The December National Association of Home Builders (NAHB)/Wells Fargo Housing Market Index (HMI) edged up one point to 39. This is the 3rd straight month of improvement in the index–a development that could be confused for something encouraging.  But the reality is that builder confidence is merely drifting along just barely above the lowest levels in more than a decade. This has been the case for more than 3 years now. Peeling back the layers shows familiar constraints, even if the numbers shuffled slightly. The index measuring current sales conditions rose one point to 42, while the gauge tracking prospective buyer traffic held steady at 26—still firmly in “low to very low” territory. Future sales expectations improved one point to 52, extending a three-month stretch above breakeven. “Market conditions remain challenging with two-thirds of builders reporting they are offering incentives to move buyers off the fence,” said NAHB Chairman Buddy Hughes. “Meanwhile, builders are contending with rising material and labor prices, as tariffs are having serious repercussions on construction costs.” Pricing pressure continues to do much of the heavy lifting. NAHB reports that 40% of builders cut home prices in December, marking the second consecutive month at or above that level. The average price reduction eased to 5%, down from 6% in November, while the use of sales incentives climbed to 67%—the highest share in the post-Covid period. Regionally, the three-month moving averages show a broad-based but still uneven improvement. The Northeast slipped to 47, while the Midwest strengthened to 43. The South rose to 36 and the West improved to 34, though both regions remain more acutely exposed to affordability pressures.

Existing-home sales extended their recent stabilization in November, rising 0.5% to a seasonally adjusted annual rate of 4.13 million , according to the National Association of Realtors (NAR). This is the 3rd straight increase and annualized sales are at their highest level in 8 months. The catch is that–much like several other housing metrics–Existing Sales have been stuck in the lowest of gears since late 2022. As long as we continue to operate in this range, it’s difficult to draw any conclusions about bigger picture momentum. “Existing-home sales increased for the third straight month due to lower mortgage rates this autumn,” said NAR Chief Economist Lawrence Yun. “However, inventory growth is beginning to stall. With distressed property sales at historic lows and housing wealth at an all-time high, homeowners are in no rush to list their properties during the winter months.” Regional Breakdown (Sales and Prices, November 2025)

Region
Sales (annual rate)
MoM Change
Median Price
YoY Change

Northeast
510k
+4.1%
$480,800
+1.1%

Midwest
970k
-2.0%
$319,400
+5.8%

South
1.89m
+1.1%
$361,000
+0.8%

West
760k
0.0%
$618,900
-0.9%

The option for holders of older government-sponsored enterprise bonds that predated the move to uniform mortgage-backed securities now has a deadline.

Congress has passed a bill giving taxpayers who have been affected by natural disasters some extra time to file a claim for a tax credit or refund.

The Dallas bank turned down another offer because it thought it could get a higher price from Fifth Third, and also could ink an agreement faster, according to Comerica’s latest regulatory filing.

A coalition of mortgagees said the zombie seconds law negatively impacts 1.2 million junior liens statewide, despite just over 500 potential “zombie” loans.

The Federal Reserve said in a statement that its “understanding of innovation products and services have evolved” since the initial guidance was published in 2023.

Limited Follow-Through After Shockingly Big Miss

If you told the average trader that today’s core CPI would come in at 2.6% vs 3.0% year over year, they would have expected a much bigger reaction than we saw today. Ironically, the size of the miss may be one of those reasons. It’s so far outside the realm of expected possibilities that traders immediately assumed the presence of legitimate issues with November’s data collection. Nonetheless, it was worth a moderate extension of the overnight rally.

Econ Data / Events

Continued Claims (Dec)/06

1,897K vs 1930K f’cast, 1838K prev

Jobless Claims (Dec)/13

224K vs 225K f’cast, 236K prev

Philly Fed Business Index (Dec)

-10.2 vs 3 f’cast, -1.7 prev

Philly Fed Prices Paid (Dec)

43.60 vs — f’cast, 56.10 prev

y/y CORE CPI (Nov)

2.6% vs 3% f’cast, 3.0% prev

y/y Headline CPI (Nov)

2.7% vs 3.1% f’cast, 3.0% prev

Market Movement Recap

08:47 AM Rallying after CPI data. MBS up a quarter point and 10yr down 4.4bps at 4.115

12:18 PM Off best levels. MBS still up 5 ticks (.16) and 10yr down 3.1bps at 4.127

02:56 PM MBS up 7 ticks (.22) and 10yr down 4.2bps at 4.117

Officially, there were 2 days at the end of November where the average lender’s 30yr fixed rates were just a hair lower (0.02% difference).  Otherwise, today’s rates would be the lowest since late October. The improvement follows this morning’s release of November’s Consumer Price Index (CPI). Inflation was so far below expectations that it raised new questions about just how much the government shutdown impacted data collection. The market still treated it as good news for rates, but most of the improvement was already in place before the data came out. CPI marked the last of 2025’s top tier economic reports when it comes to potential impacts on rates. This doesn’t mean rates won’t move between now and January–only that they’re far less likely to make any big changes based on economic reports.

Great news for bonds on the inflation front this morning: Core annual inflation came in at 2.6% compared to a 3.0% forecast and 3.0% last time.  It’s the lowest reading of the cycle and the first attempt to break below the stagnant sideways/elevated levels that have prevented more aggressive Fed rate cuts. Despite those facts, the bond market is only rallying moderately (but certainly rallying). Traders could be skeptical about the thoroughness of post-shutdown data collection, or this could foreshadow year-end bearish biases. Whatever the case, the data itself was better for bonds than anyone could have hoped for (and better than any economist predicted).  NOTE: there is no month-over-month data due to the non-existence of October CPI.