Mortgage News>> Market Update November 2026
FEDERAL RESERVE
10/28/26: Federal Reserve holds short term rates at 3.75 – 4.00 despite “sticky” inflation, but on the back of a softer than expected jobs report in September.
The Fed is anticipated to raise rates in December and January. The volatility of economic data could change the level of anticipation between now and then.
PERSONAL CONSUMPTION EXPENDITURES
(10/29/26): Personal Consumption Expenditures (PCE) came in hot to the upside, putting the annual inflation rate at 3.6%; well higher than the Fed’s target rate of 2.0%.
GDP also came in hot at a seasonally adjusted rate of 3.4%. Good news for the economy.
Personal income grew at a sluggish pace of only 0.2%.
Consumer spending rose 3.8% in the third quarter, the same pace as the prior period. Gross private domestic investment soared 19.4%, driven by a 20.9% surge in equipment spending and an 8.4% jump on intellectual property products.
A Labor Department report also released Thursday showed that layoffs remain low. Initial jobless claims edged lower to a seasonally adjusted 194,000 for the week ending Oct. 24, below the estimate for 200,000 and near levels last seen in the late 1960s. – cnbc.com
Strong GDP, a resilient jobs market, and rising inflation equates to an almost inevitable Fed rate hike in December.
CPI COMES IN HOT IN OCTOBER
(10/14/26): Consumer prices rose 3.7% annually, missing expectations of 3.6%. Rising gas prices largely credited for the miss to the upside. Inflation will stay elevated with persistent tariffs, and the War with Iran. The Administration can directly control how long both persist.
CONSUMER CONFIDENCE
(10/27/26): Consumer confidence in October has a surprising beat at 91.7 VS 81.0 estimated. Despite historic highs of consumer credit and elevated inflation, the consumer continues to spend and is at least somewhat optimistic about the overall economy.
NEW HOME SALES
New home sales for September were down 0.6% from August, and 5.3% year over year. Little surprise as mortgage interest rates have ticked up. The median new home sold for $400,400, up 3.9% from August, down 3.9% year over year. Also driven by higher interest rates and lower demand. Silver lining, home affordability is improving.
New home inventory is holding at an 8.4-month supply. Statistically a “buyers” market, nationally.
In PulteGroup’s Q3 2026 earning call (10/22/26), CEO Ryan Marshal mentioned multiple headwinds facing builders today. “The headwinds that are out there, the current immigration enforcement, which I think has been widely reported on, that is having disruption in the broad labor market.” Marshall also identified several additional factors weighing on homebuyer sediment:
· Conflict in the Middle East
· Rising energy prices
· Persistent inflation
· Uncertainty about future interest rates
· Declining consumer confidence (although higher in October)
Builder confidence in October dropped to 29, the lowest report since 2012.
New home inventory is high. Resale inventory is also high. The top 50 markets are all statistically “buyers” markets today. Price reductions and seller concessions to reduce closing costs and/or buy down interest rates are more common than not.
While interest rates remain high compared to 2020/2021 averages, they are right in line with historic averages. At the same time, prices are coming down and incentives are going up. Today may be the best time to buy, in a very long time. Remember, if rates fall, prices go up. Today there are more variables working to a buyer’s advantage, than not.
EXISTING HOME SALES
As of September, existing home sales are at a 3.99 million annualized rate. That is at lows not experienced since 1995 when there were 3.85 million existing home sales. This is a shocking metric considering the U.S. population has roughly 80 million more residents today.
There is no housing shortage today. There is a misconception that interest rates at a historic norm (mid 7%s) is a reason to not sell or not buy. A better understanding of current market dynamics could be all that it takes to thaw the frozen housing market. Rates aren’t the problem. The inventory for existing homes is at 4.8 months. Sellers are motivated, cutting list prices and offering 3%-6% in seller concessions. For buyers, it is a great market.
Note: October 2026, home sale prices dropped 0.1%, for the first time in over three years. – Redfin.
HOW AI IS DRIVING MORTGAGE RATES HIGHER
According to the Federal Reserve Bank of Dallas, AI related investment could total $3 – $5 trillion dollars over the next 3-5 years. AI related tech companies sell corporate bonds to fund those investments. This massive capital raise takes away from more traditional investments like U.S. Treasury Bonds and Mortgage-Backed Securities.
The U.S. Government is also in demand of capital to finance deficits and refinance existing debt. With U.S. debt already surpassing $40 trillion and climbing at an alarming rate, the U.S. needs capital; capital generated by selling more debt.
AI related companies and the U.S. Government are competing for the same capital, and at staggering levels. The trillion-dollar question is where your money is safer and/or going to create a higher return. Do you want to invest in SpaceX, Nvidia, OpenAI, or the U.S. Government?
A very simplistic explanation as to why mortgage rates may rise or fall, with very little connection to what the Fed does with short term rates. The demand for capital, much of which is coming from the AI trade, can move the market more than even the Fed.
AI will likely be the most revolutionary technology in human history to date. Forever changing the landscape of productivity, and employment. As with the internet before, there is a real threat of an “AI Bubble.” When investors grow concerned that the money invested today isn’t going to produce the returns that were anticipated over a given period and stop investing. If this happens, the stock market, which is mostly propped up on AI related company stocks comes crashing down, as do U.S. Treasury yields, and mortgage rates as a flight to quality flows back to Treasuries and Mortgage-Backed Securities and away from AI investment. The market has already experience some very short-term AI jitters where this has played out real time in the markets.
The AI Bubble may never transpire. It is important to pay attention to, because if it does burst, it will be violent for the stock market, but mortgage rate relieve will almost be inevitable. Neither resolves the U.S. $40 trillion (and climbing) debt problem no one wants to address.
EXECUTIVE ORDER TO LOWER THE COST OF HOUSING
Trump’s Executive Order on Mortgage Insurance title “Decreasing Housing Costs for the American People” was signed on October 22nd, 2026
One of its most significant provisions concerns the automatic cancellation of private mortgage insurance (PMI) on conventional mortgages backed by Fannie Mae and Freddie Mac.
1. Automatic Cancellation of Private Mortgage Insurance
The order directs the Federal Housing Finance Agency (FHFA) director to consider establishing a pilot program that would:
- 1. Automatically evaluate borrowers’ equity positions using automated valuation models (AVMs).
- 2. Identify borrowers who have sufficient equity to qualify for PMI cancellation based on current property values.
- 3. Proactively cancel PMI when borrowers meet equity, payment-history, and other eligibility requirements.
- 4. Reduce appraisal and documentation requirements associated with PMI cancellation.
- 5. Require mortgage servicers to notify borrowers when they may qualify.
The program, in its current state, would only apply to mortgage originated after the program is established; not for existing borrowers. While these programs may benefit new borrowers, they would not experience any benefit for at least 5-10 years. Today, it does nothing for home affordability.
If is important to note that this currently applies to loans funded through Fannie Mae and Freddie Mac, and not FHA, VA, or USDA.
Mortgage insurance companies will more than likely increase costs of private mortgage insurance knowing that the life of private mortgage insurance paid by new borrowers could likely be shortened, thus diminishing their profitability. Capitalism would support that economic move by private mortgage insurance companies.
2. Reducing Title Insurance Costs
· Allowing approved automated title assessments instead of traditional lender’s title insurance on eligible refinances.
· Considering eligibility for loans with LTVs exceeding 80%.
· Expanding the number of approved title assessment providers.
· Requiring savings from the program to be passed along to borrowers.
This could reduce costs for refinance transactions. It does not help purchase transactions. The costs saving is likely hundreds of dollars, which does not begin to thaw a frozen housing market.
3. Reducing Refinancing Costs and Loan Level Pricing Adjustments (LLPAs)
The order directs FHFA to consider:
· Eliminating appraisal requirements on qualifying limited cash-out refinances.
· Waiving income reverification when existing agency data supports doing so.
· Reducing or eliminating LLPAs on qualifying refinances.
· Removing unnecessary documentation requirements when refinancing reduces the borrower’s monthly payment.
These changes could reduce origination costs, accelerate processing, and increase refinance eligibility. However, these are directions for FHFA to consider—not immediate changes to Fannie Mae or Freddie Mac selling guidelines.
Today credit risk by many indicators is as high as it has been since 2007. Serious mortgage delinquencies are up 30% year over year. Consumer debt is at an all time high. As is mortgage debt. Equity is also very high, but due to rapid appreciation of hoe values largely due to dropping mortgage rates to 3.0% or less in response to the COVID crisis. Values far outpacing incomes thus making them “inflated.” LLPAs are created to increase revenue to Fannie and Freddie to protect them, and ultimately the taxpayer when we have another housing / credit crisis. While decreasing borrower costs to the consumer seems on the surface beneficial, it is also eliminating a lever Fannie and Freddie must protect against credit risk. During a time when risk is high, and growing higher.
4. Expanding Manufactured and Factory Built Housing
The executive order establishes a federal task force to modernize manufactured housing.
Its responsibilities include:
· Standardizing construction approvals and inspections.
· Reducing duplicative regulatory requirements.
· Supporting automated and modular home construction.
· Expanding access to federal housing financing programs.
· Encouraging state and local governments to streamline permitting.
Modular homes are likely the future of lower cost housing. Bringing more modular homes to market could have a long-term positive impact on affordable housing. Not going to happen overnight, but this could be a great move in the right direction.
5. Reducing USDA and VA Direct Loan Interest Rates
The order directs the Secretaries of Agriculture and Veterans Affairs to reduce interest rates on qualifying single-family loans made directly by their departments, consistent with existing law and available funding.
Important: This does not mandate lower rates on all VA-guaranteed or USDA-guaranteed mortgages originated by private lenders.
Unclear how, or when such a change would go into effect, and the actual impact on borrowers.
FORECLOSURES ON A RUN
Serious mortgage delinquency is up 30% year over year. Serious delinquency is leading to a spike in foreclosure auctions, up 25% year over year.
Federal Housing Administration (FHA) loans accounted for the greatest increase in foreclosure auction volume posting a 73% increase year over year. FHA loan auctions accounted for 43% of all foreclosure auctions.
Thirty-one states recorded year-over-year increases in completed foreclosure auction volume, including Texas (up 54%), Florida (up 67%), California (up 80%), Ohio (up 12%) and Illinois (up 7%). States with the largest percentage increases were Arkansas (up 113%), California (up 80%), South Carolina (up 76%), Nevada (up 76%) and Washington (up 69%).
Eighteen states reached or exceeded their first-quarter 2020 baseline, including Texas (38% above), California (9% above), Arizona (31% above), Louisiana (41% above) and Colorado (246% above).
States with the most foreclosure auction volume were Texas (15% of the national total), Florida (8%), California (6%), Ohio (5%) and Illinois (5%). – Housingwire.com
Crisis? Today, no. No data to support that this gets better before it gets worse.
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Interest rates as of 10/30/2026. Conforming interest rates. Interest rates and APR based on loan amounts not to exceed $806,500. Loan to value not to exceed 80%. 740+ credit score. Owner occupied only. Purchase and rate in term refinances. Not all applicants will qualify. Call today for your individual scenario rate quote.
