt levels among these “hyperscalers”.

Following the recent escalation of conflict in the Middle East, the 10-year Treasury yield has shown signs of reversing course. Investors are closely monitoring how protracted the conflict may become and its potential implications for global energy markets. If oil prices rise significantly or remain elevated, inflation pressures could intensify, potentially pushing Treasury yields higher.



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Fourth Quarter 2025 – Eye On Housing

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U.S. house prices continued to rise at the close of 2025, though the pace of growth has slowed compared with the rapid gains of previous years. Elevated mortgage rates, affordability challenges, and ongoing economic uncertainty have restrained buyer demand, resulting in wide variations in local housing markets. While some states and metropolitan areas continue to post solid price gains, others are experiencing flat or declining prices.

Nationally, according to the quarterly purchase-only House Price Index (HPI)1 released by the Federal Housing Finance Agency (FHFA), U.S. house prices rose 1.8% in the fourth quarter of 2025, compared to the same period in 2024. This represents the slowest year-over-year (YoY) appreciation since the second quarter of 2012, indicating a cooling in the housing market following more than a decade of robust price growth. On a quarterly basis, appreciation was modest, increasing 0.8% from the third quarter.

The FHFA’s purchase-only HPI tracks average price changes based on more than six million repeat sales transactions on the same single-family properties. It offers insights about house price changes not only at the national level but also across states and metropolitan areas.

At the state level, 43 states experienced positive YoY price growth between the fourth quarter of 2024 and the fourth quarter of 2025, with gains ranging from 0.1% to 6.4%. North Dakota led the nation with a 6.4% gain, followed by Delaware with a 6.3% gain and Illinois with a 6.1% gain. On the opposite end, nine states and the District of Columbia reported negative YoY house price appreciation. Florida posted the most significant price decline at 2.7%. Notably, 33 states exceeded or matched the national YoY growth rate of 1.8%. On a quarterly basis, home prices declined in five states compared to the third quarter of 2025, highlighting softening momentum in select regional markets.

At the metro level, the divergence is even more pronounced. Among the 100 largest U.S. metro areas tracked by FHFA, YoY house price appreciation ranged from a 9.1% decline to an 8.9% increase. Cape Coral-Fort Myers, FL recorded the steepest annual decline, while Allentown-Bethlehem-Easton, PA-NJ posted the strongest annual gains over the previous four quarters. In total, 34 out of the 100 largest metro areas experienced annual price declines in the fourth quarter, while 66 metro areas posted gains.  Many of the strongest performers were concentrated in the Midwest and Northeast, where inventory remains limited and price levels are comparatively affordable. In contrast, several Sun Belt and Mountain West metro areas that saw outsized appreciation earlier in 2021-2022 are now facing flatter or negative growth as affordability pressures weigh on demand.

Note:



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Multifamily Absorption Rate Remains Below 50% – Eye On Housing

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The percentage of new apartment units that were absorbed within three months after completion was unchanged for new units completed in the second quarter, according to the Census Bureau’s latest release of the Survey of Market Absorption of New Multifamily Units (SOMA). The survey covers new units in multifamily residential buildings with five or more units. The number of new multifamily units completed rose marginally in the second quarter and remained above 90,000 units for the seventh consecutive quarter.

Apartments

The percentage of apartments absorbed within three months has remained below 50% for four straight quarters. The SOMA data has never featured more than two consecutive quarters with under 50% absorption rates. Currently, the rate stands at 47%, meaning that 47% of the 93,680 units completed in the second quarter were rented within three months of completion. The median asking rent in the second quarter was $1,860, up 5.3% from $1,766 last year. The SOMA data has also displayed two quarters of median rent declines, as the asking rent has fallen from $1,941 for completions in the fourth quarter of 2024.

Along with the three-month absorption rate and completions, SOMA also reports absorption rates at six, nine, and twelve months after completion. For apartments completed six months ago (93,400 units), 70% have been absorbed into the market. Of the 125,100 apartments completed nine months ago, 85% have been absorbed. For those completed twelve months ago (142,700 units), 91% were absorbed into the multifamily market.

Condominiums and Cooperative Units

The three-month absorption rate for new condominiums and cooperative units rose to 69%. Total completions of new condominiums and cooperative units, according to SOMA, doubled in the second quarter from 2,551 to 5,167.



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Private Residential Construction Spending Edges Higher in December – Eye On Housing

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Private residential construction spending was up 1.5% for the last month of 2025. This modest gain was driven primarily by increased spending on home improvements and single-family construction. Despite this increase, total spending remained 1.3% lower than a year ago, reflecting the continued impact of housing affordability challenges facing the sector.

According to the latest construction spending data from the U.S. Census, single-family construction spending was up by 1.6% in December, consistent with the soft builder confidence reflected in the NAHB/Wells Fargo Housing Market Index (HMI). Compared to a year ago, single-family construction spending decreased 3.6%. Meanwhile, multifamily construction spending edged up 0.1% in December, marking a seventh consecutive month of modest gains. Compared to a year earlier, multifamily spending was 2.9% higher. Improvement spending (remodeling) rose 1.8% for the month but stayed flat relative to a year ago.

The NAHB construction spending index is shown in the graph below. The index illustrates how   spending on single-family construction has slowed since early 2024 under the pressure of elevated interest rates and concerns over building material tariffs. Multifamily construction spending growth has also slowed down after the peak in July 2023, with the index largely plateauing since late 2024. In contrast, improvement spending has been on an upward trend since the beginning of 2025.

Spending on private nonresidential construction was down 1.8% over a year ago. The annual private nonresidential spending decrease was primarily driven by a $26 billion drop in manufacturing construction spending, followed by a $2 billion decrease in healthcare construction spending.



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