Housing inventory
The best story about housing in 2025 has been the inventory growth, which has brought us closer to what a normal housing market looks like. After the extreme seller’s market that followed COVID-19, we experienced unhealthy housing market conditions in late 2020. By early 2021 I was talking about the need for higher mortgage rates to cool things off but that didn’t happen. By early 2022 the housing market was savagely unhealthy. So far, 2025 has been the healthiest year for the housing market since the pandemic! That said, the inventory channels have changed recently.
The housing market began to shift in mid-June, and inventory growth slowed significantly to the point that, for the first time in many years, our inventory data showed a decline in August, which is not the usual pattern. Early in August, I believed we hadn’t yet seen the peak in inventory for 2025 and I anticipated inventory would grow above recent highs. So far, that hasn’t happened yet.
Additionally, we are approaching the seasonal decline period, which has happened in October and November in recent years. On a percentage basis, we peaked recently at 33% year-over-year growth and are now running at 20%.
New listings and price-cut percentages
A range of 80,000 to 100,000 new listings every week during the seasonal peak months should be standard for this data line, but it hasn’t been normal since the pandemic. We have been slowly working our way back to normal inventory and for 2025, I expected we would get at least 80,000 weekly new listings during the peak seasonal months.
So, I was pretty excited when we saw over 80,000 listings printed in late May. However, I didn’t anticipate that this would be the peak for the year. Since then, we have been gradually declining, and we are now into the usual seasonal decline. This new listings situation impacted the market dynamics in mid-June, resulting in fewer sellers in June, July, and August — particularly as mortgage rates began to decrease.
The price-cut percentage data has stabilized recently and has decreased slightly.
Housing demand
On the demand front, we have enough data to prove that once again, when mortgage rates get below 6.64% and head toward 6%, the forward-looking data gets better with positive weekly data, similar to what we saw in late 2022 and the mid part of 2024. The key is knowing where to look.
Purchase application data has recently had its best seven weeks of the year — all when mortgage rates fell below 6.64%. The trick with purchase apps is that you need 12-14 weeks of positive week-to-week data, similar to what we had in 2022 and 2024. That hasn’t happened yet, but over the last seven weeks, this is what the data has shown:
- 6 positive weeks
- 1 negative week
- 7 straight weeks of double-digit year over year growth
If we can get six to eight weeks of positive data week to week, alongside the year-over-year growth we experienced, late October or early November could be the timeline for that.
Here is the data for 2025. Note, we have had good year-over-year growth, but the week-to-week was choppy until these last seven weeks.
- 18 positive readings
- 12 negative readings
- 6 flat prints
- 33 straight weeks of positive year-over-year data
- 20 consecutive weeks of double-digit growth year over year
Note that purchase application data takes 30-90 days before it hits the sales data. If we can string together six to eight more weeks of positive weekly data, we should see growth in the existing home sales data. Our weekly pending sales data has shown slight growth year over year in the past few months. It usually takes 30-60 days for this data to hit the existing home report.
Conclusion
Next week, we will get back to the standard format of our weekend tracker. This weekend I wrote a separate article about mortgage rates and the 10-year yield so that I could focus on the key metrics to look at as we close the books on 2025 and get ready for 2026.
Existing home sales will be coming up this week, and I don’t expect to see much happening there as we still haven’t had 12-14 weeks of positive weekly purchase apps data yet.
