Holly changes quite a bit after Fred's death. She doesn't talk about him anymore, she doesn't call the narrator Fred, and she hides out in her apartment for much of the summer. She also starts to even look very different. She stops dying her hair, she gains weight, and she stops caring about her clothes, even going "to the delicatessen wearing a rain-slicker and nothing underneath" (12.1). José moves in with Holly but he spends so much time in Washington that Holly is quite often alone.
While this all sounds very sad, the narrator tells us that Holly "seem[s] more content, altogether happier than [he'd] ever seen her" (12.2). She develops an "un-Holly-like enthusiasm for homemaking" (12.2) and she starts buying furniture and cooking. She can't cook any regular dishes, but she can cook things like "brandied black terrapin poured into avocado shells" and "roasted pheasant stuffed with pomegranates and persimmons" (12.2) (this suits her, don't you think?).
Holly also starts talking about how things will be after she and José get married, even though José hasn't actually asked her to marry him and hasn't even mentioned getting married. But Holly assumes that this is the inevitable outcome since she's six weeks pregnant with José's child.
Holly tells the narrator that she wants a big family, with nine kids, and that she "wish[es] [she'd] been a virgin for [José]. She tells him that she hasn't slept around as much as people assume she has and that she's "only had eleven lovers" (12.3). This doesn't include the people she slept with before she was thirteen but, according to Holly, "that just doesn't count" (12.3).
She reveals to the narrator that José is not her perfect man – he bathes too much and is too loud when he eats, and he runs in a funny way, but she loves him and he can make her feel better when she has the mean reds (she doesn't even have to take Seconal or go to Tiffany's anymore).
As summer turns into fall, Holly and the narrator spend a lot of time together, and their "understanding of each other […] reach[es] that sweet depth where two people communicate more often in silence than in words" (12.4).
The narrator starts to "develop […] hostile attitudes toward him" (12.4) (he won't even say José's name anymore), and he and Holly spend their nights together when José is in Washington. One night, they're walking back home from Chinatown on the Brooklyn Bridge and Holly talks about bringing her kids back to New York: "Years from now, years and years, one of those ships will bring me back, me and my nine Brazilian brats. Because yes, they must see this, these lights, the river – I love New York, even though it isn't mine, the way something has to be, a tree or a street or a house, something, anyway, that belongs to me because I belong to it" (12.4).
This makes the narrator very sad and he tells Holly to "shut up" (12.4), upset that he doesn't seem to be part of her future plans.