It’s been over three months since housing demand started to increase, stabilizing the housing market. Many people are unaware of this trend because they rely on outdated reports that are several months old. This is why it’s crucial to track fresh housing data weekly, even though it can be volatile, especially around holidays like Columbus Day that result in extended weekends.
Today, I want to highlight how the housing market stabilized in mid-June and how mortgage rates dropping below 6.64% have impacted specific aspects of the housing economy. This shift mirrors what we’ve seen since late 2022 and mid-2024. Let’s delve into the data!
Homebuilder confidence rises
A few months back, I discussed on CNBC the behavior of the new home sales market and homebuilders when mortgage rates approach 6%, especially once they dip below 6.64%. In a subsequent appearance on CNBC, I mentioned the three-year high in new home sales and how homebuilders can thrive with rates hovering around 6%.
Even small builders, lacking the resources of larger firms, have shown positive growth in their six-month outlook when mortgage rates trend towards 6%. This optimism has been observed four times since 2022.
New home sales recently hit a three-year high, indicating growth in sales, prices, and a decrease in inventory. While this surge may be subject to revisions due to the volatility of new home sales data, it has surprised many market participants.
Housing inventory for existing homes
Housing inventory has been a highlight of the housing market in 2025. As demand picked up with falling mortgage rates, inventory growth slowed significantly, halving its percentage increase in 2025.
Our housing inventory data, which showed 33% year-over-year growth, has now reduced to 16.24%. This shift was predicted in mid-June, and with rates nearing 2025 lows in mid-October, it sets the tone for the year. Unless an unforeseen event occurs in the next few weeks, we can anticipate the seasonal decline in housing inventory and prepare for 2026.
Last week, there was a slight increase in inventory.
- Weekly inventory change (Oct. 10-Oct. 17): Inventory rose from 856,870 to 859,419
- The same week last year (Oct. 11-Oct. 18): Inventory rose from 732,378 to 739,401
Price-cut percentage
The price-cut percentage has recently stabilized after cooling down post-mid-June. This data line now sits below 2022 levels, indicating a more stable pricing environment compared to the noticeable price declines in the latter half of 2022.
New listings
Our new listings data peaked on May 23 and has been on a seasonal decline since then. Despite expectations of staying within a certain range during peak months, the data has deviated. This decline will reach a low point before the expected seasonal increase next year.
Weekly housing data reveals a significant shift compared to pre-COVID levels, emphasizing the importance of monitoring these trends regularly.
Weekly housing data may fluctuate due to holiday weekends like Columbus Day, but it cannot reverse the overall positive trend that has been evident for months.
Mortgage rates and demand
With mortgage rates nearing year-to-date lows and the 10-year yield at 4%, discussions around breaking key levels in the bond market have emerged. The impact of Federal Reserve policy on rates cannot be overlooked, with labor data also playing a significant role.
Recent trends in purchase applications show positive year-over-year growth, with several weeks of consecutive growth. Maintaining positive week-to-week data for an extended period would solidify the positive outlook for 2025.
Weekly data for 2025 shows a mix of positive and negative readings, with consistent year-over-year growth in demand and pending sales data reflecting slight growth since mid-May.
Overall, the housing market in 2025 has shown resilience despite challenges, largely attributed to lower mortgage rates. Monitoring weekly housing data is crucial to staying informed and ahead of market trends.
Conclusion
Contrary to some pessimistic views, the housing market in 2025 is not as dire, thanks to the positive impact of lower mortgage rates. Comparing to last year, the scenario is vastly different due to the current trend of lower rates. Continued monitoring of housing data is essential to staying abreast of market shifts.
This week may not feature new home sales data due to a potential government shutdown, but the release of the CPI inflation report is anticipated. The positive trends in the housing market indicate ongoing progress, emphasizing the importance of consistent monitoring of housing data.
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