Lower mortgage rates are driving increased housing demand in 2026, as shown by another positive week in our Housing Market Tracker data. Both weekly pending home sales and purchase application data posted gains last week — both week over week and year over year. My work over the years indicates that housing demand strengthens when rates approach 6%, though we have not seen a sustained period at this level recently. 2026 may be the first year this trend holds.
Mortgage purchase application data
Purchase application data had another positive week, both on a weekly and yearly basis. The main goal with this data set is to achieve at least 12-14 weeks of week-to-week gains, and so far, the year is heading in that direction. Last week, we observed 5% week-over-week growth and 18% year-over-year growth. In 2026, the extremely low threshold for year-over-year growth in this index is now gone, so it’s somewhat surprising that we’ve reported double-digit year-over-year growth for both weeks.
These applications typically lead sales data by 30 to 90 days. Here’s 2026 so far:
- 2 positive week-over-week results
- 0 negative week-to-week prints
- 2 weeks of double-digit year-over-year growth
Weekly pending sales
Weekly pending home sales offer a week-to-week perspective, though results can be affected by holidays and short-term fluctuations. Last week once again showed positive week-to-week and year-over-year growth. These figures are typically reflected in the existing home sales report 30 to 60 days after pending sales are recorded. Last week marked the highest weekly pending sales in several years.
Weekly pending sales for the last week in the past few years:
- 2026: 56,252
- 2025: 52,165
10-year yield and mortgage rates
In the 2026 HousingWire forecast, I anticipated the following ranges:
- Mortgage rates between 5.75% and 6.75%
- The 10-year yield fluctuates between 3.80% and 4.60%
Last week, global events such as the global summit in Davos and significant volatility in Japan’s bond market impacted financial markets. The U.S. and Japan discussed an intervention plan to support the yen, which shows you how much drama we had in the bond markets last week.
Mortgage rates rose from 6.07% to 6.21%, ending the week at 6.19% according to Mortgage News Daily. Considering the events that happened last week, not too bad. Mortgage rate lock data from Polly shows a weekend rate of 6.23%.
Mortgage spreads
Mortgage rates have remained stable in part because mortgage spreads have improved significantly, especially early this year. At this time last year, similar bond market conditions would have resulted in rates of 6.30% to 6.40%, but improved spreads have helped limit rate increases.
Historically, mortgage spreads have ranged from 1.60% to 1.80%. Last week’s spreads closed at 1.82%. If spreads matched the 2023 peak levels, mortgage rates would be 1.29% higher, at 7.48%. With spreads returning to normal, mortgage pricing can remain lower for longer than in previous years.
Weekly housing inventory data
Housing inventory has shown positive trends as the market moves toward normalization. However, since mid-June 2025, the inventory growth rate has slowed from 33% to 9.81% year over year. With more challenging year-over-year comparisons this spring, similar growth rates are unlikely in 2026. However, as long as we are growing year over year from where we are today, instead of where we were in early 2022, it’s a plus.
- Weekly inventory change: (Jan. 16-Jan. 23): Inventory rose from 695,628 to 697,868
- Same week last year: (Jan. 17-Jan 24): Inventory rose from 632,076 to 635,529
New listings data
New listings data for 2026 has been encouraging. The goal is not only to reach 80,000 new listings per week during peak periods, but also to exceed this number in some weeks. Last year, reaching 80,000 marked the low end of the typical range of 80,000 to 100,000, but growth stalled after that.
For context, during the housing bubble crash, new listings ranged from 250,000 to 400,000 per week for several years. Here is last week’s new listings data for the past two years:
- 2026: 53,920
- 2025: 50,946
Price-cut percentage
Typically, about one-third of homes undergo price reductions, reflecting the dynamic nature of the housing market. Many homeowners adjust sale prices as inventory increases and mortgage rates remain elevated. In 2026, it will be important to observe how supply and demand respond to mortgage rates near 6%, rather than the 7% or higher rates seen from 2022 to 2025.
The price-cut percentage for last week:
- 2026: 33.60%
- 2025: 33%
The week ahead: Fed week, home prices, and inflation
This week, the Federal Reserve meets but is not expected to move rates. The Q&A session following the meeting will be closely watched as Jerome Powell wraps up his term and President Trump prepares to announce a new Fed chair.
Several home price index reports and PPI inflation data are also scheduled for release this week. Additionally, the president announced a 100% tariff on Canada if it reaches a deal with China, and market reactions will become clearer as trading begins on Monday.
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