Our weekly pending contract data is still positive year-on-year, but only by 1%, as demand growth has slowed amid high loan levels. What does this mean for the spring housing market? Let’s look at the data and see what we can expect.
Weekly pending sales
The latest weekly pending contract data from Altos Research provides valuable insight into real-time trends in housing demand. It shows good growth for a long time now compared to the 2022 and 2023 data. We still show growth in 2025 compared to 2024 data, but the growth rate has dropped to 1%.
Weekly pending contract data is seasonal; We are about to break the low selling point in this data line and see a general increase in demand. The question is whether higher mortgage rates will break the streak of favorable year-over-year data. Over the last two and a half years, we have seen better demand as mortgage rates are heading towards 6% but now we are entering the second week of January with mortgage rates above 7%. However, for now, we still have slightly positive year-on-year data.
Weekly pending contracts for the previous week over the past few years:
- 2025: 252,586
- 2024: 250,621
- 2023: 231,674
Buy app data
I usually don’t comment on app data for the last two weeks of the year or the first week of the new year, as volumes tend to fall during this time, making the data invalid. However, ahead of the holiday weeks, the data held up well, considering the rise in mortgage rates.
Last year, during the winter to early spring months of 2024, when mortgage rates fluctuated between 6.75% and 7.50%, the purchase application data looked like this:
- 14 negative prints
- 2 flat prints
- 2 fine prints
So, we’ll be watching this closely as mortgage rates approach the highest levels we’ve seen in 2024.
10-year yield and housing rates
My prediction for 2025 includes:
- Loan rates range between 7.25% -5.75%
- 10-year yield range between 4.70%-3.80%
Last week was a busy week, and all key data points held firm, leading to the 10-year yield rising even more than my top 2025 forecast. Meanwhile, mortgage rates are slightly lower than I expected in 2025. This situation is the same. to last year; However, at that time mortgage rates reached around 7.50% because the spread was so bad.
In order for mortgage rates to continue to rise from these levels, the economic data, especially the labor market, will have to work very well and continue to work very well. The irony here is that housing starts and permits are already at recessionary levels and higher prices can impact construction workers, which has other consequences, as I’ve discussed here.
Mortgage spreads
Mortgage rates are high right now, which is not good for the housing market. However, the situation could be even worse. If we apply the worst-case spread rates from 2023 to today’s rates, we’ll see an increase in the value of the loan by 0.82% – bringing it to over 8%. On the other hand, if mortgage spreads were at their normal level, we would expect mortgage rates to be 0.68% to 0.78% lower than they are now.
In my 2025 forecast, I expect spreads to improve between 0.27%-0.41%, compared to an average of 2.54% in 2024. We are close to reaching that average spread, and the goal is to develop and maintain a better spread if the yield decreases.
Weekly housing inventory data
As we enter 2025, we face healthy inventory levels compared to what we experienced in 2020-2023. This development has been a very important benefit in the current housing market. The key question now is when we will see a seasonal drop and a general increase in inventory during the spring. We hope to see this increase in January and February rather than March and April, as seen in some years after COVID.
- Weekly inventory change (Jan. 3-Jan. 10): Inventory has fallen 635,432 to 624,419
- In the same week last year (Jan. 5-Jan 12): Inventory increased from 499,105 to 505,186
- The all-time inventory low was in 2022 240,497
- The 2024 asset peak was 739,434
- In another context, the active listing for the same week in 2015 was 924, 813
New listing
I am excited for 2025 because the new listing data can increase significantly this year compared to last year. We’ve been operating from historically low new listings data for the past two weeks due to the New Year’s holiday week, but experienced some good health last week.
The prediction I didn’t make in 2024 was that we would see at least 80,000 prints during the peak weeks of the season, which didn’t happen. To get back to normal, we need to see peak weeks of the season with numbers between 80,000 and 110,000. Here are the new lists from last week. a few years ago:
- 2025: 44,639
- 2024: 39,640
- 2023: 36,804
Discount percentages
In an average year, it is common for about one-third of all homes to see a price reduction, reflecting the general volatility of the housing market. We are in the tail end of the discount season and we will keep a close eye on whether this and inventory data goes up in 2025.
Last week’s price reduction percentages over the last few years:
- 2025: 33.9%
- 2024: 32%
- 2023: 36%
Next week: Inflation Week!
It’s inflation week again, and we’ll be analyzing the current outlook for the data, especially since the 10-year yield has had a big change and is now approaching a cycle high. We have data on upcoming sales and housing starts, and it will be interesting to see a report on builder confidence, given that high mortgage levels have persisted for some time.
As always, we’ll also monitor key jobless claims data on Thursday, which showed a decline last week.
An interesting feature with The Federal Reserve now whether they will start commenting on the yield increase or let it just take its own course. As Fed President Logan from the Dallas Fed said, if the 10-year yield is rising, we don’t need to be restrictive with our policy.
Check out all of our weekly Housing Market Tracker articles here.
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