How existing-home sales, jobs data, foreclosure activity and latest delinquencies will impact market activity
2026 has gotten off to a slow start for the US housing market, with existing-home sales sliding by 8.4% in January even as affordability continued to improve.
The National Association of Realtors (NAR) said Thursday that the monthly drop – and a 4.4% annual decrease in activity – marked a “disappointing” kickoff for this year’s market, even if it was mitigated slightly by unusually cold weather across plenty of the country.
It seems economic volatility is also keeping plenty of homebuyers on the sidelines. On Wednesday, the Bureau of Labor Statistics (BLS) said nonfarm payrolls increased in January and the unemployment rate ticked lower – but annual revisions revealed 2025 was the worst year for job creation since the height of COVID-19.
Continuing unease around job security, especially amid the rapid rise of artificial intelligence (AI) in the workplace, is weighing against the outlook, according to Glen Weinberg of the Colorado-based Fairview Commercial Lending.
“Economic uncertainty is definitely impacting homebuyers – especially in markets like Denver with lots of jobs threatened by AI,” he told Mortgage Professional America.
Rising arrears and foreclosures: A cause for concern?
Mortgage arrears, too, are on the up, signaling that affordability is continuing to strain plenty of homeowners in the current choppy economy and rate environment.
Foreclosure activity has now risen for 11 months in a row, property data provider ATTOM said this week, skyrocketing by 32% in January compared with the same time last year.
And Weinberg said while he doesn’t see rising mortgage arrears as cause for panic yet, the volume of calls he’s recently fielded on that topic has been steadily increasing.
“Delinquencies are definitely rising,” he said, “not to a worrying level yet, but I’m starting to see an uptick based on borrowers calling me.”
The silver lining on mortgage arrears: they’ve jumped recently, but only “after having reached artificially low levels during the pandemic,” the Federal Reserve Bank of New York said in a Tuesday report.
About 1.3% of mortgages went underwater last year, the study said, largely in line with historical averages.
Fed approach offers few clues on where rates are headed
The Federal Reserve doesn’t directly set mortgage rates, but its decisions impact 10-year Treasury yields – which are strongly correlated to the 30-year average fixed mortgage.
Those yields have slipped since the same time last month, partly on the back of this week’s underwhelming economic data, but a sizable drop in mortgage rates don’t appear to be imminent.
And some market watchers, including hedge fund manager David Einhorn, have questioned the current consensus that the Fed will stay on hold in the months ahead.
In a Tuesday interview with CNBC, Einhorn said he sees “substantially more than two” rate cuts by the central bank this year.
Weinberg, though, doesn’t see much relief ahead for homebuyers or homeowners on the rate front. “I think the Fed is going to sit tight for a bit,” he said. “Unfortunately, Fed budget deficits will keep yields higher as well.”
A sliver of positive news for those hopeful buyers determined to push ahead with a purchase arrived in the NAR’s latest report. The association’s Housing Affordability Index crept up for the seventh month in a row, even as median existing-home prices moved ever so slightly higher.
An index higher than 100 means a family on the median income has “more than enough” to qualify for an average mortgage loan with a 20% downpayment. In January, that gauge sat at 116.5.
Weinberg also sees average purchase prices falling in the months ahead as economic uncertainty – and a possible bumpy ride ahead on Wall Street – continue to impact the national housing market.
“The economy is getting volatile,” he said. “A much higher percentage of wealth is now held in the stock market. As that hiccups, it will lead to a pullback in housing prices, as they’re almost directly correlated now.”
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