We had a nice pop in our weekly pending home sales last week, and with mortgage rates near 2025 lows we could ask: Is housing breaking out? Not exactly.
One of the themes I really stressed this year is that weekly data can be volatile around holiday weekends. So we always look at the two weeks of data around holidays like Columbus Day with some skepticism. In last week’s Housing Market Tracker I was suspicious of the decline in the data and expected a rebound in the second week. However, on top of the two-week period around a holiday, an AWS outage created some drama in the weekly data as it appears to capture an extra day.
We need to consider those factors as we look at last week’s data. Pending home sales did rebound last week, but not to the exact level that the data seems to show. The same holds true for our new listings data and inventory data. Let’s take a look.
Weekly pending sales
Last week’s existing home sales report showed another year-over-year increase in demand, up 4.1%.
This is something I talked about many months ago: if the sales trend stays flat around 4 million — given the low bar in 2025 — we should see growth for many months. The months of June to October, with reports coming out in July to November, should be positive year over year, as the early forward-looking housing data was better than last year. This has happened, and now we have one more month of low comps left.
However, our weekly sales data began to show growth in May; it takes 30-60 days for this to be reflected in the existing home sales market. It isn’t significant growth, but growth nonetheless.
Our weekly pending sales did rise, but probably not this much:
- 2025: 67,757
- 2024: 58,966
As you can see below, our new listings data experienced a larger-than-usual increase, which is uncommon for this time of year. This will normalize in the coming week. It’s important to remember that most home sellers are also buyers. I was encouraged to see the recent stabilization in this data line, but the spike here was abnormal, similar to the weekly pending home sales data.
Our price-cut percentage data has stabilized in the past few months and recently declined slightly. In fact, it’s currently running below the levels we saw in 2022. Last week saw a slight decline in the data, but I’m a bit mindful of this data as well.
Hopefully, we should get some normalization in the data this week — we already have enough drama with the government shutdown.
Purchase application data
We’ve had 12 weeks of testing the housing data with mortgage rates under 6.64%, which has been the key level in the past. Over the last 12 weeks, we have had seven positive prints, five negative prints and 12 straight weeks of double-digit year-over-year growth in purchase apps.
I would like to see at least 12-14 weeks of positive weekly purchase application data to say this trend is material, but it has still been the best 12 weeks of the year. However, in the last few weeks, the week-to-week data have been negative. I addressed the question of whether the government shutdown was causing this in this episode of the HousingWire Daily podcast.
Here is the weekly data for 2025 so far:
- 19 positive readings
- 16 negative readings
- 6 flat prints
- 38 straight weeks of positive year-over-year data
- 25 consecutive weeks of double-digit growth year over year
Weekly housing inventory data
My first response to housing inventory hitting a new yearly high in this data was a big jump of joy, since I didn’t think it had peaked the first week of August. I have been consistently wrong on my call that we should see a new yearly high in inventory. Inventory growth has slowed significantly recently, but I wasn’t ready to call the top just yet. However, I’m not sure I can declare victory yet with this week’s data glitches.
In any case, inventory growth peaked at 33% early in the year and has now fallen to 17.92%. The seasonal decline should start soon with our data.
- Weekly inventory change (Oct. 17-Oct. 24 ): Inventory rose from 859,419 to 867,811
- The same week last year (Oct. 18-Oct. 25): Inventory fell from 739,401 to 735,961
Mortgage rates and the 10-year yield
In my 2025 forecast, I anticipated the following ranges:
- Mortgage rates between 5.75% and 7.25%
- The 10-year yield fluctuating between 3.80% and 4.70%
Well, we had CPI week. It wasn’t much of a story with the 10-year yield, as we had a small range last week and not much movement since we don’t have all the data inputs due to the government shutdown.
However, looking at 2025, we are near the lows only because labor data has gotten softer; without that, mortgage rates and the 10-year yield would be higher today. Mortgage rates ended the week at 6.19% on Mortgage News Daily, and the Polly rate lock data has rates at 6.30%. I got close again to the bottom end of my range for the 10-year yield and mortgage rates so it will take a lot to break below my forecast, I believe.
Mortgage spreads
Mortgage spreads have been the best story for mortgage rates in 2025. At one point this year, we were just 0.35% away from normal spread levels, and we reached 0.2% below my peak improvement forecast for 2025 for mortgage spreads. So a lot of the good news is priced in here.
Historically, mortgage spreads have ranged between 1.60% and 1.80%. If today’s spreads were as bad as they were at the peak of 2023, mortgage rates would be 0.91% higher. Conversely, if the spreads returned to their normal range, mortgage rates would be 0.59% to 0.39% lower than today’s level. Normal spreads would mean mortgage rates at 5.60% to 5.80% today.
The week ahead: Fed week, bond auctions, pending home sales, Fed speeches and home prices
We have a lot of economic news this week! It’s Fed week and the Fed will be cutting rates, but the verbiage that Fed Chair Jerome Powell uses is key. Usually, Powell gives a very hawkish statement when the 10-year yield is this low, so everyone needs to be mindful of that.
We have some huge bond auctions this week along with Fed speeches. The pending home sales data could also be interesting because if the government shutdown is delaying closings, this is where you will see it.
The home price indexes are coming out this week too. Remember that these reports lag a few months. The market shift in prices has been caught by the NAR reports as the median sales price index has ticked up a tad the last two months, so we should have some more fun during Halloween week.
