Home sales stay surprisingly positive even with higher rates

The weekly home sales data for last week was a big surprise. If someone had told me at the beginning of the year that we would have mortgage rates fluctuating between 6.64% and 7.25%, trade war escalations, stocks slipping into bear market territory and confidence data collapsing — I would think housing demand would be negative year to date and year over year.

Yet, amid all those conditions, our weekly data showed positive year-over-year growth in housing demand following the first reversal from lower rates this year, where they briefly surpassed 7%. This unexpected resilience has genuinely amazed me, even as someone who highlights that historic lows in home sales has given us a low bar. Can this trend continue with elevated mortgage rates?

As inventory increases and price growth slows, we are positioning ourselves for a better housing market when mortgage rates fall toward 6%. If home prices were rising above the inflation rate and inventory wasn’t increasing much, it would indicate an unhealthy housing market. However, that is not the case for 2025.

Purchase application data

Given the recent increase in mortgage rates, I anticipated a more significant decline in both the week-to-week and year-over-year data. Surprisingly, the week-to-week decline was only 5%, notably less than my expectations. Furthermore, the year-over-year growth has improved, rising from 10% to 13%. This can likely be attributed to the low baseline we are currently working from.

I expected this trend if mortgage rates were moving from 6.64% down toward 6%, not staying elevated as they have. Also, the new home sales market’s monthly purchase application report shows 14% month-to-month growth and 5.5% year-over-year growth.

Here is the weekly data for 2025:

• 7 positive readings
• 4 negative readings
• 3 flat prints

Double-digit year-over-year growth in purchase applications was not in my cards unless mortgage rates were headed from 6.64% toward 6%. This is why the data line surprised me, especially this week, more than any week this year. Last year, when mortgage rates rose from 6.63% toward 7.50%, we had 14 negative prints, 2 flat and 2 positive prints with zero year-over-year growth weeks.

Weekly total pending sales

The latest weekly total pending contract data from Altos offers valuable insights into current trends in housing demand. Usually, it takes mortgage rates to trend closer to 6% to get real growth in the housing demand data lines, but we have recently seen some pick-up on the weekly sales data, and now our total pending sales data is positive year over year. Over the next few weeks, we will have more challenging comps on our weekly sales data.

Weekly pending contracts for the last week over the past several years:

• 2025: 391,488
• 2024: 384,614
• 2023: 335,017

10-year yield and mortgage rates

In my 2025 forecast, I anticipated the following ranges:

• Mortgage rates will be between 5.75% and 7.25%
• The 10-year yield will fluctuate between 3.80% and 4.70%

Last week presented promising developments for the 10-year yield and mortgage rates. In the face of concerns about potential debt issues and a bond market losing it, I maintained an optimistic outlook. In the absence of significant escalation headlines, I foresaw that the 10-year yield should stabilize around 4.35%.

This optimistic prediction was validated, as the 10-year yield consistently hovered around this level throughout the week, coinciding with a decline in mortgage rates. Overall, the combination of falling yields and decreasing mortgage rates indicates a less stressful bond market, which I see as a positive trend from prior weeks.

Powell’s hawkish speech last week, which led to a decline in bond yields, impressed me. The fact that bond yields rebounded on Thursday toward 4.33% demonstrates a well-functioning bond market, something we needed to witness.

Mortgage spreads

Mortgage spreads exploded higher after the Silicon Valley banking crisis made things worse in 2023. However, mortgage spreads did start to improve in 2024. At the beginning of this year, this positive trend was heading in the right direction, but unfortunately, recent market volatility has widened the spread.

It’s understandable to feel concerned, especially considering that if spreads were as unfavorable as they were in 2023, we could be facing mortgage rates close to 8%. This situation would have made it incredibly difficult for anyone looking to buy a home, or sell and buy a house. If mortgage spreads were back to normal, we would be talking about mortgage rates near 6%.

Historically, mortgage spreads should range between 1.60%-1.80%. 

Weekly housing inventory data

The best housing story for me over 2024 and 2025 — the growth of inventory! Getting the country back to 2019 levels will make a more balanced housing market, and in fact, all my low housing inventory talk goes away. We made more progress again this week toward that goal.  

• Weekly inventory change (April 11-April 18): Inventory rose from 702,434 to 719,400
• The same week last year (April 12-April 19): Inventory rose from 526,479 to 542,651
• 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 1,060,699

New listings data

The new listings data for the past two years hasn’t been a positive story, but it is now. Last year, I anticipated that a minimum of 80,000 homes would be listed every week during the peak seasonal months, and I was wrong — off by 5,000. This year, I am optimistic we would get back to that mark. Notably, around 70% to 80% of home sellers and buyers engage in the market, reflecting a constructive trend as we strive for a more balanced market.

Although this week presented a slight slowdown in growth of new listings, we are steadily approaching the seasonal peak and I remain confident that we will exceed 80,000 listings per week this year.

To give you perspective, during the years of the housing bubble crash, new listings were soaring between 250,000 and 400,000 per week for many years. The growth in new listings data is just trying to return to normal, where the seasonal peaks range between 80,000 and 110,000 per week. The national new listing data for last week over the previous several years:

• 2025: 77,004
• 2024: 68,409
• 2023: 59,269

Price-cut percentage

In a typical year, about one-third of homes experience a price reduction, reflecting the housing market’s ever-changing nature. As inventory levels rise along with higher mortgage rates, some homeowners are experiencing an increase in price adjustments. 

For the remainder of 2025, I confidently project a modest increase in home prices of approximately 1.77%. At the same time, this suggests another year of negative real home price growth — the current availability of homes and elevated mortgage rates back this outlook. A significant shift in mortgage rates to around 6% could alter this trajectory. My 2024 forecast of 2.33% proved wrong, as lower rates in 2024 made my forecast too low.

The rise in price cuts this year compared to last strongly reinforces my belief that my conservative growth price forecast for 2025 is solid and well-supported. Below are the price cuts from previous weeks over the last several years:

• 2025: 35.5%
• 2024: 32%
• 2023: 30%

The week ahead: Will headlines trump economic data?

This week, several Federal Reserve presidents will speak, which is likely to generate significant media attention. Additionally, with Trump expressing interest in replacing Powell, that narrative may gain traction. I’ll delve into this topic further in the Monday episode of the HousingWire Daily podcast. 

We’ll also see reports on new and existing home sales this week, and since our weekly data is slightly ahead of these figures, I expect a month-to-month decline in existing home sales. Furthermore, we’ll have service PMI reports alongside the Michigan consumer sentiment data on Friday, which has shown some challenges recently. It will be interesting to see how these indicators develop.

See the whole archive of our weekly Housing Market Tracker articles here.