Currently, I believe the decrease in mortgage rates, the decline in new listings data, and frustrated home sellers withdrawing their homes from the market due to unsatisfactory prices are contributing factors to the housing market trends. It seems that we may have already witnessed the highest growth rate percentage of inventory in 2025, unless mortgage rates increase again. However, the peak of inventory levels is yet to be seen.
Weekly housing inventory data
Last week, there was a surprising decline in inventory levels. Typically, inventory has been increasing in the first week of August in recent years. The decrease in inventory growth rate since the end of June may not solely be attributed to mortgage rates dropping below 6.64%. Despite this, the overall trend of inventory growth has been slowing down, with last week’s growth percentage dropping to 24% from a recent peak of 33%.
The recent decline in inventory from the previous week is noteworthy:
- Weekly inventory change (Aug. 1-Aug. 8): Inventory fell from 865,620 to 859,096
- The same week last year (Aug. 2-Aug. 9): Inventory rose from 683,738 to 692,833
New listings data
The peak for new listings data was observed during the week of May 23, reaching a total of 83,143 listings. While meeting the minimum weekly target of 80,000 new listings is positive, there have been concerns about a negative year-over-year print in the data. The decline in new listings data this week compared to last year may be influenced by various factors, including some sellers opting out for 2025.
Comparing new listings data from the past two years:
- 2025: 66,372
- 2024: 75,373
Price-cut percentage
Typically, around one-third of homes see price reductions in a year, influenced by factors such as inventory levels and mortgage rates. The increase in price reductions this year compared to last year aligns with a cautious growth forecast for 2025. The recent cooling down of the growth rate in this data line further supports this forecast.
Here are the percentages of homes with price reductions in the previous week for the last two years:
10-year yield and mortgage rates and spreads
In the 2025 forecast, expected ranges for mortgage rates and the 10-year yield were provided. This week, mortgage spreads have been in focus, with mortgage rates hitting their lowest levels for the year. Despite the rise in the 10-year yield, mortgage rates have not been significantly impacted, indicating a favorable mortgage spread environment.
Discussion on mortgage spreads and their impact on rates has been ongoing, with room for further improvement highlighted. The historical trend of mortgage spreads is depicted in the chart below.
Purchase application data
Recent purchase application data showed positive week-to-week growth and a significant year-over-year gain. The correlation between new listings data and purchase apps growth is evident, with lower mortgage rates potentially driving improved weekly data. The consistent positive year-over-year data and double-digit growth for several weeks indicate a positive trend in housing demand.
Total pending sales
Insights from total pending sales data highlight current housing demand trends. With mortgage rates hovering around 6.57%, shifts in pending sales data can be expected as rates approach 6%. Comparing total pending sales data from 2025 and 2024 reveals a notable difference.
- 2025: 374,025
- 2024: 367,324
Weekly pending sales
Weekly pending sales data provides insights on short-term trends, with recent data indicating a decline week-to-week. Despite seasonal fluctuations, the impact of mortgage rates nearing 6% on this data line remains to be seen. Notably, year-over-year comps in home sales are currently at historic lows.
- 2025: 66,347
- 2024: 70,896
The week ahead: Inflation week, Fed speeches, and retail sales
The upcoming week will focus on how the bond market reacts to inflation, with various economic indicators and Federal Reserve speeches contributing to market dynamics. As markets navigate uncertainties, including inflation concerns, retail sales data, and jobless claims, the week ahead presents key insights into market movements.
Monitoring jobless claims data is crucial, as any significant increase could prompt the Fed to adjust rates more aggressively. Currently, initial jobless claims data remains historically low, indicating a stable labor market.