Hawaii Mortgage Market Update – December 2025

Each month, we bring you insights from one of the best in the business — Zack Diener of Barrett Financial Group, LLC — to help you stay informed and make confident, well-timed decisions in today’s ever-changing mortgage landscape.

A Month of Volatility and Sobering Economic Data

The past 30 days have delivered a whipsaw of rate movements and critical economic data that paint a concerning picture of the U.S. labor market. From pre-Fed jitters to disappointing employment reports, December has tested the patience of both borrowers and market watchers alike.

Where Rates Stand Today

Currently, mortgage rates are averaging 6.27% for conventional 30-year fixed loans according to Mortgage News Daily’s daily survey of lenders. To put this in perspective, rates are dead center in the narrow range that’s been intact since early September. While we’re not at the exceptional 3-year lows we saw briefly in late November, we’re also well below the 7%+ levels that characterized much of 2024.

The Fed Cut That Changed Nothing (Again)

On December 10th, the Federal Reserve delivered its expected quarter-point rate cut, marking the third consecutive cut this year. But if you’ve been following our updates, you know the pattern by now: there was no movement in the bonds that underlie mortgage rates when the rate cut was announced. Instead, markets reacted to Fed Chair Powell’s press conference.

This time, however, the outcome was positive. Mortgage rates moved lower after the announcement, providing a welcome break from the previous two Fed meetings which resulted in weeks of higher rates. Powell’s key comments helped ease market concerns:

• Job gains could have been overstated in recent months
• Growing evidence that inflation is coming down
• Rates are now in a high range of neutral

The reference to “neutral” is significant – it means the Fed believes rates are near levels that should neither help nor hurt the economy, suggesting room for another rate cut or two in 2026.

The Jobs Report That Shocked Markets

This past Tuesday brought the long-delayed November jobs report, and the numbers were sobering. After a six-week data drought caused by the government shutdown, the report revealed significant weakness in the labor market:

November’s Disappointing Numbers:

• Only 64,000 jobs added, though better than the 45,000 forecast
• Unemployment jumped to 4.6%, the highest level since September 2021
• A broader unemployment measure that includes discouraged workers swelled to 8.7%, the highest since August 2021

October’s Revised Disaster:

• October saw a net loss of 105,000 jobs, primarily due to government layoffs from deferred resignation programs
• August and September were revised down by a combined 33,000 jobs

The Silver Lining:

• The labor force expanded by 470,000 to a record 171.2 million, suggesting more Americans are coming off the sidelines to look for work
• Average hourly earnings rose just 0.1% monthly, up 3.5% annually – the smallest annual gain since May 2021

The market’s reaction to this weak data was measured. While today’s jobs report was weaker on balance, it wasn’t weak enough to unequivocally shift the narrative of a labor market that is merely cooling in a gradual and manageable way. Bond markets showed some strength, but rates are in a consolidation pattern inside the same relatively narrow range seen since early September.

What’s Really Driving the Labor Market Weakness

The employment challenges aren’t happening in a vacuum. Several factors are contributing to the slowdown:

• Aging baby boomers are retiring at a rapid rate
• The Trump administration’s aggressive crackdown on both legal and illegal immigration has limited the growth of the U.S. workforce
• Employers in industries ranging from manufacturing to hospitality are hitting the pause button on hiring amid concerns about economic growth and tariff costs

Fed Chair Powell himself acknowledged these dynamics, stating that the labor market was likely weaker than official government indicators suggest, a result of a massive shift in population growth as the Trump administration cracks down on immigration.

Data Quality Concerns

It’s worth noting that the Fed is unlikely to put much weight on this report given data disruptions from the government shutdown. The report on December’s employment data, released in early January ahead of the next Fed meeting, will likely be a much more meaningful indicator for policy decisions.

Local Hawaii Market Update

Hawaii’s market continues to show interesting dynamics heading into the end of 2025. Statewide sales activity is mixed in November 2025, with home sales up 11% and condo sales down 7% from last year. Market times are up in November 2025, with home Days on Market up 3% to 37 and condo Days on Market up 26% to 53 from last year.

On Oahu specifically, the data shows even more dramatic shifts. Oahu sales activity is mixed in November 2025, with home sales up 17% and condo sales down 8% from last year. Median sale prices show the home price up 1% to $1,112,500 and the condo price down 9% to $481,950 from last year. Market times are up in November 2025, with home Days on Market up 18% to 26 and condo Days on Market up 19% to 38 from last year.

The takeaway for the local market is clear: homes are taking longer to sell, giving buyers more time for due diligence and negotiation. The frenzied pace of recent years has cooled considerably, creating a more balanced environment.

Here in Hawaii, local banks and Hawaii-based credit unions continue to reflect national rate trends while bringing invaluable expertise to island real estate transactions. Understanding leasehold properties, rural financing, and Hawaii-specific nuances becomes especially valuable in this more measured market environment.

As a local mortgage brokerage with longstanding partnerships with both local and mainland institutions, I’m positioned to help clients navigate this volatile environment and secure competitive par rates when opportunities present themselves.

What This Means for Borrowers

The Economic Reality: The labor market is clearly cooling, with unemployment at four-year highs and job creation significantly below what’s needed to keep pace with population growth. This weakness, paradoxically, is good news for mortgage rates as it reduces Fed concerns about an overheating economy.

The Rate Environment: Current rates around 6.27% represent a reasonable middle ground. We’re not at the exceptional 3-year lows we saw briefly in late November, but we’re also nowhere near the 7%+ rates of early 2024. The narrow trading range suggests rates are searching for direction based on incoming economic data.

The Volatility Factor: Volatility remains a risk as the week progresses, particularly with this Thursday’s Consumer Price Index (CPI) report on the horizon. Inflation data will be critical in determining whether the recent rate improvements can continue or if we’ll see another reversal.

The Strategy for 2026: With the Fed suggesting room for one or two more cuts in 2026, and the labor market showing clear signs of cooling, the trajectory for rates appears more favorable than it’s been in years. However, the path won’t be linear. Economic data releases will continue to create volatility, and the narrow trading range we’ve been stuck in since September may finally break – in either direction.

Action Items:

• Don’t wait for “perfect” conditions that may never materialize
• Focus on your financial readiness rather than trying to time the market
• Understand that current rates, while not exceptional, are historically reasonable
• Be prepared for continued volatility around major economic data releases
• Lock rates when they’re favorable rather than gambling on further improvements

The mortgage market has taught us repeatedly that windows of opportunity can be fleeting. The economic headwinds facing the labor market suggest that rate relief may be coming in 2026, but the path will likely include bumps along the way. For qualified borrowers ready to move forward, current conditions represent a workable environment – especially when compared to where we’ve been for most of the past two years.

Mortgage insights provided by Zack Diener, Barrett Financial Group

Zack Diener
Senior Loan Advisor
Mortgage Loan Originator | NMLS 470413
Based in Fort Collins, CO
Serving Colorado and Hawaii
(808) 349-3777 phone
(800) 385-3630 fax

ZDiener@barrettfinancial.com

Barrett Financial Group, LLC | Corp NMLS #181106
275 E Rivulon Blvd, Suite 200, Gilbert, AZ 85297