Analysis of Purchase Application Data
Recent data indicates a notable reversal in purchase applications, showing an 11% increase week-over-week and a 13% increase year-over-year. This follows three weeks of declines while still maintaining a favorable year-over-year comparison. The focus period for this index runs from early January to early May, and next week will reveal the potential for a 100% positive year-over-year trend as we enter the warmer months, although historically, transaction volumes tend to decrease after May.
So far in 2025, the metrics for purchase applications are:
- 8 positive readings
- 6 negative readings
- 3 flat readings
Further insights into this growth can be found in a recent detailed article on the subject.
Current Pending Sales Trends
According to the latest data from Altos, total pending home sales are revealing critical trends in housing demand. Historical context suggests that a significant real growth in housing typically requires mortgage rates to hover around 6%. Although the total pending sales figure has begun to slow, indicating some impact from elevated rates, the year-over-year comparisons reveal a steady performance. After a rise in rates at the start of April, which was brief, the market has shown resilience.
Here are the weekly pending sales figures for the last few years:
- 2025: 398,653
- 2024: 393,788
- 2023: 368,490
10-Year Yield and Mortgage Rates
For 2025, projections suggest mortgage rates will range between 5.75% and 7.25%, with the 10-year yield fluctuating between 3.80% and 4.70%. Recently, the 10-year yield has seen an increase amid expectations surrounding trade negotiations with China. Notably, improved mortgage spreads are encouraging, particularly on days when bond yields rise, indicating a stabilization in mortgage rates despite fluctuations.
Mortgage Spreads Overview
Since 2022, mortgage spreads have remained elevated, though they have shown signs of improvement since reaching a peak in 2023. However, recent market volatility has increased spreads. Ideally, they would average between 1.60% and 1.80%. Currently, if spreads were at their previous peak, mortgage rates would be approximately 0.66% higher. Conversely, a return to normal ranges could lower rates by 0.64% to 0.84%, suggesting that rates could fall to nearly 6%.
Weekly Housing Inventory Insights
A significant uptick in housing inventory represents a promising trend for 2024 and 2025. Essential for a more balanced market, inventory levels need to reach those seen pre-pandemic. Recently released data indicates a rise in inventory, reflecting a gradual return to normalcy.
Weekly inventory changes: (May 3 – May 9)
- 2025: Increased from 744,225 to 755,895
- 2024: Increased from 556,291 to 568,557
- 2022 all-time inventory low was 240,497
- 2025 peak thus far: 755,895
New Listings Data
For the first time, new listings surpassed 80,000, a mark anticipated during peak seasonal weeks. The previous two years had displayed historically low new listings, but this year’s growth suggests a return to normalcy, where these peaks are typically between 80,000 to 110,000 per week.
Here are the recent new listing figures:
- 2025: 80,338
- 2024: 68,793
- 2023: 61,911
Price Cuts Overview
In an average year, about one-third of homes typically see price reductions. With rising inventory levels and mortgage rates, many homeowners are adjusting sale prices accordingly. The forecast for 2025 suggests a modest increase in home prices of about 1.77%, although there are expectations that a drop in mortgage rates could lead to higher price predictions than currently estimated.
Here’s the percentage of homes with price cuts over the years:
- 2025: 36.7%
- 2024: 33%
- 2023: 29%
Looking Ahead: Key Economic Indicators
The upcoming week will bring significant updates, including the outcome of trade talks with China. Additionally, several Federal Reserve officials are expected to speak, with critical inflation data and housing starts to be released. Monitoring jobless claims will also be essential, given last week’s decline in applications.
The primary focus will be on market reactions to trade updates and whether the positive trend in purchase applications can be sustained.