Has the spring home-buying season already begun? Our weekly pending contract data has shown year-over-year growth for some time now, even with elevated mortgage rates. I believe that spring demand actually started in November this year — a trend that has been evident in the rising sales data we’ve observed during the winter months in recent years.
However, we need to be mindful that existing home sales data is working from record low levels of sales, so it doesn’t take much to move the needle as I discussed on Yahoo Finance recently.
Weekly pending sales
The latest weekly pending contract data from Altos Research offers critical insights into real-time trends in housing demand. For some time now, it’s been showing positive growth versus both 2022 and 2023 data, and, in the first few days of 2025, versus 2024 data as well. We have a slight single-digit increase in demand year over year.
It’s a shame mortgage rates have increased by 1% since September because existing home sales could have had some monthly prints around 4.5 million. In late 2022 and 2023 when rates fell over 1%, we saw a boost in demand by roughly 500,000. Now, pending home sales have been up four months in a row, so in time, we are going to lose the super-low bar we’ve been working with. However, it was nice to see demand firm up in the last few months of 2024.
Weekly pending contracts last week over the past several years:
- 2025: 260,329
- 2024: 247,652
- 2023: 231,127
Purchase application data
My rule of thumb: I don’t track purchase application data during the last two weeks of the year because very few people go out to complete applications during Christmas and New Year’s week. Also, both Christmas and New Year’s fell in the middle of the week this year, which could throw off people’s travel plans. Before those last two weeks, we recorded six positive weekly results and four negative ones with elevated mortgage rates. We will begin tracking the purchase application data again next week, even though this last week was New Year’s.
10-year yield and mortgage rates
My 2025 forecast included:
- A range for mortgage rates between 7.25%-5.75%
- A range for the 10-year yield between 4.70%-3.80%
Recently, the 10-year yield has been hovering around a key level of 4.60%, showing little meaningful movement either way. We are near the top of the 10-year yield and mortgage rates forecast for 2025. As we enter jobs week, I wrote about the significance of labor data for mortgage rates in 2025 and highlighted which data points deserve more attention in this article.
Mortgage rates did briefly stay above my 7.25% level in 2024, but for the most part, the range stuck for most of the year because mortgage spreads improved.
Mortgage spreads
If mortgage spreads did not improve in 2024, we would have already lost some construction workers due to rising rates. However, we should be thankful that spreads improved last year and remain favorable.
If we apply the worst spread levels from 2023 to today’s rates, we would see an increase of an additional 0.77% on the mortgage rate, bringing us 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
We are heading into 2025, and historically, housing inventory tends to bottom in March and April, at least following the COVID pandemic. In the last decade before that, we would see the lowest inventory in late January or February and then inventory would start rising. Last year’s lowest point for inventory was in February, so we will monitor this closely.
I don’t want inventory to reach its lowest point in April, as that would be too late in the year.
- Weekly inventory change (Dec. 27-Jan. 3): Inventory fell from 650,992 to 635,432
- The same week last year (Dec. 29-Jan. 5): Inventory fell 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 some context, active listings for the same week in 2015 were 959,028
New listings
I am very excited about the new listings data this year. Last year, I anticipated growth, and while we did see an increase, it didn’t reach my target levels. Still, I was happy to see growth.
It’s important to remember that most sellers are also buyers and the last two years presented the lowest new listings data in history. This means we can look forward to 2025 as a year when things return to normal, and we should expect to see some weeks where new listings data hits between 80,000-110,000 in the peak season.
Last week was a holiday week, so new listings data dived; things will return to normal soon. This also explains why people shouldn’t take the last two weeks of the year with purchase application data seriously, either.
New listings data for last week over the past few years:
- 2025: 18,484
- 2024: 35,698
- 2023: 31,995
Price-cut percentage
In an average year, it’s common for about one-third of all homes to see a price cut, reflecting the usual dynamics of the housing market. Rising mortgage rates often lead to an increase in the percentage of homes, reducing their prices. On the flip side, when mortgage rates drop, we typically see a rise in demand, which often stabilizes or even boosts home prices, as we’ve recently experienced with falling rates.
We are experiencing a seasonal decline in this data line, and we will track this closely for any changes in the data, especially as rates trend higher or lower
- 2025: 34.9%
- 2024: 33%
- 2023: 36%
The week ahead: Jobs week, bond auctions and Fed speeches
It’s going to be an intense week ahead! We have jobs week, which includes all four jobs reports, plus bond auctions, Global PMI data, the release of the Fed minutes and speeches from some hawkish Fed presidents. Considering we are at a key level in the bond market, this week could get wild. As always, we’ll watch for jobless claims data every Thursday. Last week, it fell once again.
Buckle up this week; it’s the first week of 2025, and it’s shaping up to be another year of drama.
Related
First Time Home Buyer FAQs - Via HousingWire.com
