Housing Inventory
In 2025, the housing market has seen significant growth in inventory, moving closer to a more balanced market. After the intense seller’s market following COVID-19, the housing market experienced unhealthy conditions in late 2020. By early 2021, there were discussions about the need for higher mortgage rates to cool down the market, but that did not materialize. The housing market reached its peak of unhealthiness by early 2022. However, 2025 has been the healthiest year for the housing market since the pandemic. Despite this improvement, recent changes have been observed in inventory channels.
The housing market began to shift in mid-June, with inventory growth slowing significantly. For the first time in many years, there was a decline in inventory data in August, which is not the usual pattern. Although it was anticipated that inventory would continue to grow above recent highs, that has not yet occurred. Additionally, as we approach the seasonal decline period in October and November, the year-over-year growth in inventory has decreased from 33% to 20%.
New Listings and Price-Cut Percentages
Normally, a range of 80,000 to 100,000 new listings per week during peak months is expected, but this has not been the case since the pandemic. The market has been gradually returning to normal inventory levels, with an anticipation of at least 80,000 new listings per week during peak seasonal months in 2025. While there was excitement over seeing over 80,000 listings in late May, it turned out to be the peak for the year. Since then, there has been a gradual decline, impacting market dynamics as new listings decreased in June, July, and August.
The price-cut percentage data has recently stabilized and slightly decreased.
Housing Demand
Mortgage rates below 6.64% have shown positive effects on housing demand, leading to better forward-looking data. Positive weekly data has been observed when rates trend towards 6%, similar to trends in late 2022 and mid-2024. Purchase application data has shown strong growth in the past seven weeks when rates fell below 6.64%, with 6 positive weeks, 1 negative week, and 7 straight weeks of double-digit year-over-year growth. If this positive trend continues for six to eight weeks, late October or early November could see significant growth.
Year-to-date data for 2025 shows good year-over-year growth, with 18 positive readings, 12 negative readings, and 20 consecutive weeks of double-digit growth year over year.
Conclusion
As we approach the end of 2025 and look ahead to 2026, it is important to focus on key metrics in the housing market. This weekend, a separate article on mortgage rates and the 10-year yield will be published, while existing home sales data is expected to show minimal changes until there are sustained positive weekly purchase apps data for 12-14 weeks.
Stay tuned for updates on existing home sales data and the evolving trends in the housing market.