Weekly housing inventory data
Over the years, our housing inventory data has shown steady growth in August, but this year has been different. Contrary to my initial belief that we had not yet reached the peak of active inventory in 2025, it is now evident that we are entering a phase where inventory typically experiences a seasonal decline.
What’s intriguing is that earlier this year, there was excellent growth in inventory, but I noticed a shift in housing dynamics around mid-June. Let’s connect the dots:
– Our new listings data peaked on May 23, the earliest in recent history, and we did not see significant growth during the peak months of 2025.
– In May, some sellers did not get their desired price and began withdrawing their listings. With most sellers also being homebuyers, elevated mortgage rates may have discouraged some from keeping their homes on the market.
– As mortgage rates started to decline and have been below 6.64% for nine consecutive weeks, there has been an uptick in purchase applications, leading to increased demand and quicker removal of supply from the market.
This simple explanation sheds light on why inventory growth was strong early in the year but began to slow down by mid-June.
- Weekly inventory change (Sept. 26-Oct. 3): Inventory increased from 862,575 to 863,972
- The same week last year (Sept. 27-Oct. 4): Inventory rose from 731,010 to 734,257
New listings data
New listings data peaked during the week of May 23 this year, reaching a total of 83,143 listings. Since then, the number of new listings has gradually declined, impacting the slowdown in inventory growth. Typically, we see new listings data trending between 80,000 and 100,000 during peak months, which did not occur this year.
For comparison, during the housing bubble crash years, new listings were between 250,000 and 400,000 per week. Here is last week’s new listings data for the past two years:
- 2025: 64,328
- 2024: 60,629
Price-cut percentage
In an average year, about one-third of homes see price reductions. When inventory levels rise and mortgage rates remain high, homeowners often lower their sale prices. This explains why the percentage of price reductions is higher in 2025 compared to last year.
My forecast for a modest increase in home prices of around 1.77% in 2025 suggests the likelihood of negative real-home prices. The increase in price reductions this year reinforces my cautious growth forecast for 2025. Last week’s price cut percentage data for the past two years:
10-year yield and mortgage rates
In my 2025 forecast, I anticipated mortgage rates between 5.75% and 7.25% and the 10-year yield fluctuating between 3.80% and 4.70%. Last week, the 10-year yield ended at 4.12% while mortgage rates fell slightly from 6.38% to 6.34%. Soft job reports kept bond yields in check.
Mortgage spreads
Mortgage spreads have been a positive story for mortgage rates in 2025. If spreads returned to normal levels, mortgage rates could be lower than today’s levels. Historically, mortgage spreads have ranged between 1.60% and 1.80%. The improvement in mortgage spreads is reflected in current mortgage rates.
Purchase application data
Last week, purchase application data showed a 1% decline week over week but a 16% growth year over year. The weekly data for 2025 has seen positive trends, indicating a healthy market.
Weekly pending sales
Weekly pending home sales continue to show slight year-over-year growth, reflecting a positive trend in the market. Last week’s pending sales data was the highest for this calendar year since 2022.
The week ahead: Fed speeches and government shutdown news?
With the government shutdown ongoing, upcoming economic reports may be affected. The housing market could experience delays in closings due to the shutdown. The following week may lack crucial inflation reports if the shutdown continues.