February ICE Mortgage Monitor: "Home price growth slowed to its weakest pace in more than a decade"

Several Southern markets now have 10%+ mortgaged homes underwater

Note the significant regional differences in price action, inventory and negative equity. Areas that have high levels of inventory are seeing soft prices and an increasing number of mortgaged homes with negative equity.

Here is the ICE February Mortgage Monitor report (pdf).

Press Release: ICE Mortgage Monitor: Early-January Rate Decline Unlocks Refinance Opportunity for Nearly 5 Million Homeowners

Intercontinental Exchange, Inc. … today released its February 2026 ICE Mortgage Monitor Report. According to the analysis, early January declines in mortgage rates unlocked refinance opportunities for nearly five million borrowers and helped push affordability to a four-year high.

“Even small reductions toward 6% rates can significantly boost affordability, particularly for homeowners who could refinance into a lower rate and monthly payments,” said Andy Walden, Head of Mortgage and Housing Market Research at ICE. “When rates hit 6.04% on January 9, the number of homeowners in the money to refinance jumped by 20% and affordability hit its best level in four years. That said, affordability remains structurally challenged, with home prices still elevated relative to incomes and meaningful differences emerging across regions and borrower segments.”

Key findings from the February Mortgage Monitor include:

• Refinance incentives surged to a nearly four-year high following early-January interest rate declines

On January 9, interest rates reached 6.04%, according to the ICE 30-year conforming fixed rate index, which put roughly 4.8 million borrowers “in the money” for a refinance — the highest level since early 2022. That drop effectively increased the eligible population by 20% overnight. Although some of that benefit has since receded, the episode underscores how sensitive the market is to rate shifts in the high‑5% to low‑6% range. Nearly 1.3 million recently originated mortgages carry rates between 6.875% and 6.99%, including more than half a million from 2025, making it the most common rate band last year, and the most sensitive to interest rate drops.

• Housing affordability reached its best level since early 2022, but remains stretched by historical standards

In early January, the monthly principal and interest payment needed to purchase the average-priced home fell by -$164 (-7%) year over year to $2,091, reducing the share of median household income required to 27.8%. Despite the improvement, the national home price-to-income ratio remains elevated at roughly 4.8:1, well above its long-run average near 4:1. To revert back to pre-pandemic home price-to-income ratios, household incomes would need to rise a little over 15%, assuming home prices remain flat.

• Negative equity is increasing modestly, concentrated in recent vintages and select Southern markets

More than 1.1 million borrowers ended 2025 underwater — the highest level since early 2018 — with negative equity heavily concentrated among FHA and VA loans originated in 2022 or later. Several Southern markets now have more than one in 10 mortgaged homes underwater, even as national equity levels remain historically strong.

• Home price growth slowed to its weakest pace in more than a decade, with regional divergence widening

U.S. home prices rose just 0.6% in 2025, marking the smallest calendar year growth since 2011. The Northeast and Midwest continue to provide stability, while price declines in the South and West are increasingly weighing on national averages. …

emphasis added

Mortgage Delinquencies Decreased in December

Here is a graph of the national delinquency rate from ICE. Overall delinquencies decreased in December and remain below the pre-pandemic levels. Source: ICE McDash

• The national delinquency rate dipped 16 basis points (bps) in December, landing at 3.68% after November’s calendar-related spike

• That’s down 3 bps from last year’s hurricane-affected levels and 26 bps below the December 2019 pre-pandemic benchmark

• Early-stage delinquencies improved, but 90-day-plus delinquencies rose by 30K and are now at their highest point in almost three years — 19K more than last year

• Non-current rates improved across the board, with VA loans seeing the biggest monthly drop at 28 bps

• FHA performance remains a challenge: even with a 6 bps decline in December, the FHA non-current rate is still above 13% — more than triple the market average — with more than 1 million FHA loans past due, up 11% year over year

House Prices Up 0.5% Year-over-year in January

Here is the year-over-year in house prices according to the ICE Home Price Index (HPI). The ICE HPI is a repeat sales index. ICE reports the median price change of the repeat sales. The index was up 0.5% year-over-year in January.

• After seeing home prices rise by a modest 0.6% in 2025 — the softest calendar-year gain since 2011 — price softening continued into early 2026

• Annual growth slowed to +0.5% in January with prices up a modest +0.04% from December on an adjusted basis

• More than one-third of major markets saw home prices ease on a seasonally adjusted basis in January, marking the largest share seeing single month declines since last October

• Single-family homes (+0.8%) continue to outperform condos (-2.0%), with 97 of the 100 largest markets seeing single-family prices outpace condo prices

• Regional patterns remain a core theme: the Northeast and Midwest are supporting national stability, while the West and Sunbelt continue to drag overall growth

• Roughly a quarter of major markets continue to see home prices edge lower on a seasonally adjusted basis including 17 in the South, 13 in the West, and five in the Midwest

Percent of Mortgages in Negative Equity are very high in Parts of Florida and Texas

• Negative equity continued to rise through late 2025, ending the year with 1.1 million borrowers (2.1%) underwater — the largest share since early 2018 and up from 696,000 (1.3%) at the start of the year

• Another 3.2 million borrowers (7.9%) have less than 10% equity, making them more vulnerable to small price drops or income shocks

• While negative equity remains modest nationally, some markets are seeing much higher exposure

• In eight major markets, more than one in 20 homes are underwater, including: Tampa, Fla. (5.4%); Colorado Springs, Colo. (5.6%); North Port, Fla. (6.0%); Jacksonville, Fla. (6.3%); San Antonio, Texas (8.8%); Austin (9.2%), Texas; Cape Coral, Fla. (10.1%); and Lakeland, Fla. (10.8%) — where more than one in 10 mortgaged homeowners owe more than their home is worth

• Negative equity is far less common in the Midwest, the Northeast and along the West Coast, where exposure remains modest even after last year’s price softening

emphasis added

National Inventory Still Below 2019 Levels

But there are significant regional differences.

• After rebounding to within 13% of 2017–2019 norms by mid-2025, progress stalled in the back half of the year, leaving supply still meaningfully below pre-pandemic benchmarks

• A standout trend in recent quarters: several South and West markets, including Denver; Austin, Texas; San Jose, Calif.; and others, saw last summer’s inventory surpluses shrink as sellers pulled listings in response to softer pricing conditions

• Those pullbacks, combined with better affordability, have helped rebalance supply and demand in those markets, leading to firmer (or at least less weak) price trends recently

• Meanwhile, many Midwest and Northeast markets are still slowly working their way out of deep, multi-year inventory shortages. Progress has been slow, and deficits remain significant — especially in places like Connecticut and New York.

There is much more in the mortgage monitor.