Mortgage purchase application data
Mortgage purchase application data is a forward-looking indicator, as it typically takes about 30-90 days for purchase apps to lead to home sales. In some cases, it can even be longer, as most sellers are homebuyers, and it depends on how long it takes to sell and buy their next home.
The key for purchase apps is to have positive week-to-week and year-over-year growth data together, which we have seen in the last 19 weeks. We are now at multiyear highs going into 2026.
- 11 positive week-to-week prints
- 8 negative week-to-week prints
- 19 weeks of double-digit year-over-year growth
Last week, we had 19% year-over-year growth and purchase apps at multiyear highs. I am still surprised by the double-digit year-over-year growth, as yearly comps are much harder now than earlier in the year.
Below is the data for the entire year. Earlier in the year, when mortgage rates were above 6.64%, we really didn’t have much positive week-to-week data. However, even with rates above 6.64% the data held up better than in previous years.
- 23 positive readings
- 19 negative readings
- 6 flat prints
- 45 straight weeks of positive year-over-year data
- 32 consecutive weeks of double-digit growth year over year
Total weekly pending home sales
Our total weekly pending home sales data looks out 30-60 days and last week we hit a four-year high in demand. If mortgage rates stay near 6% for the early part of 2026, it does look encouraging for growth in sales in 2026. Here are the weekly pending home sales over the last four years:
2025: 309,719
2024: 303,849
2023: 275,022
2022: 277,102
Mortgage rates, spreads and the 10-year yield
In my 2025 forecast, I anticipated the following ranges:
- Mortgage rates between 5.75% and 7.25%
- The 10-year yield fluctuating between 3.80% and 4.70%
The 10-year yield and mortgage rates have been in a range for a few months near yearly lows. Even with the Fed meeting behind us and the third rate cut in for 2025, it’s been hard to get below 4% on the 10-year yield, which seems right to me. As long as we have a neutral policy in the books, the 10-year yield should not go below 3.80% unless the labor market is breaking or the bond market believes in an economic growth scare, as it did in 2023 and 2024.
Mortgage rates ranged between 6.36% and 6.32% last week, per Mortgage News Daily. Polly, which tracks locked loans across all credit profiles, showed rates at 6.34%.
Mortgage spreads
For 2025, I was looking for a 0.27%-0.41% improvement in mortgage spreads, using a 2.54% average for 2024, and this week the data has been better than that at a 0.48% improvement. Historically, mortgage spreads have ranged between 1.60% and 1.80%. If today’s spreads were as bad as they were at the peak of 2023, mortgage rates would be roughly 1.04% higher, at 7.36%. Conversely, if the spreads returned to their normal range, mortgage rates would be 0.46% to 0.26% lower than today’s level, meaning they would be 5.86% to 6.06%.
Weekly housing inventory data
Housing inventory is now in its traditional seasonal decline, but we did have good growth this year. At one point, we had 33% inventory growth over last year, but that fell to 13.69% last week. In mid-June I noted that the housing market was shifting and that it would take people three to six months to realize this was happening because they were working with very old data.
- Weekly inventory change (Dec. 5-12): Inventory fell from 795,212 to 775,339
- Same week last year (Dec. 6-Dec. 13): Inventory fell from 689,964 to 682,152
New listings data
New listings are also experiencing the traditional seasonal decline. I was very excited earlier in the year when my forecast for weekly new listings — above 80,000 — finally happened. But my excitement was short-lived as the new listings data peaked in late May and began trending downward thereafter. In any case, 2025 was a vast improvement over 2023, which had the lowest new listings data ever recorded, followed by 2024. 2025 looks to be the third-lowest in history.
To give you some perspective, during the years of the housing bubble crash, new listings were soaring between 250,000 and 400,000 per week for many years. Here’s last week’s new listings data over the past two years:
- 2025: 42,499
- 2024: 45,287
Price-cut percentage
In a typical year, about one-third of homes experience price reductions, highlighting the housing market’s dynamic nature. Many homeowners adjust their sale prices as inventory levels rise and mortgage rates stay elevated.
For my 2025 price forecast, I anticipated a modest 1.77% increase in home prices and it looks like we will be finishing the year at that level. The seasonal decline in price-cut percentage is here, as we prep for 2026. Price-cut percentages for last week over the last two years:
The week ahead: A lot of data coming
We have a lot of data coming out this week, including builders’ confidence, the jobs report, inflation, retail sales, bond auctions and jobless claims. We are on the verge of breaking a key level with the 10-year yield that could send mortgage rates a little higher, so it will be interesting to see how the bond market, mortgage rates and spreads act with all the data coming up.
