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Mortgage rates are declining, and recent purchase application data shows a promising 9% week-to-week increase and a 2% rise compared to the previous year. Does this indicate that the housing market is beginning to wake up just in time for spring? While I wouldn’t say we’re experiencing a full revival just yet, the latest data suggests a stabilization.
I’ve noticed that housing data tends to improve when mortgage rates drop from 6.64% to 6%, especially when I adjust for seasonal demand. Let’s continue to monitor what the data reveals.
Purchase application data
Last year, when mortgage rates ranged from 6.75% to 7.50%, the weekly data looked like this:
- 14 negative prints
- 2 flat prints
- 2 positive prints
There was no year-over-year growth to report when comparing 2024 and 2023. It is important to note that mortgage rates rose to around 6% in late 2022 and early 2023. By early 2024, mortgage rates increased slightly to 6.63%.
In 2025, mortgage rates have ranged between 7.26%-6.64%. The data shows:
- 3 Positive readings
- 3 negative readings
- 2 positive flat
We’ve hit an exciting milestone with five weeks of positive year-over-year growth — something we haven’t seen for a long time! While we bounced a tad from record-low levels in purchase applications, let’s remember we are working from levels that we saw in 1995 when No Doubt ruled the charts and “Gangsta’s Paradise” topped the Billboard list — it’s clear we need context with this growth.
What is encouraging is that mortgage rates haven’t dipped below 6.64% this entire year, signaling that we have the potential to grow more if mortgage rates head down toward 6% . So while the data is better than last year, context is key. Also, it takes about 30-90 days for purchase apps to filter into the sales data.
Weekly pending sales
The latest weekly pending contract data from Altos offers valuable insights into current trends in housing demand. Last year, after rates fell toward 6%, this data line showed noticeable improvement versus prior years. However, as mortgage rates started to rise late into 2024 and have stayed elevated in 2025, that has facilitated a slight but consistent decline in pending sales year over year. It’s not getting worse here with our pending weekly sales, but I don’t see much improvement yet.
Weekly pending contracts for the past week over the past several years:
- 2025: 323,456
- 2024: 334,017
- 2023: 314,696
We have a better day on purchase applications but pending home sales, nothing of note.
10-year yield and mortgage rates
In my 2025 forecast, I anticipate the following ranges:
- Mortgage rates will be between 5.75% and 7.25%
- The 10-year yield will fluctuate between 3.80% and 4.70%
What an exhilarating week it has been, packed with data and headlines that kept everyone on their toes! The 10-year yield took us on quite the rollercoaster ride. It kicked off the week around 4.24%, took a dip to about 4.11% amid a whirlwind of market and economic drama, and then made a sharp turnaround. Just when you thought it was going to drop again before the jobs report, Federal Reserve Chair Jerome Powell stepped in, confidently declaring that the economy was in good shape. That announcement sent the 10-year yield skyrocketing on Friday, closing near the week’s highs!
In last week’s Housing Market Tracker, we mentioned that for bond yields and mortgage rates to go lower, we really needed to see a sell-off in stocks and weaker economic data to lower yields after that significant jump. While we did see some of that unfolding, yields ultimately climbed higher. This shift came as trade war concerns began to ease and some positive economic indicators emerged toward the end of the week. What a wild ride!
What is more interesting to me this week was this statement from Fed Governor Bowman: “Although the FOMC has been focused on lowering inflation in the past few years, as we continue to make progress on approaching our 2% target, I expect that the labor market and economic activity will become a larger factor in the FOMC’s policy discussions.”
Labor over inflation, anyone? With that in mind, read my labor model for 2025 after the jobs report on how you get there!
Mortgage spreads
Today’s housing market would look entirely different if mortgage spreads hadn’t improved in 2024 and 2025. Typically, we see these spreads hover between 1.60% and 1.80%. If we were still grappling with the challenging mortgage spreads that defined 2023, we’d be facing mortgage rates a staggering 0.71% higher right now.
Conversely, if spreads aligned more with historical norms, our current mortgage rates could be anywhere from 0.79% to 0.89% lower. Imagine — if today’s spreads were back to normal levels, we would enjoy mortgage rates below 6%. That would be a game changer, folks.
Looking ahead to the rest of this year, I expect only a modest improvement in mortgage spreads, around 0.27% to 0.41% below the average level of 2.54% we saw in 2024. We’ve been close to reaching that forecast a few times this year.
Weekly housing inventory data
The best story for housing is the housing inventory growth we’ve seen since the historically low levels we saw in 2022. Last week we had slight growth week over week, and we should be starting the seasonal increase in active inventory now. The closer we get to normal levels, the better it will be for housing in the long term and the growth seen already means that if mortgage rates go lower, we have enough supply to prevent escalating home-price growth.
- Weekly inventory change (Feb. 28-March 7): Inventory rose from 639,485 to 642,359
- The same week last year (March 1-March 8): Inventory rose from 498,339 to 500,579
- The all-time inventory bottom was in 2022 at 240,497
- The inventory peak for 2024 was 739,434
- For some context, active listings for the same week in 2015 were 1,081,867
New listings data
The new listing data from Altos reflects homes that come to the market without an immediate contract, providing us with a real-time view of any selling pressure in the market. The last two years were the two lowest years for new listings data in history, and they were also not healthy years for the latest listings data.
Last year, I had high hopes that we would see at least 80,000 new listings per week during the peak seasonal months, but unfortunately, that didn’t come to fruition. This year, though, I strongly feel we can finally hit that target!
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. When I saw a slight dip two weeks ago, I admit I felt a twinge of worry about our sluggish new listings growth this year.
But then came last week; wow, we got a good number! While the increase may not be dramatic compared to 2024 levels, we are inching closer to that elusive 80,000 mark—something we haven’t achieved in the past two years. It’s a small victory, but it’s a victory nonetheless, and it puts a big smile on my face!
The national new listing data for last week over the previous several years:
- 2025: 63,858
- 2024: 59,243
- 2023: 50,687
Price cut percentage
In an average year, about one-third of all homes typically experience a price cut, which reflects the housing market’s usual dynamics. As inventory increases and mortgage rates stay elevated, the price-cut percentage data has been higher than when rates were lower.
For 2025, I predict a home price growth of 1.77%, which indicates another year of negative real home price growth. As inventory levels rise and mortgage rates remain high, negative real home price growth is expected for 2025. The percentage of price cuts has increased earlier this year compared to previous years, so my current forecast remains intact. If rates decline in the future, we can reevaluate the weekly data.
Price-cut percentages for last week over the previous several years:
- 2025: 33.6%
- 2024: 31%
- 2023: 31%
The week ahead: Inflation week and job openings data
This week promises to be a pivotal one in the world of data. Not only are we anticipating crucial inflation reports, but we’re also gearing up for one of the Federal Reserve’s key labor data releases: the job openings data.
As we look ahead, the job openings data will play a vital role, especially as we approach the middle of the year. With the government’s recent actions affecting federal workers, the tightening of the money supply, and the ongoing twists and turns of the trade war, this data could reveal some fascinating trends. It will be intriguing to see whether the job market showed signs of softening even before these changes occurred. Last week, the jobless claims data did fall from its recent spike.
Stay tuned, as the insights we gain could shape our understanding of the economy in the coming months.
