Current Trends in Purchase Application Data
Recent data indicates that mortgage rates recently reached their lowest levels of the year, positively impacting purchase applications in the housing market. A year ago, rates escalated from 6.63% to approximately 7.50%, resulting in significant challenges for homebuyers and consistent declines in purchase application volumes. Over an 18-week span, only two weeks reported positive changes, while the remaining weeks reflected either declines or stagnant activity with no year-over-year growth.
However, 2025 is witnessing a change in this trend, as evidenced by the following weekly performance:
- 6 weeks of positive growth
- 3 weeks of negative growth
- 3 weeks of stable performance
Overall, the data for 2025 shows a promising trend, with purchase applications reflecting a year-over-year increase of 9% in the previous week. This growth has occurred despite mortgage rates lingering above 6.64% until recently. Historically, when rates fall below this threshold, we typically observe improvements in data trends beyond usual seasonal patterns, particularly as rates approach 6%.
Analysis of Total Pending Sales
According to the latest weekly total pending sales data from Altos, there are notable insights concerning housing demand trends. Traditionally, significant growth in housing demand follows a reduction in mortgage rates to about 6%. Remarkably, the weekly pending sales figures indicate a year-over-year increase in total pending contracts:
- 2025: 367,776
- 2024: 363,834
- 2023: 335,017
The data points illustrate a trend where positive weekly figures correlate with mortgage rates exceeding the established growth threshold, particularly when rates decline towards 6%. A recent dip below 6.64% has reaffirmed ambitious forecasts for increased existing home sales this year, deviating from previous assessments.
10-Year Treasury Yield and Mortgage Rate Projections
Forecasts for 2025 predict mortgage rates will generally fluctuate between 5.75% and 7.25%, with the 10-year Treasury yield ranging from 3.80% to 4.70%. It’s crucial to note that recent tariff developments influenced these rates, preventing the yield from exceeding 4% or reaching the lower forecast of 3.80%. In the recent trading week, the yield hit a low of around 3.87%.
Despite the fluctuations, mortgage rates are currently at year-to-date lows due to market volatility and concerns surrounding potential long-term tariff impacts on the economy. Absent these tariff changes, mortgage rates might have been pegged around 6.75% following favorable labor reports.
Trends in Mortgage Spreads
Mortgage spreads have shown improvement since 2024, but last week experienced a setback amid market volatility. Despite less favorable spreads, a year-to-date low in mortgage rates was still achieved. If spreads had maintained typical conditions, current mortgage rates could have reached a significant milestone of 5.75%. Conversely, if spreads mirrored their worst levels from 2023, rates could be as high as 7.25%.
Weekly Housing Inventory Insights
As spring approaches, the growth in housing inventory stands out as a significant development for 2024 and 2025. Despite not having returned to pre-pandemic levels, the latest week revealed a notable upward trend in inventory:
- Weekly Inventory Change (March 28-April 4): from 675,558 to 691,197
- Year-Over-Year Comparison (March 29-April 5): from 517,355 to 512,930
The lowest point for active listings was during 2022 at 240,497, while the peak for 2024 hit 739,434 active listings. For reference, active listings in the same week of 2015 stood at 1,021,567.
New Listings and Market Performance
New listings have emerged as a positive aspect of the current housing market. In 2024, predictions indicated that at least 80,000 homes would be listed weekly during peak seasons, a target that appears to be met this year, as 70% to 80% of sellers are also buyers. This trend is moving towards a more balanced market.
Historical data on weekly new listings for the past several years shows:
- 2025: 71,775
- 2024: 54,769
- 2023: 55,008
Price Adjustments in the Housing Market
On average, roughly one-third of homes experience price reductions annually, reflective of normal market fluctuations. With rising inventory and high mortgage rates, an increased percentage of homes is currently seeing price cuts relative to periods of lower rates. I project home prices will see a modest increase of approximately 1.77% for the remainder of 2025. This projection, however, may suggest another year of negative real home price growth.
Here’s a comparison of price cut percentages over the past few years:
- 2025: 35%
- 2024: 32%
- 2023: 30%
Upcoming Indicators and Market Stability
This week holds considerable importance as we anticipate CPI and PPI data releases, alongside key speeches from Federal Reserve presidents. However, extreme conditions in the bond market may cause these indicators to have limited immediate impact. Recently, even strong labor data did not stabilize bond yields, revealing the current volatility in credit markets. Monitoring the stabilization of these markets will remain critical amidst fluctuating economic conditions.
