Last week was a solid week for housing demand. Our weekly pending sales data increased by 15.36% year over year, and the Mortgage Bankers Association’s purchase application data showed 31% year-over-year growth. In fact, if I average the last two weeks, purchase application data is up 28.5% year over year and our weekly pending home sales data increased by 15.43% on a two-week average year over year.
Our weekly pending sales data indicate that these homes are going into contract and will most likely be included in the existing home sales report 30-60 days later. We have seen good year-over-year growth the last two weeks and a big reason for that is that this year is that rates have stayed below 6.64% for the previous 15 weeks, whereas last year, mortgage rates at this time were rising toward 7% and higher.
This week’s data occurred despite the veterans’ day holiday last week, which is impressive, as our weekly data is typically affected during a holiday week. We are dealing with lower year-over-year comps, but still it’s good to see the two-week run with our pending sales data.
Weekly pending sales for last week:
We’ve had 15 weeks of testing the housing data in 2025 with mortgage rates under 6.64%. In the last few years, housing data has performed better when mortgage rates have fallen below 6.64% and headed toward 6%. Rates have risen from their lows recently. As always, the Fed tends to panic when rates drop toward 6% and becomes hawkish. Regardless of that, let’s take a look at the last 15 weeks of data.
Over the last 15 weeks, we have had nine positive week-to-week prints, six negative prints, and 15 consecutive weeks of double-digit year-over-year growth in purchase apps. Last week saw a 6% increase from the previous week but a 31% increase year-over-year.
Earlier in the year, we saw healthy year-over-year growth, but the weekly data was choppy. The last 15 weeks have been the best of the year so far. Now, the year-over-year comparisons are easier, as rates were rising last year at this time. Still, it’s good to see the growth in purchase apps in both the week-to-week data and the year-over-year data.
The 10-year yield has been range-bound recently, between 4.06% and 4.15%. I believe the Federal Reserve accomplished its mission to raise mortgage rates above 6% at the last meeting, and so far, it’s working, as not only Fed Chair Jerome Powell but also a host of Fed members have been very hawkish. I discussed this on the most recent episode of the HousingWire Daily podcast.
Mortgage rates started the week at 6.34% and ended the week at 6.38%, according to Mortgage News Daily. The Fed is getting what it wants, with rates moving higher in response to its language and press releases. The loan lock data from Polly showed rates closing the week at 6.38%
Mortgage spreads have been the best story for mortgage rates in 2025. We are only 0.33% basis points away from normal levels again. The main thing to remember is that mortgage rates would not have approached 6% if the spreads hadn’t improved this year, and we still have some room for improvement next year.
Historically, mortgage spreads have ranged between 1.60% and 1.80%. If the spreads today were as bad as they were at the peak of 2023, mortgage rates would currently be 0.97% percentage points higher. Conversely, if the spreads returned to their normal range, mortgage rates would be 0.53% to 0.33% lower than today’s level. With normal spreads, mortgage rates would be at 5.85%- 6.05%.
Housing inventory growth during the prime selling season increased by 33% year over year, and it has recently decreased to 16%. As housing demand picked up slightly and new listings began to decline, the growth rate percentage of inventory has slowed by half, but remains up year over year in a healthy manner.
The year-over-year growth has provided a much more buyer-friendly marketplace, but we are entering the seasonal decline in inventory for 2025 so I am expecting inventory to move lower until we find the seasonal bottom in 2026.
In 2025, new listings data have shown decent improvement as we strive to return to normal levels. A return to normal would mean that the seasonal increase in new listings would result in a few months with 80,000 to 100,000 new listings per week.
My forecast this year was similar to last year’s, predicting we would reach 80,000 new listings per week for the first time in years. Last year, we never reached that number, but we did this year. However, once we reached over 80,000 in May of this year, we didn’t grow from that point, so it was a bit disappointing on that front. Nonetheless, the new listing story in 2025 has been a positive one.
To give you some perspective, during the years of the housing bubble crash, new listings were soaring between 250,000 and 400,000 per week for many years. Here’s last week’s new listings data over the past two years:
In a typical year, approximately one-third of homes experience price reductions, highlighting the dynamic nature of the housing market. Homeowners adjust their sale prices as inventory levels rise and mortgage rates stay elevated. With more inventory and higher rates, our price-cut percentage data is higher than last year.
For my 2025 price forecast, I anticipated a modest increase in home prices of approximately 1.77%. This suggests that 2025 will likely see negative real home prices again. The rise in price reductions this year compared to last year reinforces my cautious growth forecast for 2025.
Here are the percentages of homes that saw price reductions in the previous week in the last two years:
We are finally getting a jobs report, but it will be the September jobs report on November 20. The Census Bureau is not expected to release housing starts and new home sales data this week. However, we will get the existing home sales report and the home builder confidence data.
The government shutdown may impact existing home sales, but only due to the delay in closings; if that happens, the impact will likely be reported in the next month. Additionally, we will have several Fed presidents speaking this week, which became a major story last week regarding rates.
