10-year yield and mortgage rates
In my 2025 forecast, I predicted the following ranges:
- Mortgage rates between 5.75% and 7.25%
- The 10-year yield fluctuating between 3.80% and 4.70%
On Friday, the 10-year yield experienced a significant move, initially trading around 4.34% before dropping to 4.26% following comments from Powell at Jackson Hole. Despite the Fed’s dovish stance on the labor market, the yield has not broken below 4.18%, indicating a need for more economic weakness to drive rates lower. I discuss the future of mortgage rates in a special Saturday episode of the HousingWire Daily podcast.
Mortgage spreads
Improvements in mortgage spreads have contributed to year-to-date lows in rates. Historical data shows that spreads have ranged between 1.60% and 1.80%, with normal levels suggesting mortgage rates of 5.86% to 6.06% today.
Purchase application data
Recent weeks have seen positive trends in purchase applications, with year-over-year growth consistently outperforming week-to-week changes. The data indicates a strong market demand.
Total pending sales
Total pending sales data reflects positive year-over-year growth, showcasing ongoing demand in the housing market.
Weekly pending sales
Weekly pending sales data continues to exhibit year-over-year growth, indicating a healthy market trend.
Weekly housing inventory data
Despite slow inventory growth, the housing market remains stable, contributing to housing affordability.
New listings data
New listings data show a seasonal decline, with a slight decrease in listings compared to previous weeks.
Price-cut percentage
Price reductions in the housing market have increased, aligning with a cautious growth forecast for 2025.
The week ahead: Inflation, new home sales, pending home sales, home prices and more
Upcoming economic data releases, including new home sales and inflation reports, will provide insights into market trends. Jobless claims data remains crucial for Federal Reserve policy decisions.
Recent developments in the market highlight the importance of labor data in determining future mortgage rates.