This Market Update is written by our Capital Market specialists each week to bring you insight into what's happening in the market and how it may affect mortgage rates and real estate trends.
Market Commentary:
From November 28th to December 4th interest rates remained steady. This week’s big news is that the Federal Reserve is widely expected to cut interest rates by 25 basis points at its December 10th meeting, lowering the federal funds rate to around 3.50% to 3.75%. Markets are already pricing in this move, and mortgage rates have been trending downward in anticipation. That will be the third cut in four months from the Fed, opening up new opportunities for borrowers who otherwise would have paid a lot more a year or two ago. Futures markets (CME FedWatch) show an 80-90% probability of a rate cut. JP Morgan and Goldman Sachs both shifted their forecasts to expect a December cut rather than waiting until January.
FedWatch: Target rate (in bps) possibilities, according to the CMEGroup (as of 12/04/2025 – 12:00 PM EST):
House Price Appreciation by State and Metro Area: Third Quarter 2025 – Click on your state
Asking Rents Soft Year-over-year
Final Look at Housing Markets in October and a Look Ahead to November Sales
About 7% of New Homes Are Teardowns:
Starter-Home Sales Climb 5%, But Prices Stay in Check as Inventory Hits 9-Year High – Redfin:
Token Tariffs:
Import prices are where at least some tariff impacts would manifest themselves. Yet M-o-M September import inflation was 0.0%, August was a miniscule 0.1%, and July was 0.3%, it appears to be declining. Additionally, Y-o-Y import inflation is a benign 0.3%. Strip out oil, and M-o-M import inflation in both August and September was 0.2%, and Y-o-Y it’s been flat as a hockey rink at 0.8% since 6/1/25. Cut rates. - Elliot Eisenberg, Economist
News You Can Use:
· Redfin’s 2026 Predictions: Welcome to The Great Housing Reset
· Realtor.com 2026 Housing Forecast
· Tariff impact starting to hit, could cause reduced headcount in 2026
· Inflation Adjusted House Prices 3.0% Below 2022 Peak
· ADP National Employment Report
*Communication is intended for Industry Professionals only and not intended for Consumer Distribution
Interest rate and annual percentage rate (APR) are based on current market conditions as of 12/04/2025, are for informational purposes only, are subject to change without notice and may be subject to pricing add-ons related to property type, loan amount, loan-to-value, credit score and other variables. Estimated closing costs used in the APR calculation are assumed to be paid by the borrower at closing. If the closing costs are financed, the loan, APR and payment amounts will be higher. Contact us for details. Additional loan programs may be available. Accuracy is not guaranteed, and all products may not be available in all borrower's geographical areas and are based on their individual situation. This is not a credit decision or a commitment to lend. actual interest rate, APR, and payment may vary based on the specific terms of the loan selected, verification of information, your credit history, the location and type of property, and other factors as determined by Prosperity Home Mortgage, LLC. Not available in all states. Rate is as of 12/04/2025 and is subject to change at any time without notice. Opinions, estimates, forecasts, and other views contained in this document are those of Freddie Mac’s economists and other researchers, do not necessarily represent the views of Freddie Mac or its management, and should not be construed as indicating Freddie Mac’s business prospects or expected results. Although the authors attempt to provide reliable, useful information, they do not guarantee that the information or other content in this document is accurate, current, or suitable for any particular purpose. All content is subject to change without notice. All content is provided on an “as is” basis, with no warranties of any kind whatsoever. Information from this document may be used with proper attribution.
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