Both the FHFA and the S&P/Cotality Case-Shiller home-price indices released new data this week. The message remains consistent: home prices are still higher than a year ago, but the pace of appreciation continues to slow. FHFA’s national index shows prices up 1.7% year-over-year and flat 0.0% month-over-month in September after August was revised to 0.0%. The stagnation in monthly movement reflects a clear deceleration taking hold across most regions. The Case-Shiller 20-City Composite posted a 1.4% annual gain in September, down from 1.6% in the previous month. On a seasonally adjusted basis, the 20-City Composite rose 0.1% month-over-month , consistent with the broader cooling trend as elevated mortgage rates continue to weigh on demand and affordability. Both indices point to similar conditions: slower appreciation, weaker monthly momentum, and home-price growth now trailing inflation. This shift further tightens affordability and underscores a market that has transitioned into a slower, more restrained phase of the cycle. Conforming Loan Limit Update (2026) The FHFA announced that the 2026 baseline conforming loan limit for one-unit properties is $832,750 , an increase of $26,250 from 2025. High-cost areas will see a limit of $1,249,125 , or 150% of the national baseline. These updates reflect slower—but still positive—home-price appreciation over the past year and will shape eligibility and pricing for conforming mortgages.

Want better affordability? Lower house prices certainly helps, and this article states that more than half of homes in the United States have fallen in price in the last year. Forget interest rates: Certainly, there are fewer willing buyers when they know ahead of time that they may face increasing insurance, tax, or condo fees. (Lenders are doing what they can to control costs, and a recent STRATMOR piece is titled, “Rates Drop, Pipelines Pop: Don’t Let Fulfillment Flop.”) The strain is being seen and felt. CNBC reports that foreclosures rose in October signaling some type of distress. (Or delinquency and foreclosure numbers were really low to begin with, right?) As broker veteran Brian B. writes from Florida, “This is one reason for the popularity of DSCRs. Companies looking to buy real estate can buy the DSCR mortgages, and then the foreclosures are quicker because they are non-owner properties.” The foreclosure moratorium coming off is a likely source. Foreclosure activity is returning to normal ranges after years of artificially low volumes (Covid-era forbearance programs, etc.), according to ICE’s First Look report. However, FHA-backed loans are driving roughly half of foreclosure starts. FHA loans saw a 44-bps rise in non-current rates, while other loan types improved. Foreclosure starts hit 103,000 in Q3, up 23 percent over the same period YoY. FHA loans now account for 38 percent of all active foreclosures nationwide. Overall foreclosure volume remains historically low, with Q3 foreclosure sales at ~half of 2019 levels. (Today’s podcast can be found here and this week’s are sponsored by The Big Point of Sale, which delivers a fast, flexible, and low-cost mortgage POS that gets lenders up and running in hours (not months) while empowering loan officers and consumers to collaborate seamlessly from any device. Hear an interview with The Big Point of Sale’s Matthew VanFossen on the evolution of technology in the mortgage industry and how all parties privy to a mortgage transaction can be included on the same workflows.)

ADP’s weekly employment report showed another contraction at -13.5k, but unlike last week, no one seems to care. We also got the delayed release of Retail Sales with a notably weak -0.1 vs 0.3 control group, and backlogged PPI that was just a hair cooler than expected. There too, zero bond market reaction. Thanksgiving week trading vibes are in full effect.  Fortunately, the trading that immediately preceded the data was moderately stronger, leaving MBS to start the day up nearly an eighth of a point and 10yr yields down nearly 2bps at 4.011.

Before the day is done, we’ll get the home price update that includes new conforming loan limits, several other reports, and a 5yr Treasury auction.  

A federal judge threw out the criminal charges against former FBI Director James Comey and New York Attorney General Letitia James, ruling that the prosecutor who brought the cases had been illegally appointed.

The government-sponsored enterprise took its first look at what new loan volume might be like in two years and found it could rise closer to pandemic levels.

Social media posts point to a 40% to 100% price hike this year, the latest in a series of hikes started in 2023, when for some lenders prices rose 400%.

The Natural Treasury Employees Union has asked a district court to clarify whether Russell Vought, the acting director of the Consumer Financial Protection Bureau, has complied with a preliminary injunction.

While the tone is still generally upbeat, the market is mired below October’s price highs and yields are range-bound.

Lowest Yields in Almost 4 Weeks Despite Ongoing Stock Market Recovery

There’s no question that stock prices and bond yields have had more than the normal amount of correlation recently. While that created some risk of a bond market weakness in the event of a stock market correction, those fears are proving unfounded over the past 2 trading days. Granted, stocks haven’t surged, but they did move back to the highest levels in a week on Monday. But bonds didn’t follow. In fact, after a microscopically stronger start, yields continued to fall gradually throughout the session, ultimately closing at the lowest level since the late October Fed meeting.

Market Movement Recap

08:53 AM Modestly stronger overnight and holding gains so far.  MBS up 2 ticks (.06) and 10yr down 1.3bps at 4.05

12:04 PM MBS up 3 ticks (.09) and 10yr down 1.7bps at 4.047

02:52 PM Best levels of the day with MBS up an eighth of a point and 10yr down 2.7bps at 4.037

Thanksgiving weeks can be weird for mortgage rates. This has to do with the fact that rates are dictated by the bond market and the bond market depends on real live people who can actually be out of the office on holiday weeks. The lighter levels of participation can increase volatility and cause random movement for no apparent reason. We’ll cross that bridge if we come to it. As far as Monday is concerned, there’s no drama or weirdness to report. Bonds improved modestly throughout the day, thus allowing mortgage rates to move modestly lower.  Because rates were closer to the higher end of their recent range at the end of last week, the small drop means we’re still very much inside the prevailing range. The next two days bring some backlogged economic data. Combined with the typical holiday-week caveats, volatility risk will thus be higher through Wednesday.