Why U.S. Home Sales Ended 2025 on a High Note

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0:33Alex Ossola:A flurry of bank earnings this week shows American consumers are still spending and borrowing. Plus, U.S. home sales finished 2025 on a surprisingly strong note. Can it continue? Definitely, we could see a continuation of this increased activity. But if rates fall and that brings more buyers into the market, maybe that just pushes prices up faster and kind of offsets any of that affordability improvement. And speaking of housing, Polymarket now lets Americans bet on whether home prices will go up or down. It's Wednesday, January 14th. I'm Alex Osola for The Wall Street Journal. This is the PM edition of What's News, the top headlines and business stories that move the world today.

1:19Alex Ossola:Earnings out this week from some of America's biggest banks show that consumers continue to spend and borrow at a healthy clip at the end of last year, despite economic uncertainty. JPMorgan Chase reported yesterday, and today we had Bank of America, Citigroup, and Wells Fargo. Collectively, the four banks posted$28.5 billion in profit for the fourth quarter, with profits for the full year up nearly 5 % from 2024. JPMorgan, Bank of America, and Citigroup say spending on cards rose in the fourth quarter, while delinquencies on credit cards edged lower. And yet stocks of these banks fell today, as did tech stocks, weighing on the major U.S.

1:55Alex Ossola:indexes. The Nasdaq led the losses, falling 1%.

2:01Alex Ossola:As part of his attempt to address concerns around affordability, President Trump has called for a 10 % cap on credit card interest rates for one year. There's no guarantee this would go into effect, but if it did, one impact it would have would be shaking up the world of credit card rewards. WSJ personal finance reporter Imani Moiz tells us what could be in store for cardholders. What it means is that it would be harder to get credit card rewards unless you are at the very tippy top of the credit spectrum. So people with high credit scores, people who make a lot of money and therefore spend a lot of money, you shouldn't expect too big changes because those types of rewards are funded mostly through interchange, which are those swipe fees that merchants pay to accept credit cards, and also those sky-high annual fees that we've also talked on this show about, that can be as much as$900 a year.

2:48But what you will see is that the more basic rewards, so think about things like simple cash back or maybe just a more entry-level rewards card, those will probably get cut. So there was a recent Vanderbilt study that gamed this out a little bit, and they found that in order to basically offset the hit to bank profits from this reduction in rates, they would need to basically eliminate rewards for anyone with a credit score below a 760.

3:14Alex Ossola:But Imani says it's not clear if Trump's idea will become policy. What everyone in the industry is asking for is a fleshed-out policy document so that they could run their own analysis to game out exactly what this is going to mean for their business lines and what they need to cut back. Everybody wants more details. Legal experts say that it would require an act of Congress to actually cap credit card rates. People are skeptical that it will pass Congress, but we're creating a lot of precedents recently. So who knows if this goes forward?

3:50Alex Ossola:meta has laid off about 1500 people from its reality labs division which includes the company's virtual and augmented reality business that's according to a person familiar with the matter meta has shifted its focus away from the metaverse and towards the tech industry's newest obsession artificial intelligence. And Verizon customers across the country reported problems with their cell phone service today. The company says it's working on a fix for the outage. Coming up, we've got surprisingly strong home sales to close out 2025, the latest on the protests in Iran, and the Trump administration hitting pause on immigrant visas.

4:24Alex Ossola:That's after the break.

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5:04Alex Ossola:What's your guess about home prices in your area? Do you think they'll go up or down? Well, now you can put money on that via betting market, polymarket and parcel, which tracks daily home prices. The partnership between the two companies is an expansion of the kinds of things you can bet on online, from global elections to the Super Bowl and how often Elon Musk posts on social media. But it might come with some risks for people looking to buy or sell an actual house. Veronica Dagger covers personal finance for the journal and joins me now. Veronica, is this partnership between Polymarket and Parcel really positioned as more of a gambling market for kind of whoever wants to participate?

5:42Alex Ossola:Or is it a tool for homebuyers and sellers? I think it depends who you ask. Parcel sees it as a tool. They are very focused on the data and utility aspects of this. and the CEO, Trevor Bacon, says that this is a way to essentially narrow the information gap between institutional investors who have a lot of fancy tools and regular buyers. They want to be seen as a way for people to head risk and understand what's happening in the market. Polymarket, I think, is more focused on the speculative nature of the platform, and many of their users are people who like to bet on things. But at the end of the day, it's really more likely to be a market dominated by people like speculators rather than, say, a family who's looking to hedge the price of their home going up or down.

6:33Alex Ossola:So for people who are looking to these platforms as a way to gauge home prices and home sales, what do they offer that maybe the typical numbers don't? Well, traditional real estate data is backward looking like Case-Shiller or local MLS, which is the multiple listing statistics and data to see the recent comparable transactions in your area. Many of the prices that you see today announced, they're based on decisions made like 30 or 90 days ago. It really depends. What these markets share and promote themselves on is that it's real-time sentiment. So it's basically based on things like, you know, breaking news, like a sudden change in interest rates and not what happened last month.

7:17Another difference is the wisdom of the crowds, which sometimes filters out a lot of noise and spots trends before the more mainstream finds it.

7:28Alex Ossola:So if you are using this polymarket parcel data to gauge when to buy a house, when to sell your house, does that come with risks? Oh, 100 percent. Like any sort of thing you put your money in, there's going to be risks. And one of them is the prices of real estate could vary dramatically depending on even what street you live on within a specific town. Well, these markets are focused on citywide predictions. That could be completely removed from what's happening in my specific neighborhood. Also, there's a lot of volatility. So you could have one big trader, like they call it sometimes a whale, a whale come in and move the odds of what's happening in that market significantly.

8:11And that could really create a signal that's not really reflecting what's happening in that market. That was WSJ reporter Veronica Dagger.

8:21Alex Ossola:Thanks, Veronica. Thanks for having me. Veronica says PolyMarket's availability is limited for U.S. users, but they're adding more people on a rolling basis. The platform has a data partnership with Dow Jones, the publisher of The Wall Street Journal. Moving from home prices to home sales, they finished last year with surprisingly strong momentum. The National Association of Realtors says existing home sales rose 5.1 percent in December, the fourth straight monthly increase and the biggest gain in nearly two years. Nicole Friedman covers housing for The Journal and joins me now. Nicole, regular listeners of this show know that the housing market's been struggling for a while.

8:56Alex Ossola:You write in your story that lower mortgage rates and home prices that are still climbing but more slowly are helping out with that. What's behind those dynamics? So mortgage rates are now around 6.2 % for a 30-year fixed rate. And the start of 2025, they were closer to 7%. So that can make a big difference in a monthly payment for a buyer. And rates have come down really on expectations about the Federal Reserve cutting short-term rates. And more recently, President Trump announced that he's instructing Fannie Mae and Freddie Mac to purchase mortgage bonds, which could also somewhat lower mortgage rates.

9:37And so we have seen rates dip slightly on that news as well. And then with home price growth, really what we're seeing there is that the number of homes for sale has been rising. And so that gives buyers more to choose from and means there's less competition, less of those bidding wars that we heard so much about a few years ago. And so we are seeing buyers have more negotiating leverage, They're able to get homes for under the asking price. And so even though the supply of homes for sale isn't as high as it was before the pandemic, it's up significantly from the lows of a year or two ago. And that means that home prices are not rising as quickly.

10:16Alex Ossola:So December may have been a strong month, but last year's overall existing home sales of about 4 million held at the lowest level since 1995. Are analysts expecting this momentum and the dynamics that you talked about to continue and create more of a turnaround this year? So that's the big question heading into 2026. Definitely, we could see a continuation of this increased activity if rates stay where they are or keep falling and if home price growth stays slow. But if rates fall and that brings more buyers into the market, maybe that just pushes prices up faster and kind of offsets any of that affordability improvement.

10:59Some people have been waiting and waiting for the market to get better. And they're saying, we've got to make a move. And so some of that kind of frozen market is thawing. That improvement in affordability is enough to get some people off the sidelines and back into the market.

11:17Alex Ossola:That was WSJ reporter Nicole Friedman. Thanks, Nicole. Thanks for having me.

11:24Alex Ossola:In news from the Trump administration, the State Department will indefinitely pause visa processing for immigrants from 75 countries, including Russia, Thailand and Brazil, starting next week. The freeze affects people who want to permanently immigrate to the U.S. and doesn't apply to tourist or temporary work visas. And it's part of the administration's effort to block low-income foreigners. Trump told reporters today at the White House that the U.S. has been notified that Iran had, quote, no plans to carry out any executions of protesters. The Iranian government had signaled that it was preparing to execute anti-government protesters as it cracks down on nationwide demonstrations.

12:00Alex Ossola:Trump has been leaning toward ordering military action in Iran to protect the protesters as the death toll climbs. Because tensions are rising, the U.S. military has started to evacuate some personnel from the Al-Udid airbase in Qatar. That's according to a U.S. official and another person familiar with the matter. And Japanese Prime Minister Sanai Takeuchi plans to call a general election as soon as next month after dissolving the country's parliament. She's aiming to solidify her grip on power. A decisive victory would give her a freer hand to pursue a pro-U.S. agenda. Investors expect that her winning would lift Japan's growth as well as inflation and boost government borrowing.

12:36Alex Ossola:That's weighed on the yen. And that's what's news for this Wednesday afternoon. Today's show is produced by Pierre Bien-Aimé with supervising producer Tali Arbel. Additional support from Hannah Aaron-Lang. I'm Alex Osola for The Wall Street Journal. We'll be back with a new show tomorrow morning. Thanks for listening.

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