Market Overview

In recent weeks, the housing market has shown signs of gradual recovery. Year-over-year data for 2025 indicates positive but modest growth, driven primarily by lower mortgage rates. While the current momentum is not extraordinary, it does signal improvements from previous lows.

The forecast anticipates a more stable demand environment if mortgage rates stabilize around 6%. This adjustment could lead our sales projections, currently at 4.2 million, to shift upwards.

Weekly Pending Sales Insights

The latest information from Altos on pending contracts provides a glimpse into current housing demand trends. Typically, growth is contingent on mortgage rates descending toward 6%. Currently, although rates are still hovering above 6.64%, there have been slight improvements in pending sales.

Pending Contract Data Comparison

• 2025: 346,533 contracts
• 2024: 356,618 contracts
• 2023: 327,933 contracts

Mortgage Rates and 10-Year Yield Outlook

For 2025, forecasts suggest that mortgage rates may fluctuate between 5.75% and 7.25%, with the 10-year yield possibly ranging from 3.80% to 4.70%. The yield recently tested critical levels, closing near 4.25%, while the barrier to break below is around 4.15% to 4.18%. Continued soft economic indicators, particularly in labor, will influence both the Federal Reserve’s actions and the bond market.

Implications of Improved Mortgage Spreads

The landscape of the housing market has been notably affected by improved mortgage spreads since 2024. Current spreads range from 1.60% to 1.80%, which have contributed to lower mortgage rates than those observed in 2023.

Forecasts suggest a potential modest decline in spreads for the remainder of the year, amounting to approximately 0.27% to 0.41%, which could result in further reductions in prevailing mortgage rates.

Weekly Housing Inventory Data

The arrival of spring is bringing renewed activity in the housing inventory, with last week’s total rising from 655,626 to 668,155 listings. While this reflects significant improvement compared to the previous year, the 2024 levels have not yet matched those of 2019.

Weekly Inventory Changes

• One year ago: rose from 507,160 to 512,759
• All-time inventory low in 2022: 240,497
• Peak inventory for 2024: 739,434
• Historical context: Spring 2015 inventory was at 985,411

New Listings Update

While the number of new listings has seen a slowdown recently, 2025 still outperforms the previous years. Aiming for a baseline of approximately 80,000 listings during peak seasonal weeks remains an ongoing goal.

New Listings Comparison

• 2025: 69,701 listings
• 2024: 60,328 listings
• 2023: 49,993 listings

Price Cut Trends in the Housing Market

Historically, about one-third of homes experience price reductions each year. With increasing inventory levels and sustained high mortgage rates, the proportion of homes that have seen price cuts has risen.

For 2025, we anticipate a modest increase in home prices around 1.77%. However, given the prevailing conditions, forecasting negative real growth in home prices remains reasonable unless there is further decline in mortgage rates.

Looking Ahead: Key Data Releases

This week will deliver various crucial data points, including updates on inflation, new home sales, and pending home sales. Additionally, speeches from Federal Reserve officials may provide insights into market trends and economic policies.

It’s important to watch for fluctuations in jobless claims as they may influence market reactions. The collective data emerges at a significant moment as we observe the interplay of economic indicators and government policy decisions.