Sellers Do What No One Expects | Dec. 2025 Housing Market Update - BiggerPockets Real Estate Recap
Podcast: BiggerPockets Real Estate
Published: 2025-12-22
Duration: 36 minutes
Guests: Dave Meyer
Summary
The December 2025 housing market shows signs of stabilization with prices correcting, mortgage rates dropping, and inventory stabilizing, but a rise in underwater mortgages raises concerns, though not indicative of a crash.
What Happened
The December 2025 housing market update features Dave Meyer analyzing significant changes. Home prices have corrected, seeing a modest increase of 1.5% overall, despite notable declines in areas like Punta Gorda and Cape Coral, Florida, where prices dropped 13% and 10%, respectively.
Mortgage rates have fallen from 7.25% to 6.25% over the year, making refinancing more attractive to millions of homeowners. This decrease in rates, alongside improved affordability, marks the best affordability levels since 2020, particularly benefiting markets in the Midwest.
Inventory growth has slowed significantly, with only a 4% increase year-over-year by October 2025. However, delistings have surged to their highest since 2017, with only 20% of these properties returning to the market, indicating sellers are holding out for better conditions.
A concerning trend is the rise in underwater mortgages, with 900,000 homes affected, equating to 1.5% of all mortgage holders. Despite this, current delinquency rates, although slightly up by 16 basis points, remain below the 2019 levels, suggesting market stability rather than distress.
Foreclosures have increased by 6% year-over-year, but foreclosure starts have decreased by 10%. This mixed data suggests a market correction rather than a crash, with FHA and VA loan delinquencies notably rising.
Overall, Meyer emphasizes that American homeowners and investors are largely keeping up with their mortgage payments, a positive sign of market stability. The episode concludes with a cautious but optimistic outlook for the housing market as it enters 2026.
Key Insights
- Home prices in December 2025 saw a modest overall increase of 1.5%, but specific areas like Punta Gorda and Cape Coral, Florida, experienced significant declines of 13% and 10%, respectively.
- Mortgage rates decreased from 7.25% to 6.25% over the year, resulting in the best affordability levels since 2020 and making refinancing more attractive, especially in Midwest markets.
- Inventory growth slowed to a 4% year-over-year increase by October 2025, while delistings surged to their highest since 2017, with only 20% of delisted properties returning to the market.
- The number of underwater mortgages rose to 900,000 homes, affecting 1.5% of all mortgage holders, but delinquency rates remain below 2019 levels, indicating market stability.