Current Market Overview

Year-over-year analysis indicates a moderate positive growth trend within the housing market as we move through 2025. While the growth isn’t remarkable and emerges from historically low levels, any increase is significant. The purchase application data provides insights over a range of 30 to 90 days, revealing that demand remains tepid. Should mortgage rates stabilize around 6%, it may prompt an upward adjustment in sales forecasts, including our own projection of 4.2 million units for 2025 under such conditions.

Weekly Pending Sales Trends

Recent data from Altos regarding weekly pending contracts presents a nuanced picture of housing demand. Historical trends suggest a noticeable growth in demand typically requires mortgage rates to approach 6%. Despite current rates hovering above 6.64%, there are signs of slight improvement in the pending sales data.

Pending Contract Figures:

• 2025: 346,533
• 2024: 356,618
• 2023: 327,933

Mortgage Rates and 10-Year Yields

Looking ahead, forecasts for mortgage rates in 2025 suggest a range between 5.75% and 7.25%, while the 10-year yield may vary from 3.80% to 4.70%. Recently, the 10-year yield approached a critical threshold, closing around 4.25%. Breaking below the range of 4.15% to 4.18% will require softer economic indicators to draw attention from both the Federal Reserve and bond markets.

Mortgage Spreads

An essential shift occurred in 2024, with mortgage spreads improving considerably. These spreads, traditionally between 1.60% to 1.80%, significantly influence current mortgage rates. If we were experiencing the tight spreads from 2023, rates would be about 0.71% higher. If spreads return to more normalized levels—around 0.79% to 0.89% lower—we might see rates drop below 6%.

Housing Inventory Analysis

The arrival of spring has coincided with a notable increase in active listings, hinting at healthier inventory levels. The recent week saw a climb in inventory, marking a positive trend:

Weekly Inventory Changes:

• Current Inventory: 668,155 (up from 655,626)
• Last Year: 512,759 (up from 507,160)
• All-Time Low: 240,497 in 2022
• Peak for 2024: 739,434

New Listings Overview

The growth in new listings has experienced a slowdown recently, yet this year’s figures outshine those of the previous two years. Although the goal of reaching 80,000 new listings in peak weeks remains unfulfilled, nearing that target is more feasible now than before.

Latest New Listings Data:

• 2025: 69,701
• 2024: 60,328
• 2023: 49,993

Price Reduction Trends

Historically, about one-third of homes experience price reductions within an average year. However, as inventory levels inflate against a backdrop of high mortgage rates, an uptick in price cuts has been noticeable. Looking forward, a modest home price increase of approximately 1.77% is anticipated for 2025; yet real price growth remains uncertain unless mortgage rates fall to roughly 6%.

Upcoming Week: Key Economic Indicators

As we look to the coming week, a range of important economic indicators will be released, including reports on inflation, new home sales, and pending sales. Additionally, speeches from Federal Reserve representatives are expected to provide further clarity on economic sentiments.