Is the spring home-buying season already in full swing? Our weekly data on pending contracts has been showing year-over-year growth for some time now, despite the higher mortgage rates. I believe that the demand for spring homes actually began in November this year — a trend that has been evident in the increasing sales data we’ve seen during the winter months in recent years.
However, it’s important to note that the existing home sales data is starting from historically low levels, so even small changes can have a significant impact, as I discussed recently on Yahoo Finance.
Weekly pending sales
The latest weekly data on pending contracts from Altos Research provides valuable insights into real-time trends in housing demand. It has consistently shown positive growth compared to both 2022 and 2023 data, and now, in the first few days of 2025, compared to 2024 data as well. We are seeing a slight single-digit increase in demand year over year.
Unfortunately, mortgage rates have risen by 1% since September, which has impacted existing home sales. If rates had not increased, we could have seen monthly sales around 4.5 million. In late 2022 and 2023, when rates dropped by over 1%, there was a significant boost in demand of roughly 500,000. While pending home sales have been on the rise for four consecutive months, we may soon lose the advantage of the low baseline we’ve been working with. Nonetheless, it was encouraging to see demand strengthen in the final months of 2024.
Weekly pending contracts for the last week over the past several years:
- 2025: 260,329
- 2024: 247,652
- 2023: 231,127
Purchase application data
During the last two weeks of the year, I typically do not track purchase application data as very few people complete applications during the holiday season. Additionally, with Christmas and New Year’s falling in the middle of the week this year, it could have further impacted people’s travel plans. Before these last two weeks, we saw six positive weekly results and four negative ones, despite the elevated mortgage rates. We will resume tracking the purchase application data next week, even though last week was New Year’s.
10-year yield and mortgage rates
My forecast for 2025 included:
- A range for mortgage rates between 7.25%-5.75%
- A range for the 10-year yield between 4.70%-3.80%
Currently, the 10-year yield is hovering around a key level of 4.60%, showing minimal movement. We are approaching the top end of the forecasted range for both the 10-year yield and mortgage rates in 2025. As we enter jobs week, I have highlighted the significance of labor data for mortgage rates this year in an article.
Mortgage rates briefly exceeded 7.25% in 2024, but for the most part, they stayed within the forecasted range due to improved mortgage spreads.
Mortgage spreads
If mortgage spreads had not improved in 2024, we could have lost some construction workers due to the rising rates. Fortunately, spreads improved last year and remain favorable.
Comparing the worst spread levels from 2023 to today’s rates, we could see an additional 0.77% increase in mortgage rates, bringing them close to 8%. Conversely, if mortgage spreads were typical, we could expect mortgage rates to be approximately 0.76% to 0.86% lower today.
Weekly housing inventory data
As we enter 2025, historical trends suggest that housing inventory tends to reach its lowest point in March and April, especially following the COVID pandemic. Prior to that, in the last decade, we would see the lowest inventory in late January or February, followed by a gradual increase. Last year, the lowest inventory point was in February, so it will be interesting to monitor this trend closely.
We aim to avoid reaching the lowest inventory point in April, as that would be too late in the year.
- Weekly inventory change (Dec. 27-Jan. 3): Inventory decreased from 650,992 to 635,432
- The same week last year (Dec. 29-Jan. 5): Inventory decreased from 513,240 to 499,143
- The all-time inventory bottom was in 2022 at 240,497
- The inventory peak for 2024 was 739,434
- For context, active listings for the same week in 2015 were 959,028
New listings
I am optimistic about the new listings data for this year. While I anticipated growth last year, it did not reach the levels I had hoped for. Nevertheless, it was positive to see some increase.
It’s important to note that most sellers are also buyers, and the past two years saw historically low new listings data. Therefore, we can expect 2025 to bring a return to normalcy, with weeks where new listings data reaches between 80,000-110,000 during the peak season.
Last week was a holiday week, so the new listings data experienced a dip, but we anticipate a return to normal levels soon. This also emphasizes why the last two weeks of the year should not be taken as representative of overall trends.
New listings data for the last week over the past few years:
- 2025: 18,484
- 2024: 35,698
- 2023: 31,995
Price-cut percentage
In an average year, around one-third of all homes typically experience a price cut, reflecting the usual dynamics of the housing market. When mortgage rates rise, there is usually an increase in the percentage of homes reducing their prices. Conversely, when rates drop, we tend to see a rise in demand, which can stabilize or even increase home prices, as we have witnessed recently.
We are currently seeing a seasonal decline in this data line, and we will closely monitor any changes, especially as rates fluctuate.
- 2025: 34.9%
- 2024: 33%
- 2023: 36%
The week ahead: Jobs week, bond auctions, and Fed speeches
The upcoming week is expected to be eventful, with jobs week featuring all four jobs reports, bond auctions, Global PMI data, the release of the Fed minutes, and speeches from some hawkish Fed presidents. Given the critical juncture in the bond market, this week could be quite dynamic. We will continue to monitor jobless claims data every Thursday, as it decreased once again last week.
Get ready for an exciting start to 2025; it looks like another year of interesting developments lies ahead.
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