RE Market Pulse – Week of December 15, 2025

Each week, I analyze the evolving dynamics of the market, identifying emerging trends, shifts in momentum, and key considerations for real estate professionals. Last week, the Federal Reserve approved its third interest rate cut of 2025, reducing the federal funds rate to a range of 3.5%–3.75%, the lowest level since 2022. Mortgage activity continued to strengthen in November, recording the largest year-over-year increase in more than five years. Meanwhile, the national homeownership rate edged higher, reaching 65.3% in the third quarter of 2025 with growth concentrated among younger and middle-aged households.

December 15, 2025

DIVIDED FED APPROVES THIRD RATE CUT THIS YEAR, SEES SLOWER PACE AHEAD. The Federal Open Market Committee delivered its third consecutive rate cut, reducing the federal funds rate by 25 basis points to a range of 3.5% – 3.75%. Framed as a “hawkish cut,” the move aligns with expectations of measured easing while signaling caution on future adjustments. Forward guidance from the Fed’s dot plot projects only one additional cut in 2026 and another in 2027, before stabilizing near a longer-run target of 3%. Full story from CNBC →

Why this Matters: By reducing the federal funds rate, the Fed is making borrowing costs more affordable across the economy. This affects everything from credit cards and auto loans to mortgages. For consumers, the importance lies in timing and strategy. Whether purchasing a home, refinancing debt, or managing household budgets, understanding the Fed’s trajectory helps consumers make informed financial decisions in an evolving economic environment.

MORTGAGE ACTIVITY CONTINUED TO CLIMB IN NOVEMBER. Mortgage activity strengthened in November, delivering the largest year-over-year increase in more than five years. According to the Mortgage Bankers Association, total application volume rose 60% compared to a year earlier, despite a seasonally-adjusted 1.6% decline from October. The average 30-year fixed mortgage rate fell for the sixth consecutive month, fueling broad-based growth across categories. Refinancing activity surged 123.7% year-over-year, while purchase applications climbed 34.1% — the strongest annual gain since 2021. By loan type, fixed-rate applications are up 57.6% from last year, while adjustable-rate mortgages surged 94.9% compared to a year earlier. Full story from EYEONHOUSING →

Why this Matters: When financing becomes more workable, people act. Homeowners are refinancing to lower monthly payments, and buyers are re-entering as affordability improves and purchasing power expands. This environment rewards real estate professionals who stay engaged, keep conversations active, and help clients understand how today’s numbers translate into real options.

HOMEOWNERSHIP RATE INCHES UP TO 65.3%. The U.S. homeownership rate edged up to 65.3% in the third quarter of 2025, according to the Census Bureau. Year-over-year gains were recorded among households under 35, rising 0.5 percentage points to 37.5%, as well as those aged 45 – 54 and 55 – 64, which increased modestly by 0.3 and 0.1 percentage points, respectively. In contrast, homeownership declined by 1.2 percentage points among households aged 35 – 44 and those 65 and older. Despite the overall improvement, the rate remains 3.9 percentage points below the 2004 peak of 69.2% and continues to trail the 25-year average of 66.3%, underscoring both progress and persistent complexities in the housing market. Full story from EYEONHOUSING →

Why this Matters: For consumers, these trends carry significant implications, presenting both opportunities and risks. A rising homeownership rate indicates that more households are building equity and achieving greater financial stability. However, the uneven distribution across age groups highlights the critical role of timing, affordability, and long-term planning. By understanding where the market is strengthening and where it is losing momentum, consumers can make more strategic decisions, whether it is pursuing homeownership, refinancing existing debt, or preparing for retirement.

THE BOTTOM LINE: The Federal Reserve’s third rate cut of 2025, combined with falling mortgage rates, is creating a more favorable borrowing environment that directly impacts affordability. Lower rates are fueling demand, and the modest uptick in the national homeownership rate signals progress, though challenges remain. These dynamics highlight both opportunity and urgency: consumers who act now may secure more advantageous terms, while understanding market shifts is essential for making informed decisions.

Disclaimer: this is a compilation of industry news from trade media and industry groups; it does not share any forward-looking predictions or projections.