U.S. Housing Market Shows Cooling Trend

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Publication date: December 4, 2025

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December 4, 2025

U.S. Housing Market Shows Cooling Trend as Price Growth Moderates to 2.2% in Q3 2025

The U.S. housing market is entering a period of stabilization, with home price appreciation slowing considerably through the third quarter of 2025 while federal regulators implement significant policy shifts and approve major industry consolidation, according to recent data from U.S. Federal Housing (FHFA) and the Department of Housing and Urban Development.

U.S. house prices rose 2.2% year-over-year in Q3 2025, marking a notable deceleration from the 2.9% annual growth recorded in the second quarter, according to the FHFA House Price Index. On a quarterly basis, prices increased just 0.2% between Q2 and Q3 2025, suggesting the market is cooling after years of rapid appreciation.

Monthly Volatility Signals Market Sensitivity

Monthly data reveals increasing volatility in home price movements. In August 2025, house prices rose 0.4% on a seasonally adjusted basis, with year-over-year growth at 2.3%. However, July 2025 saw prices decline 0.1% month-over-month, though annual growth remained at 2.3%.

This monthly fluctuation indicates heightened sensitivity to economic conditions and potential shifts in buyer behavior as the market adjusts to moderating price growth after an extended period of rapid appreciation.

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2026 Conforming Loan Limits Increase to $832,750

FHFA announced conforming loan limit values for mortgages that Fannie Mae and Freddie Mac will acquire in 2026. In most of the United States, the 2026 conforming loan limit for one-unit properties will be $832,750, representing an increase of $26,250 from 2025 levels.

This approximately 3.3% increase reflects continued home price appreciation and adjusts the threshold for loans the government-sponsored enterprises can purchase, potentially affecting borrowing capacity for homebuyers in higher-cost markets.

Multifamily Sector Maintains Strong Federal Support

U.S. Federal Housing set 2026 multifamily loan purchase caps at $88 billion for each of Fannie Mae and Freddie Mac, totaling $176 billion combined to support the multifamily market. The announcement emphasized maintaining "a strong focus on" affordable housing within the multifamily sector, signaling continued federal commitment to rental housing despite the cooling single-family market.

Major Mortgage Servicing Consolidation Approved

In a significant industry development, U.S. Federal Housing allowed Fannie Mae and Freddie Mac to approve Rocket Companies' proposed acquisition of Mr. Cooper Group in August 2025. The approval came with "appropriate conditions to ensure" safety and soundness, though specific conditions were not detailed in the announcement.

This consolidation creates substantial concentration in the mortgage servicing industry, potentially impacting competition and service delivery across mortgage origination and servicing operations.

Policy Realignment Under New Leadership

FHFA Director William J. Pulte announced he will donate 100% of his salary to wounded veterans in October 2025, describing the move as "a demonstration of commitment to fiscal responsibility and public service."

The agency also formalized its withdrawal from the Network of Central Banks and Supervisors for Greening the Financial System (NGFS) in September 2025, signaling a policy shift away from climate-focused initiatives.

Additionally, FHFA requested public input on its proposed Strategic Plan for FY 2026-2030 in October 2025. The new plan proposes three strategic goals for the agency: "Responsibly Oversee Fannie Mae and" Freddie Mac, though complete details were not provided in the announcement.

Affordable Housing Challenges Persist

HUD released its Worst Case Housing Needs: 2025 Report to Congress in November 2025, highlighting ongoing challenges for vulnerable populations accessing affordable housing. The report underscores that despite moderating price growth in the single-family market, affordability concerns remain acute for many Americans.

Regional Market Activity Intensifies

Federal housing agencies released numerous regional market analyses throughout late 2025, with particular concentration on Florida, Texas, and select Midwest markets. Housing Market Profiles were published for Deltona-Daytona Beach-Ormond Beach, FL, Abilene, TX, San Diego-Chula Vista-Carlsbad, CA, Rockford, IL, Chattanooga, TN-GA, and Miami-Miami Beach-Kendall, FL in November and December 2025.

Comprehensive Housing Market Analyses were released for Madison, WI, Fort Worth-Arlington-Grapevine, TX, Cape Coral-Fort Myers, FL, Camden, NJ, Fayetteville-Springdale-Rogers, AR, and North Port-Sarasota-Bradenton, FL between September and November 2025.

The concentration of analysis on Florida markets suggests these areas warrant closer monitoring for market dynamics and potential volatility.

Additional Regulatory Updates

FHFA released 2026 data for Qualified Census Tracts and Difficult Development Areas on September 30, 2025, providing updated geographic designations that affect Low-Income Housing Tax Credit allocations and other affordable housing programs.

HUD also published its Evaluation of the Moving to Work Flexibility Cohort: Year 3 Report in August 2025, assessing the ongoing demonstration program that allows public housing authorities greater flexibility in housing assistance operations.

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Market Outlook

The combination of moderating price growth, monthly volatility, and significant policy realignment suggests the housing market is entering a transitional period. The deceleration from 2.9% annual growth in Q2 to 2.2% in Q3 2025 indicates the market is stabilizing after years of rapid appreciation, though monthly fluctuations suggest continued sensitivity to economic conditions.

The multifamily sector maintains strong federal support through substantial loan purchase caps, while the single-family market shows signs of cooling. Meanwhile, regulatory changes signal a shift in federal housing policy priorities, with emphasis on traditional oversight functions rather than broader environmental and social considerations.

This article is for informational purposes only and does not constitute legal, financial, or real estate advice. Always consult licensed professionals for advice on your specific situation. This article is for informational purposes only and may contain general statements, data, or interpretations. Opendoor is not responsible for any errors, omissions, or outcomes resulting from the use of this information. The housing market is subject to rapid changes, and readers should independently verify all figures, facts, and claims before relying on them.

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