First-time homebuyers begin to gain ground
First-time homebuyers are making modest gains in the market.
A new mortgage report from mortgage data and technology firm Optimal Blue shows a 1% month-over-month increase in first-time buyer participation in Federal Housing Administration and Veterans Administration loan segments.
FHA and VA loans tend to cater to entry-level borrowers by offering lower down payments and more flexible requirements. The uptick suggests that lower interest rates in September improved affordability and helped unlock access for new buyers.
Mortgage rates fell across all major loan types in September. FHA loans dropped to 6.08%, while VA loans fell to 5.82%, making monthly payments more manageable and helping entry-level buyers qualify more easily, according to Optimal Blue.
Meanwhile, the debt-to-income ratio—a key metric lenders use to assess affordability—declined to 44.3% for FHA loans, down from the previous month. This suggests borrowers had slightly more room in their budgets for monthly payments.
Single-family permit activity declines
Single-family permit activity has declined, while multifamily construction appears to be stabilizing, according to the National Association of Home Builders.
In an Oct. 15 online post, the NAHB cited U.S. Census data showing that from January through August 2025, the total number of single-family permits issued nationwide reached 637,096 — a 7.1% decrease from the same period last year.
Multifamily permits totaled 330,617 for the first eight months of the year, representing a 1.4% year-over-year increase.
Regional trends varied. The Midwest saw a 1% increase in single-family permits, while the Northeast declined by 4.4%, the South dropped by 7.5%, and the West fell by 10.6%.
For multifamily permits, the Midwest saw a 17.2% increase, the West rose by 9.1%, the South by 1.9%, and the Northeast declined by 23.5%.
Remodeling spending expected to rise steadily in 2026
Homeowners are projected to steadily increase spending on remodeling by mid-2026, according to the Remodeling Futures Program at the Joint Center for Housing Studies of Harvard University.
The Leading Indicator of Remodeling Activity projects that year-over-year spending on home renovations will rise by 2.4% at the start of next year, easing to 1.9% by the third quarter.
“Upward trends in both remodeling permit activity and single-family home sales suggest that demand for home improvement will remain stable in the coming year,” said Rachel Bogardus Drew, director of the Remodeling Futures Program, in a statement.
Total homeowner remodeling spending is expected to reach a record high of $524 billion early next year.