Housing demand started to pick up more than three months ago and has stabilized the housing market. One reason many people are behind the curve on housing data is that they rely on outdated reports that are three to six months old. This is why it’s very critical to track weekly live fresh housing data — while understanding that weekly data can be very volatile, especially around national holidays like Columbus Day that result in a long weekend.
Today, I want to focus on showing the data that the housing market stabilized in mid-June and how mortgage rates dropping below 6.64% have changed specific dynamics in the housing economy, similar to what we’ve observed since late 2022 and the mid-point of 2024. Let’s take a look at the data!
Homebuilder confidence rises
A few months ago, I went on CNBC to talk about how the new home sales market and homebuilders act differently when mortgage rates head toward 6% once they break under 6.64%
Weeks later, I went back on CNBC to talk about the new home sales report having a three-year high in sales — and that you don’t need 3%, 4% or 5% mortgage rates to get things going, but just getting toward 6% and holding in that area can work for the homebuilders.
But what about the small builders — those that don’t have access to big balance sheets and higher profit margins to pay down rates. Last week, we got an update on the builders’ confidence, and it surprised to the upside as well. Even the small builders, for the fourth time now since 2022, have seen growth in their six-month outlook when mortgage rates head toward 6%.
New home sales recently hit a three-year high. I am very skeptical of this print because the new home sales data can be extremely wild month to month so I will expect revisions, but for sure, we saw growth in the last new home sales report, which has shocked so many market participants. If you look at the entire new home sales report, new home sales rose, prices rose, and inventory fell.
Housing inventory for existing homes
Housing inventory has been the single best story for the housing market in 2025, but as mortgage rates fell, demand has picked up just a tad, and this has cooled down the inventory growth so much that it has been cut in half percentage-wise in 2025.
Our housing inventory data showed 33% year-over-year growth earlier in the year and now it is down to 16.24%. I pegged this shift back in mid-June, and now that we are in mid-October with rates near the lows for 2025, this seals the deal for 2025. Unless some crazy market event happens in the next four to six weeks, we can expect the seasonal decline in housing inventory soon and start to get ready for 2026. I had anticipated that we would have seen a new high in inventory recently, but that call hasn’t been correct yet and I am running out of time before the seasonal decline.
In recent years our housing inventory typically peaks in October or November, but this year it looks like it will have peaked in the first week of August. As mortgage rates fell, demand picked up and the supply-and-demand dynamics shifted. You would have never seen this coming unless you are looking at the weekly housing data.
Last week, inventory rose slightly.
- Weekly inventory change (Oct. 10-Oct. 17): Inventory rose from 856,870 to 859,419
- The same week last year (Oct. 11-Oct. 18): Inventory rose from 732,378 to 739,401
Price-cut percentage
We can also see the price-cut percentage stabilizing recently. The growth rate was cooling down starting in mid-June, and now we can easily see the stabilization in this data line, which is now under the levels of 2022, where we did see prices decline noticeably in the second half of the year, which wasn’t related to the traditional seasonality of pricing.
New listings
Our new listings data peaked on May 23 and started its seasonal decline then. I had hoped we’d stay in a range of 80,000-100,000 during the seasonal peak months, much like what we saw pre-COVID, but we didn’t, and now the seasonal decline will take us to a low point again before the seasonal increase next year.
I always remind everyone that this data line was running at 250,000 to 400,000 per week for years during the housing bubble crash. Again, believe in people who have an economic model rather than doom porn trash. It’s October 2025, people.
The one thing about weekly housing data is that it can be significantly affected by holiday weekends, such as Columbus Day. However, no holiday weekend can reverse a trend and this trend of housing data getting better has been in place for months — you just need to know where to look
Mortgage rates and demand
Mortgage rates are near year-to-date lows, with the 10-year yield at 4%. This marks the third time this year we have attempted to break through that key level in the bond market. The fact that we are having this discussion indicates that many who claimed higher rates were inevitable due to inflation, tariffs, federal debt, deficits and Treasury supply have overlooked a fundamental principle: 65% to 75% of where the 10-year yield and the 30-year mortgage rate can go is still determined by Federal Reserve policy.
Additionally, labor data will always be significant to a Federal Reserve operating under a dual mandate. I talked about this topic in this episode of the HousingWire Daily podcast and on Friday I wrote about what could take us to the very bottom of my 2025 forecast — to rates at 5.75%. It’s been hard to break below 4% on the 10-year yield in 2025, but it’s knocking on the door now.
What about demand? The purchase application trend has been generally positive year over year. However, the week-to-week data is what truly matters. Since mortgage rates dropped below 6.64% and approached 6%, we have experienced seven positive weeks and four negative weeks.
Additionally, there have been 11 consecutive weeks of double-digit year-over-year growth. Just last week, we observed a 20% year-over-year increase. I would always like to see at least 12-14 weeks of positive week-to-week data to say it’s something material, so five to seven weeks left would seal the deal in 2025.
Here is the weekly data for 2025 so far:
- 19 positive readings
- 15 negative readings
- 6 flat prints
- 37 straight weeks of positive year-over-year data
- 24 consecutive weeks of double-digit growth year over year
Weekly pending sales data
Our weekly pending sales data has consistently demonstrated slight year-over-year growth since mid-May. However, this data can be affected by factors such as weekly holidays or a government shutdown, which may delay closure. Typically, these pending sales take about 30 to 60 days to be reflected in the existing home sales report.
Demand isn’t booming by any means, but it’s good enough to shift the housing data, as you can see above. Again, if you don’t track housing data weekly with the variables above, you will be three to six months behind.
Conclusion
Overall, the housing market in 2025 isn’t as dire as some people suggest, especially considering the challenges we’ve faced. If mortgage rates had remained above 7.25%, as some predicted, the situation would be very different. However, lower mortgage rates have had a positive impact once again, similar to what we saw in late 2022 and the middle of 2024.
The key difference this year compared to last is that mortgage rates were on the rise at this time last year and eventually exceeded 7%. Just imagine the potential if we could maintain rates around 6% for a longer time frame, something we haven’t been able to do in many years.
This week we will have the existing home sales report, but not the new home sales report if the government continues to be shut down. However, the government has told us they will release the CPI inflation report on Friday — a week before the Federal Reserve meets.
