Year-over-year housing inventory growth has slowed to single digits, from 33% at one point last year to 9.99%. 2026 is off and running, and we had another crazy week of housing headlines, from Trump announcing a ban on Wall Street investors buying single-family homes to directing the GSEs to buy mortgage-backed securities. But what caught my eye is that our Housing Market Tracker data now shows year-over-year inventory growth in the single digits.
Back in mid-June of 2025, I said that the housing market had shifted; that story is still ongoing. Unlike the start of 2025, when mortgage rates eventually headed toward 7.26%, we are near 6% — with the Trump administration bent on getting housing going again. Let’s review the tracker data and what it means as we start the year.
Weekly housing inventory data
Housing inventory is expected to set a seasonal low sometime early in 2026, hopefully sooner rather than later. We don’t want what happened in 2023, when the seasonal bottom came in April. We would want the seasonal bottom to happen in February: more supply means less price growth and better affordability.
However, since mid-June, the inventory growth has slowed significantly, and mortgage rates are at 3-year lows. When mortgage rates fall below 6.64% and head toward 6%, housing demand improves. In 2026, we should see lower rates for longer versus previous years, which can keep a lid on inventory growth in 2026.
- Weekly inventory change: (Jan. 3-Jan. 10): Inventory fell from 720,102 to 686,784
- Same week last year: (Jan. 4 -Jan 11 ): Inventory fell from 635,384 to 624,375
New listings data
The goal for new listings in 2026 is not just to return to 80,000 new listings per week during the seasonal peak periods, but to grow above 80,000 in some weeks. Last year, I was excited that we got to 80,000, which is the low end of normal new listings, as we typically range between 80,000-100,000, but once we hit that level, we didn’t see much growth.
To give you another 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:
- 2026: 39,007
- 2025: 44,639
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 sales price as inventory levels rise and mortgage rates stay elevated. For 2026, let’s see how the supply and demand equilibrium works when mortgage rates are near 6%, not at 7% or higher, as the market has had to deal with from 2022-2025 at different points.
For 2026, the HousingWire forecast is for a -0.62% decline in nominal home prices nationally, based on another year of inventory growth similar to last year. And if the labor data improves, rates can move up to the upper range of my forecast. However, if inventory growth slows and rates remain 6.25% or lower, that forecast is most likely incorrect as pricing has proved to firm upwards over the past few years when rates are near 6% with limited inventory growth.
The one major difference this year versus the past few years is that the inventory shortage story is over, meaning supply isn’t going to be the big driver of prices. The demand side would need to play a bigger role in the story in 2026 for prices to keep rising. Here’s the price-cut percentage for last week over the last several years:
- 2026: 34.7%
- 2025: 34%
Mortgage rates and the 10-year yield
In the HousingWire 2026 forecast, I anticipate the following ranges:
- Mortgage rates between 5.75%-6.75%
- The 10-year yield fluctuates between 3.80% and 4.60%
The HousingWire 2026 forecast doesn’t include a 7-handle, as labor data softened in 2025 and mortgage spreads are almost back to normal. With many rate cuts in the system now, the way to get back toward the 4.40%-4.60% range on the 10-year yield is if the labor data starts to improve — in other words, higher job growth numbers, lower unemployment rate, and wage growth picking up as the Fed attempts to sound hawkish. Of course, a lot will change with a new Fed Chairman and possible new Fed governors.
Last week was jobs week, but not much happened with the 10-year yield, as it’s been in a narrow channel for months now. As you can see in the chart below, it’s trying to break above 4.20% level, with no luck. The one X variable for 2026 is if jobless claims start to rise toward 323,000 — the 10-year yield at 3.80% will break, and mortgage rates will easily break under 5.75% at that point. Mortgage rates briefly dipped to 5.99% on Friday, only because of a historic day on mortgage spreads. They later gave up on that move, but rates ended the week at 6.06%.
Mortgage spreads
Last week was very wild; mortgage spreads almost returned to their normal historical range on Friday after President Trump announced on Thursday that he wants $200 billion more in mortgage-backed security purchases. This created a wild 24 hours of trading in those securities, resulting in an abnormally high drop in spreads on Friday.
Mortgage spreads were the unsung hero for housing in 2025, and 2026 looks to be another year of a positive spread story. Historically, normal spreads have been between 1.60% and 1.80%. In 2023, they got as high as 3.11%. But since then, when the Fed said it was done hiking rates, spreads have been improving, as they typically do at this stage of the cycle.
We will monitor this positive story every day for 2026 because if spreads were as bad as they were in 2023, rates would be over 7% today, not near 6%. If the spreads improve to lower than 1.60% — which wasn’t on my radar for this year — that will be nothing but a positive story for housing this year.
Mortgage purchase application data
Staying true to my belief that weekly housing data has to be taken with a grain of salt during the last two weeks of the year and the first week of the new year, I am going to wait one more week before we start tracking the traditional purchase application data. This period is simply too heavily impacted by the holidays. We saw 10% year-over-year growth last week, but we should be skeptical of that number. The year-over-year comps will be much harder in 2026, as the extremely low bar we had last year is over with.
Total weekly pending home sales
The same end-of-the-year seasonal factors apply to our weekly and total weekly pending home sales. We are showing year-over-year growth here, and the tracker will be in full force next week with our weekly demand data.
- 2026: 256,837
- 2025: 252,259
The week ahead: Headlines, plus new home sales, retail sales and Fed speeches
So far, 2026 has seen a flurry of headlines, and some of them have already impacted housing; expect more to come. We have a lot of data this week, including new home sales, retail sales, and PPI inflation, plus Fed speeches.
With mortgage spreads close to normal, it will be key every week to see how the 10-year yield and bond markets react to economic data, but 2026 will be the first year in many years with close-to-normal spreads and many rate cuts already in the system.
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