Housing inventory at one point this year showed 33% year-over-year growth, but that growth has since slowed to 17%, and we might already have seen the seasonal peak in inventory for the year in the first week of August.
I didn’t believe we were witnessing the peak in August and I have been looking for a new yearly high since then, but that hasn’t happened. Last week, we saw a noticeable decline in active listings. It’s October, when we would traditionally start to see the seasonal decline, so if this holds, our active inventory did actually peak the first week of August, which would be highly abnormal compared to what we have seen over the past few years.
Let’s dive into the weekend Housing Market Tracker data to see what is going on.
Weekly housing inventory data
In the past few years, the seasonal peak in our active listings has occurred in October or November, especially when mortgage rates started rising late in the year. However, I noticed some shifts in the housing market mid-June and then mortgage rates fell below 6.64% — a level that has typically led to stronger demand.
If we did see the seasonal peak on Aug. 1, 2025, it would be much earlier than in previous years and resembling what we used to see in the pre-COVID-19 era.
Last week, inventory fell.
- Weekly inventory change (Oct. 3-Oct. 10): Inventory fell from 863,972 to 856,870
- The same week last year (Oct. 4-Oct. 11): Inventory fell from 734,257 to 732,378
Regardless of how inventory ends in 2025, this has been the most positive story for housing as supply grew, price growth cooled down and we have a much healthier housing market. On this episode of the HousingWire Daily podcast, I looked at the possibility of adjustable rate mortgages (ARMs) leading us to a sub 6% mortgage market in 2026.
New listings data
New listings data peaked during the week of May 23 this year, reaching a total of 83,143 listings. Since then, this number has gradually declined. This is very early in the year to see the seasonal peak in new listings.
However, I was excited to see stability in this data line recently. Most home sellers are also buyers, so seeing this stability this late in the year is encouraging. 2025 will still be one of the lowest years for new listings 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: 64,770
- 2024: 62,879
Price-cut percentage
In an average year, approximately one-third of homes experience price reductions before they sell. Homeowners often lower their sale prices when inventory levels increase and mortgage rates remain elevated, which is why the percentage of price reductions is higher in 2025 than last year. This has been another great year for housing, as the market has become much more buyer-friendly in 2025.
For my 2025 price forecast, I anticipated a modest increase of approximately 1.77% in home prices. This suggests that 2025 will likely see negative real-home prices again. In 2024, my forecast of a 2.33% increase proved inaccurate, primarily because rates fell to around 6% and demand improved in the second half of the year. As a result, home prices increased by 4% in 2024. The rise in price reductions this year, compared to last, reinforces my cautious growth forecast for 2025. This data line growth rate has also cooled down recently.
Here are the percentages of homes that saw price reductions last week in the past few years:
- 2025: 41.8%
- 2024: 39%
10-year yield and mortgage rates
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%
Well, Friday came and Trump escalated the trade war, driving the 10-year yield closer to 4% and mortgage rates lower. This is primarily due to stocks being down and money moving into the bond market due to fear that things could get worse on Monday morning. This isn’t a surprise as Godzilla tariffs in April drove the 10-year yield toward 4% too.
However, labor data is now much softer than at the start of the year. We are close to my bond market forecast bottom call, so it will really take more economic data weakness and market drama to drive yields and mortgage rates lower from here. Mortgage rates ended the week at 6.32% on Mortgage News Daily, and the Polly rate lock data ended the week at 6.38%.
Mortgage spreads
This year has seen favorable mortgage pricing, primarily due to improvements in mortgage spreads compared to 2023 and 2024. As long as there are no significant market disruptions and the Federal Reserve continues to cut rates toward neutral, this trend is expected to continue.
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 0.95% higher. Conversely, if the spreads returned to their normal range, mortgage rates would be 0.55% to 0.35% lower than today’s level. The best levels of normal spreads would mean mortgage rates at 5.79% % to 5.99% today.
Purchase application data
We’ve had 10 weeks of testing the housing data with rates under 6.64%, which has been the key level in the past. So far, the trend is positive. This week, we saw a -1% decline in the week-to-week data, but it was up 14% year over year. This makes seven positive weeks and three negative on a week-to-week basis, with 10 straight weeks of double-digit year-over-year growth. But the week-to-week data has slowed down recently.
Here is the weekly data for 2025 so far:
- 19 positive readings
- 14 negative readings
- 6 flat prints
- 36 straight weeks of positive year-over-year data
- 23 consecutive weeks of double-digit growth year over year
Weekly pending sales
Our weekly pending home sales provide a week-to-week view of the data, though pending sales can be influenced by holidays and short-term fluctuations. We are still showing slight year-over-year growth in this data line. The pending sales data will typically be reflected in the existing home sales report 30-60 days after the sale is finalized. Last week was our highest weekly home sales data for this calendar year since the market crash in 2022.
Weekly pending sales for last week:
- 2025: 63,883
- 2024: 61,238
The week ahead: The trade war, market drama and Fed speeches
Things could get really intense next week if the situation regarding China tariffs continues to escalate, as both the stock and bond markets are experiencing significant fluctuations.
Usually, we would have several economic reports this week; however, inflation week has been postponed due to the government shutdown. However, the White House has ordered BLS workers to return and ensure the Consumer Price Index (CPI) inflation report is released on Oct. 24. While housing starts won’t be reported this week, we will have the builders’ confidence data.
Until the government shutdown is resolved, we won’t have much economic data, but we might see some significant market drama ahead. Additionally, many Federal Reserve members, including Fed Chair Powell, will speak in the coming week. Buckle up, folks — this could be a week where the headlines take a wild turn.
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