Conversely, if spreads aligned more with historical norms, our current mortgage rates could be anywhere from 0.82% to 0.92% lower. Imagine — if today’s spreads were back to normal levels, we would enjoy mortgage rates below 6%. What a game-changer that could be! However, one thing happening in the markets is that the spreads tend to improve lately when bond yields are higher and not too much when the 10-year yield is falling. Even with that, the spreads improving since 2023 is vital for housing.
Looking ahead to the rest of this year, I expect only a modest improvement in mortgage spreads, around 0.27% to 0.41% below the average level of 2.54% we saw in 2024. We’ve been close to reaching that forecast a few times this year.
Purchase application data
So far this year, purchase application data has been slightly negative but is performing better than last year. Here is the week-to-week year-to-date data:
- 2 flat readings
- 3 negative readings
- 2 positive readings
Last week, the weekly data was flat but up 3% year over year. We had better year-over-year data with purchase apps the previous two weeks, even with adverse weekly reports. Last year, when rates ranged between 6.75% and 7.50%, the purchase application data showed 14 negative, two positive, and two flat readings.
Weekly pending sales
The latest weekly pending contract data from Altos Research offers valuable insights into current trends in housing demand. Last year, after rates fell toward 6%, this data line showed noticeable improvement versus prior years.
However, as mortgage rates started to rise late into 2024 and have stayed elevated in 2025, that has facilitated a slight but consistent decline in pending sales year over year. We are still showing higher growth versus 2023 levels, but not by much. Our housing data gets better when mortgage rates are near 6%, so we aren’t there yet for 2025 and spring is knocking at the door.
Weekly pending contracts for the past week over the past several years:
- 2025: 324,432
- 2024: 337,271
- 2023: 317,190
Weekly housing inventory data
The best story for housing is the housing inventory growth working from the historically low levels we saw in 2022. I had thought for sure we would see a more noticeable increase in inventory before March came, but inventory fell last week. The clear seasonal increase should be happening soon. Even though I am slightly disappointed with inventory data this year, it’s still a major plus that we are far from the lows of 2022, especially if mortgage rates do fall back down toward 6%.
- Weekly inventory change (Feb. 20-Feb. 27): Inventory fell from 640,221 to 639,485
- The same week last year (Feb. 23-March 1): Inventory rose from 497,657 to 498,339
- The all-time inventory bottom was in 2022 at 240,497
- The inventory peak for 2024 was 739,434
- For some context, active listings for the same week in 2015 were 962,785
New listings data
The new listing data from Altos Research reflects homes that come to the market without an immediate contract, providing us with a real-time view of any selling pressure in the market. The last two years were the two lowest years for new listings data in history, and they were also not healthy years for the latest listings data.
Last year, I forecasted we would get at least 80,000 new listings per week during the seasonal peak months, but it didn’t happen. This year, I believe we should hit that target. During the housing bubble crash years, this data line ran between 250,000 and 400,000 per week. Last week was a bit disappointing with the mild week-to-week decline.
The national new listing data for last week over the previous several years:
- 2025: 53,394
- 2024: 52,189
- 2023: 48,156
Price-cut percentage
In an average year, about one-third of all homes typically experience a price cut, which reflects the housing market’s usual dynamics. As inventory increases and mortgage rates stay elevated, the price-cut percentage data has been higher than when rates were lower.
For 2025, I am forecasting home-price growth of 1.77%, indicating another year of negative real home-price growth. As inventory increases and mortgage rates stay elevated, negative real home-price growth should be in the works for 2025. The price-cut percentage data has increased earlier this year than in other years, so my current forecast looks intact. If rates fall in the future, we can revisit the weekly data.
Price-cut percentages for last week over the previous several years:
- 2025: 33.7%
- 2024: 31%
- 2023: 31%
The week ahead: Jobs Friday Is key
It’s jobs week, but without the job openings data, as that report will come the following week, which means the BLS Jobs Friday report will be even more important. The jobless claims data is getting more interesting as last week had a big spike that wasn’t related to the federal workers losing their jobs.
We will have some Fed president speeches, manufacturing data, unit labor cost data and a few more reports this week, but jobs Friday will be key after a huge move lower in yields. For me, since late 2022, it’s always been about the labor data over inflation: every time we’ve seen a good move lower in mortgage rates, it has come with economic growth or labor scares, and 2025 is no different. When the Federal Reserve cuts 1% more at some point in the future, it will be easier to get mortgage rates to trend down toward 6%.
