The analysts were correct on the direction but wrong on the scale as existing home sales plunged 8.4% MoM in January from a downwardly revised +4.4% MoM in December. That is the biggest MoM drop since February 2022.
While some suggested this could be impacted by the Winter Storms, this is based on contracts signed in November/December… and the biggest decline was in The West (which had zero weather impact)
Nevertheless, realtors gonna realtor:
“The below-normal temperatures and above-normal precipitation this January make it harder than usual to assess the underlying driver of the decrease and determine if this month’s numbers are an aberration,” NAR Chief Economist Lawrence Yun said in a statement.
That MoM plunge pulled the total SAAR down near 15 year lows…
Without an extended period of improved affordability, the recovery in the housing market is likely to be prolonged.
The NAR report showed the median selling price rose 0.9% from a year earlier to $396,800 last month.
First-time buyers represented 31% of buyers of existing homes in January, up slightly from 29% in the prior month and higher than a year ago.
The inventory of previously owned homes increased 3.4% in January from a year ago to 1.22 million.
A pickup in supply through 2025 has helped to tame price growth, though Yun said on a call with reporters that listings need to increase much more to help improve sales.
On the bright side, it appears mortgage applications are rebounding as the year started with lower rates…
Source: Bloomberg
Arguably, existing home sales have much further to go to the upside as the lagged mortgage rate has continued to decline… so what triggered this collapse?
Source: Bloomberg
Finally, circling back to where we started, NAR expects home sales to rise a stunning 14% this year, higher than most other forecasts but a figure that NAR Chief Economist Lawrence Yun said he feels “confident” in. That assumes more inventory will come on the market, mortgage rates will hover around 6% and the Fed will cut interest rates another two times, compared to policymakers’ median projection for one.
While its not the 2009, we do have a house price bubble that is deflating as The Fed slows M2 Money growth. However, we are witnessing rising foreclosure rates.
Lenders started the foreclosure process on 289,441 U.S. properties in 2025, up 14 percent from 2024, up 213 percent from the pandemic-era low in 2021, but down 14 percent form 2019 and down 86 percent from a peak of 2,139,005 in 2009.
States that saw the greatest number of foreclosure starts in 2025 included Texas (37,215 foreclosure starts); Florida (34,336 foreclosure starts); California (29,777 foreclosure starts); Illinois (15,010 foreclosure starts); and New York (13,664 foreclosure starts).
Those metropolitan statistical areas with a population greater than 1 million that saw the greatest number of foreclosure starts in 2025 included New York, NY (14,189 foreclosure starts); Chicago, IL (13,312 foreclosure starts); Houston, TX (13,009 foreclosure starts); Miami, FL (8,936 foreclosure starts); and Los Angeles, CA (8,503 foreclosure starts).
Bank repossessions increase year over year
Lenders repossessed 46,439 properties through foreclosures (REO) in 2025, up 27 percent from 2024 but down 68 percent from 143,955 in 2019, the last full year before pandemic-related declines, and down 96 percent from a peak of 1,050,500 in 2010.
States that saw the greatest number of REOs in 2025 included Texas (5,147 REOs); California (4,030 REOs); Pennsylvania (2,975 REOs); Florida (2,869 REOs); and Illinois (2,768 REOs).
Those metropolitan statistical areas with a population greater than 1 million that saw the greatest number of REOs in 2025 included Chicago, IL (2,033 REOs); New York, NY (1,462 REOs); Houston, TX (1,381 REOs); Detroit, MI (1,105 REOs); and Philadelphia, PA (1,100 REOs).
Florida, Delaware, and South Carolina record the worst foreclosure rates in 2025
States with the worst foreclosure rates in 2025 were Florida (1 in every 230 housing units with a foreclosure filing); Delaware (1 in every 240 housing units); South Carolina (1 in every 242 housing units); Illinois (1 in every 248 housing units); and Nevada (1 in every 248 housing units).
Rounding out the top 10 states with the worst foreclosure rates in 2025, were New Jersey (1 in every 273 housing units); Indiana (1 in every 302 housing units); Ohio (1 in every 307 housing units); Texas (1 in every 319 housing units); and Maryland (1 in every 326 housing units).
Lakeland, Columbia, and Cleveland post the worst metro foreclosure rates in 2025
Among 225 metropolitan statistical areas with a population of at least 200,000, those with the worst foreclosure rates in 2025 were Lakeland, FL (1 in every 145 housing units with a foreclosure filing); Columbia, SC (1 in every 165 housing units); Cleveland, OH (1 in every 187 housing units); Cape Coral, FL (1 in every 189 housing units); and Atlantic City, NJ (1 in every 192 housing units).
Metro areas with a population greater than 1 million, including Cleveland that had the worst foreclosure rates in 2025 were: Jacksonville, FL (1 in every 200 housing units); Las Vegas, NV (1 in every 210 housing units); Chicago, IL (1 in every 214 housing units); and Orlando, FL (1 in every 217 housing units).
Average time to foreclose decreases
U.S. properties foreclosed in the fourth quarter of 2025 had been in the foreclosure process an average of 592 days, a 3 percent decrease from the previous quarter and a 22 percent decrease from a year ago.
States with the longest average time to foreclose in Q4 2025 were Louisiana (3,461 days); New York (1,998 days); Hawaii (1,760 days); Connecticut (1,600 days); and Kansas (1,594 days).
There was a total of 111,692 U.S. properties with foreclosure filings in Q4 2025, up 10 percent from the previous quarter and up 32 percent from a year ago.
Nationwide in Q4 2025, one in every 1,274 properties had a foreclosure filing.
December 2025 Foreclosure Activity Key Takeaways
Nationwide in December 2025, one in every 3,163 properties had a foreclosure filing.
States with the worst foreclosure rates in December 2025 were New Jersey (one in every 1,734 housing units with a foreclosure filing); South Carolina (one in every 1,917 housing units); Maryland (one in every 1,961 housing units); Delaware (one in every 2,044 housing units); and Florida (one in every 2,119 housing units).
28,269 U.S. properties started the foreclosure process in December 2025, up 19 percent from the previous month and up 46 percent from a year ago.
Lenders completed the foreclosure process on 5,953 U.S. properties in December 2025, up 53 percent from the previous month and up 101 percent from a year ago.
Conclusion
ATTOM’s Year-End 2025 Foreclosure Market Report shows that U.S. foreclosure activity increased in 2025, with foreclosure filings, starts, and bank repossessions all rising compared to 2024, signaling a continued shift toward more normalized market conditions. Despite the annual increases, foreclosure activity remains significantly below pre-pandemic levels and far below peaks seen during the last housing crisis. December 2025 and Q4 2025 data also showed increased foreclosure activity on both a monthly and annual basis.
Florida home prices are tanking with Fort Myers leading the collapse at -11.9% YoY.
President Trump ordered Fannie Mae and Freddie Mac to operate like The Federal Reserve. Buying assets to manipulate interest rates. In this case, F&F have been ordered to buy $200 billion of agency MBS.
Thursday’s Truth Social post triggered an immediate snap tighter in mortgages, led by the belly and lower coupons. By pulling MBS spreads tighter and crowding out real-money buyers, Fannie and Freddie’s purchases would push incremental demand into Treasuries as the next-best duration substitute, putting a modest bid under the belly of the curve.
However, execution and the ultimate size of purchases is still unclear, as my colleague Alyce Andres noted. If the government-sponsored enterprises GSEs stagger purchases, and signal an ultimate increase above the announces $200 billion, further tightening should occur. They can fund a lot of the buys from existing liquidity portfolios, though there’s a path where they could issue short-term debt to preserve operating buffers and could nudge repo wider at the margin.
The bigger transmission channel is hedging, as highlighted by colleagues Ira Jersey and Will Hoffman. Unlike the Fed, the GSEs actively hedge MBS holdings, shedding duration by paying fixed rates in swaps and using swaptions to manage the negative convexity and vega risks embedded in mortgages. That matters for swap spreads and for volatility, especially in the belly.
That’s why GSE MBS purchases don’t have to be huge to change the feel in rate markets. The post-Global Financial Crisis regime dulled the classic convexity feedback loop because the Fed held such a large amount of agency MBS and didn’t hedge it, while the GSEs shrank their portfolios. Trump’s directive risks bringing more of that regime back.
A recent note out of Goldman Sachs frames it cleanly: A $200 billion build could lift the active convexity-hedger footprint by about 25%. The street then starts front-running the mechanical flows — paying in selloffs, receiving in rallies — which makes breakouts more likely even if day-to-day ranges look calm, Goldman added.
Positioning makes the setup more precarious. JPMorgan already saw mortgage valuations as a “bit snug” before the announcement, while BofA flagged that rates market had recently added fresh belly shorts sitting against a backdrop of benchmark funds still overweight MBS versus IG.
That mix can keep the initial tightening sticky, but it also raises the odds of sharp reversals if the market decides the purchasing flows are slower, smaller, or more heavily hedged than hoped.
Fannie and Freddie’s retained portfolio are soaring along with the duration gap.
The effect on mortgage rates has so far has been negligible. The 30-year conforming mortgage just fell below 6% at 5.99%.
The US mortgage market is “livin’ on a prayer.” As a result, former homebuilder and current FHFA Director Bill Pulter has suggested 2 mortgage products to make US homes more “affordable”, adding to the legacy of stupid government policies to increase homeownership.
But first, current mortgage demand. Mortgage applications increased 0.6 percent from one week earlier, according to data from the Mortgage Bankers Association’s (MBA) Weekly Mortgage Applications Survey for the week ending November 7, 2025.
The Market Composite Index, a measure of mortgage loan application volume, increased 0.6 percent on a seasonally adjusted basis from one week earlier. On an unadjusted basis, the Index decreased 1 percent compared with the previous week. The seasonally adjusted Purchase Index increased 6 percent from one week earlier. The unadjusted Purchase Index increased 3 percent compared with the previous week and was 31 percent higher than the same week one year ago.
The Refinance Index decreased 3 percent from the previous week and was 147 percent higher than the same week one year ago.
Now on to Pulte’s stupid mortgage proposals.
Pulte Doubles Down After 50-Year Backlash, Proposes “Layaway Mortgage”
The 50-year mortgage is a stupid idea. True, it can reduce the monthly mortgage payment by several hundred dollars. But it extends the life of the mortgage from 30 to 50 years, keeping the outstanding mortgage balance elevated for longer, exposing the lender (or mortgage owner) to greater losses in the case of default. Not surprising since the duration risk of a 50-year mortgage is greater than on a 30-year mortgage. Who is going to hold these mortgages??
So, Pulte hearing that the mortgage market thinks this is a stupid idea, introduced another stupid mortgage idea: the “layaway mortgage” where buyers make payments for 5-10 years before they’re allowed to move into the home. This is a variation of “rent to own.”
Under Pulte’s Layaway Mortgage program:
▪️ Buyers select a home and begin making monthly payments immediately ▪️ They continue paying for 5-10 years (the “layaway period”) ▪️ During this time, they cannot live in the home, modify it, or even visit without an appointment ▪️ After the layaway period ends, buyers can move in and begin their 40-year mortgage ▪️ If they miss a payment during layaway, they forfeit everything and the home goes back on the market.
So, in other word, a 50-year mortgage (40+10 layaway).
Note: Japan used to offer 100-year mortgages during their housing bubble, but now 35-year mortgages are more common.
Mortgage applications increased 2.3 percent from one week earlier, according to data from the Mortgage Bankers Association’s (MBA) Weekly Mortgage Applications Survey for the week ending February 7, 2025.
The Market Composite Index, a measure of mortgage loan application volume, increased 2.3 percent on a seasonally adjusted basis from one week earlier. On an unadjusted basis, the Index increased 6 percent compared with the previous week. The unadjusted Purchase Index increased 4 percent compared with the previous week and was2 percent higher than the same week one year ago. The seasonally adjusted Purchase Index decreased 2 percent from one week earlier.
The Refinance Index increased 10 percent from the previous week and was 33 percent higher than the same week one year ago.
Prepays are down significantly since 2021 which marks the beginning of The Fed starting to raise rates.
Aggregate prepayments for agency mortgage-backed securities (MBS) fell 12% in January, with housing seasonals declining and mortgage rates lingering near 7%. MBS turnover speeds have bounced back considerably relative to 2023 lows, though high rates may be starting to take a toll. Even at current elevated rates, GNMA streamline refinancings are picking up as loans issued in spring of 2024 pass out of the refi lockout period.
No, Freddie Mac is not a new cheeseburger from McDonald’s. Freddie Mac is a government sponsored enterprised (GSE) that purchases residential mortgages from lenders and assists in the bundling of mortgages into mortgage-backed securities (MBS). They also monitor home prices.
Freddie Mac reported that its “National” Home Price Index (FMHPI) increased 0.54% month-over-month on a seasonally adjusted (SA) basis in December. On a year-over-year basis, the National FMHPI was up 4.0% in December, up from up 3.9% YoY in November. The YoY increase peaked at 19.0% in July 2021, and for this cycle, bottomed at up 0.9% YoY in May 2023.
But let’s look at the dark side of home prices, which is price declines. Led by Communist enclaved Austin Texas, down -12.7% from peak. The next six cities are all in Florida.
As The Pretenders sang, “My City Was Gone.” That song was about Akron, Ohio. But it applies to the US Mortgage Market under Biden/Harris. The question is whether Trump’s deregulation plans can return to its former glory.
Mortgage applications increased 0.1 percent from one week earlier, according to data from the Mortgage Bankers Association’s (MBA) Weekly Mortgage Applications Survey for the week ending January 17, 2025.
The Market Composite Index, a measure of mortgage loan application volume, increased 0.1 percent on a seasonally adjusted basis from one week earlier. On an unadjusted basis, the Index increased 3 percent compared with the previous week. The seasonally adjusted Purchase Index increased 1 percent from one week earlier. The unadjusted Purchase Index increased 7 percent compared with the previous week and was 2 percent higher than the same week one year ago.
The Refinance Index decreased 3 percent from the previous week and was 42 percent higher than the same week one year ago.
The Pretenders’ lead singer Chrissie Hynde likely would have made a better Federal Reserve Chair and Treasury Secretary than Janet Yellen.
Mortgage applications decreased 3.7 percent from one week earlier, according to data from the Mortgage Bankers Association’s (MBA) Weekly Mortgage Applications Survey for the week ending January 3, 2025. This week’s results include an adjustment for the New Year’s holiday.
The Market Composite Index, a measure of mortgage loan application volume, decreased 3.7 percent on a seasonally adjusted basis from one week earlier. On an unadjusted basis, the Index increased 47 percent compared with the previous week. The seasonally adjusted Purchase Index decreased 7 percent from one week earlier. The unadjusted Purchase Index increased 43 percent compared with the previous week and was 15 percent lower than the same week one year ago.
Purchase application activity is up about 2% from the lows in late October 2023 and is now 15% below the lowest levels during the housing bust.
The Refinance Index increased 2 percent from the previous week and was 6 percent lower than the same week one year ago.
Mortgage applications decreased 21.9 percent from two weeks earlier, according to data from the Mortgage Bankers Association’s (MBA) Weekly Mortgage Applications Survey for the week ending December 27, 2024. The results include an adjustment to account for the Christmas holiday.
The Market Composite Index, a measure of mortgage loan application volume, decreased 21.9 percent on a seasonally adjusted basis from two weeks earlier. On an unadjusted basis, the Index decreased 55 percent compared with two weeks ago. The seasonally adjusted Purchase Index decreased 13 percent compared with two weeks ago. The unadjusted Purchase Index decreased 48 percent compared with two weeks ago and was 17 percent lower than the same week one year ago.
The holiday adjusted Refinance Index decreased 36 percent from two weeks ago and was 10 percent higher than the same week one year ago. The unadjusted Refinance Index decreased 62 percent from two weeks ago and was 6 percent lower than the same week one year ago.
The delinquency rate for commercial mortgage-backed securities (CMBS) tied to office properties reached 10.4 percent in November 2024, approaching the 10.7 percent peak reached during the 2008 financial crisis. The ascent is the fastest two-year increase on record, with rates climbing 8.8 percentage points since late 2022, significantly outrunning the 6.3-point rise seen during the financial crisis nearly 15 years ago.
The office real estate sector has been grappling with a severe downturn for several years now, but are accelerating recently as they are driven by persistently high vacancy rates and declining rents. Property values, particularly for older office buildings, have plummeted, with many losing 50 to 70 percent of their market value and in some cases becoming effectively worthless. Those conditions have left real estate portfolio managers and building owners unable to borrow, refinance or sell properties, contributing to rising delinquencies and foreclosures. (Mortgages become effectively delinquent when payments are missed beyond a standard 30-day grace period.)
On the CMBS front, there have been no upgrades in 2023 and 2024.
Efforts to convert office buildings into residential spaces are increasing but remain limited by structural and economic constraints. Many office towers are unsuitable for conversion due to their large floor plates or prohibitively high retrofitting costs which often exceed the cost of demolition and rebuilding. In 2024, 73 office-to-residential conversions were completed, with an additional 30 underway. Despite plans to increase the pace in 2025, the cumulative impact remains minimal, addressing just 7.9 percent of the 902 million square feet of vacant office space nationwide.
Confounded Interest - Anthony B. Sanders 
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