10-year yield and mortgage rates
My forecast for 2025 anticipated the following ranges:
- Mortgage rates: 5.75% to 7.25%
- 10-year yield: 3.80% to 4.70%
The week began with FHFA Chairman Bill Pulte urging Powell to cut rates and Trump announcing plans to take GSEs public. Trump also shared my article with Fed Chairman Powell, emphasizing the need for a rate cut. Additionally, Trump faced setbacks with tariffs but issued a 50% tariff on steel. Despite this, the market remained unfazed, with mortgage rates slightly lower by the end of the week.
For more insights, tune into the HousingWire Daily podcast on Monday.
Mortgage spreads
Mortgage spreads have improved since their peak in 2023, despite some drama due to tariffs. It’s crucial for spreads to improve when the 10-year yield rises to mitigate the impact on mortgage rates.
If spreads were at their 2023 peak, mortgage rates would be 0.67% higher. Conversely, returning to normal ranges could lower rates by 0.83% to 0.63%. Historically, spreads have ranged between 1.60% and 1.80%.
Purchase application data
Last week saw an 18% year-over-year increase in purchase application data, continuing a 17-week streak of positive growth. Despite being the peak seasonal month of May, volumes have remained strong.
Weekly data for 2025:
- 10 positive readings
- 7 negative readings
- 3 flat prints
- 17 straight weeks of positive year-over-year data
Total pending sales
Latest data from Altos shows total pending sales slightly higher than last year, despite elevated rates in 2025. We are at the seasonal peak period for this data, expecting a decline soon.
Weekly pending sales for recent years:
- 2025: 413,771
- 2024: 406,136
Weekly pending sales
Added weekly pending sales data provides up-to-date insights, though affected by calendar year volatility. Memorial Day weekend impact expected.
Weekly pending sales for recent years:
- 2025: 68,071
- 2024: 62,822
Weekly housing inventory data
In 2024 and 2025, housing market saw an increase in inventory, vital for market efficiency. Seasonal inventory increase is much needed for market normalization.
- Weekly inventory change (May 23-May 30): Inventory rose from 787,049 to 803,519
- The same week last year (May 24-May 31): Inventory rose from 594,584 to 604,922
New listings data
As inventory grows, new listings data has emerged from a two-year drought, surpassing 80,000 per week during peak months. Data influenced by holiday weekends.
Comparison of new listings data:
- 2025: 70,421
- 2024: 63,463
Price-cut percentage
About one-third of homes typically experience price reductions annually, reflecting market dynamics. Modest home price increase forecasted for 2025.
Comparison of price-cut percentage data:
The week ahead: Jobs week!
Approaching jobs week, focus on economic indicators remains crucial. Labor data remains a key factor for the Federal Reserve and bond market participants.
Expect Fed President Waller’s speech, PMI data, and potential market volatility in the upcoming week.