Insights on 10-year yield and mortgage rates
My forecast for 2025 included the following ranges:
- Mortgage rates: 5.75% to 7.25%
- 10-year yield: 3.80% to 4.70%
Throughout 2025, the 10-year yield has mostly stayed within my predicted range, fluctuating between 4.79% and 3.87%. Despite some volatile after-hours trading, the yield has remained below 4.70% for most of the year, briefly dropping below 4% last week.
Recent episodes of the HousingWire Daily podcast have highlighted the continued influence of the labor market on bond market dynamics, which has kept mortgage rates low even amidst inflation concerns. The podcast discussions on tariffs and jobless claims data underscore the labor market’s significant impact on rates in 2025.
Looking ahead to the Fed meeting this week and the expected rate cut, it’s important to note the differences in the current economic landscape compared to last year. With the labor market softer and mortgage spreads healthier, the 10-year yield is at 4.07%, indicating a different scenario from the past.
If labor data improves and inflation remains high, we can expect the 10-year yield to rise, pushing mortgage rates higher. Conversely, a shift in Fed policy or weaker labor data could lead to lower rates. However, the Fed’s current stance suggests that multiple rate cuts are already factored into mortgage rates.
Analyzing Mortgage Spreads
Improved mortgage spreads in 2025 have contributed to lowering mortgage rates. Historically, spreads have ranged from 1.60% to 1.80%. If spreads were at peak levels seen in 2023, rates would be higher, while returning to normal ranges could result in lower rates.
With optimal spreads, mortgage rates could be as low as 5.60% to 5.80% currently.
Insights on Purchase Application Data
Positive growth in purchase application data has been observed, with consistent improvements in housing data when rates are below 6.64%. A positive trend over several weeks is needed to indicate a significant shift in the market, similar to previous years.
Weekly data for 2025 shows a mix of positive and negative readings, with strong year-over-year growth in purchase applications.
Total Pending Sales Overview
Last week’s total pending sales data reflects current trends in housing demand, with a year-over-year increase observed. Consistent low-level growth in pending sales suggests a positive market outlook if rates remain stable.
Comparison of pending sales data from 2025 and 2024 indicates a growth trend in housing demand.
Weekly Pending Sales Analysis
Weekly pending sales offer insights into short-term market fluctuations, with slight year-over-year growth reported. Pending sales data can impact existing home sales reports in the coming months.
Comparing weekly pending sales data from 2025 and 2024 shows a steady increase in sales for the current year.
Weekly Housing Inventory Trends
Recent fluctuations in inventory levels were attributed to holiday impacts, with a rebound expected in the coming weeks. Despite a slowdown in growth rate since mid-June, inventory remains a positive aspect of the housing market in 2025.
Comparison of weekly inventory changes from 2025 and 2024 indicates a steady increase in available housing units.
Insights on New Listings
New listings data shows a seasonal decline from peak levels earlier in the year. The impact of holiday weekends can influence short-term fluctuations in listing numbers, but overall trends remain positive.
Comparison of new listings data from 2025 and 2024 reveals a slight decrease year over year.
Analysis of Price-Cut Percentage
Price-cut percentage data reflects the market’s responsiveness to inventory levels and mortgage rates, with a higher percentage of price reductions in 2025 compared to previous years. This trend indicates a buyer-friendly market environment.
Comparison of price-cut percentages from recent years highlights the current market dynamics favoring buyers.
Previewing the Week Ahead
The upcoming week includes key events such as Fed meetings, retail sales data, and housing starts reports. Builder confidence and housing data are expected to show improvements, similar to trends observed when rates were nearing 6% last year.
Despite recent fluctuations in jobless claims data, the Fed is unlikely to be overly concerned, with expected positive movements in confidence data and retail sales. The overall market outlook remains optimistic.