Better mortgage spreads are still keeping home sales positive

Existing home sales were still positive year over year last week, with our weekly pending home sales data holding steady even with elevated mortgage rates. While people are frustrated that lower oil prices haven’t brought rates down, they should be deeply grateful that improved mortgage spreads have helped housing growth in 2026. If this had been 2023, 2024 or even 2025, mortgage rates would have been over 7% for most of the year and housing demand tends to soften when that happens. 

In fact, that has been the reason why we can’t get traction on home sales, as the rate volatility from 2023-2025 kept home sales from growing, but not in 2026! In the past, existing home sales would get some traction with rates near 6%, only to lose it when rates popped over 7%. This year, we haven’t had to experience that, even with a hawkish Federal Reserve, oil prices over $100 and inflation above target. So, wow, yes, hug a mortgage spread folks.

Mortgage spreads

Since late 2022, housing demand has tended to perform better when mortgage rates fall below 6.64% and head toward 6%. We don’t need 3%, 4%,or even 5% rates to grow sales — rates near 6% work, mostly because we are working from record-low levels. However, mortgage spreads widened in 2023 to over 3%, which is very rare post-1986.  

Over time, as a rate-cut cycle starts, spreads historically improve, which is why, in 2026, my peak mortgage rate forecast was 6.75%, solely due to spreads getting closer to normal. For the most part, mortgage rates have been below 6.64%.

Historically, mortgage spreads have ranged from 1.60% to 1.80%. Last week, spreads were at 2.01%, down from 2.03% the week before.

Let’s compare last week’s mortgage rates to where they would have been over the last three years, given the 10-year yield’s current level:

• If we had the worst mortgage spread levels of 2023, mortgage rates would be 7.70% today, not 6.60%.
• If we had the worst levels of 2024, mortgage rates would be 7.32% today 
• If we had the worst levels of 2025, mortgage rates would be 7.13% today.

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 fluctuating between 3.80% and 4.60%

Last week was jobs week and we saw a mixed bag in the data: job openings beat estimates, ADP was a slight miss but still at elevated levels, jobless claims were low, but Jobs Friday came in at a miss of estimates and negative revisions. And yet, the 10-year yield, even with oil prices at $68, closed the week at 4.49%.

Last week I wrote about why this is happening, and Sarah and I did an important episode of the HousingWire Daily podcast on this subject, which I believe is a must-listen. My take: policy getting more restrictive has been a reason the yields like hanging out around the 4.46%-4.48% level.

The Fed meeting is a few weeks away; we need to hear some hawks turn to doves to get bond traders off the rate hike cycle mindset. Last week we had two Fed Presidents talk and Cleveland Fed President Beth Hammack made it seem that lower oil prices were bad for inflation, a reason why yields stayed firm.

Weekly pending sales

Our pending home sales data provides a week-to-week perspective, though results can be affected by holidays and short-term fluctuations. Our weekly pending sales data typically takes 30-60 days to be reflected in the sales data. 

In the next two weeks, our weekly Housing Market Tracker will be hit due to the holiday data, but as you can see below, even with rates near yearly highs, we are still showing growth year over year. 

Here are the pending sales for last week over the last two years:

• 2026: 71,173
• 2025: 66,967

Total pending home sales

I normally don’t include our weekly total pending home sales data in the tracker, but for this July 4th weekend and since we are tracking how beneficial mortgage spreads have been to home sales this year, I wanted to show more of a moving average of sales to show how important mortgage spreads have been in 2026. 

Here are the total pending sales for last week over the last two years:

• 2026: 422,120
• 2025: 396,652

Mortgage purchase application data

Purchase application data all year long has shown why mortgage spreads have been so important to housing in 2026. Every week this year — outside of two weeks which had harder year-over-year comps — has been positive year over year. Even with all the drama in 2026, mortgage spreads have kept rates below 6.75% and thus purchase apps have been positive.

Here are the stats on purchase apps so far in 2026

• 11 positive week-to-week prints
• 12 negative week-to-week prints
• 2 flat week-to-week prints
• 10 weeks of double-digit year-over-year growth
• 23 weeks of positive year-over-year growth
• 2 negative year-over-year prints

Housing inventory

A lot of people are surprised that inventory growth has slowed down and we have had some negative year-over-year data in recent weeks. But this isn’t shocking to our readers and those that listen to our podcast.

However, now the low bar comps are done with and we need to follow the data more closely to see where the next direction is. The most important aspect of inventory is that we are at healthier levels in 2026 than what we saw in 2020-2023, which is why we are chipping away at making housing more affordable. 

• Weekly inventory change:(June 26-July 3): Inventory rose from to 841,547 to 852,241   
• Same week last year: (June 27-July 4): Inventory rose from 831,050 to 853,160

New listings

Seasonality in the new listings data is here; we are now starting the traditional decline. Traditionally, we would see 80,000-100,000 new listings during the seasonal peak weeks, but we’ve only cracked above 80,000 four times this year and never in back-to-back weeks. Still, both 2025 and 2026 new listing data is better than what we saw in 2023 and 2024. This year we just had a tad bit more demand than last year to start the year off.

In any case, the seasonal decline is with us now, but 2026 has not been a bad year for new listings: better mortgage spreads made more sellers ready to sell and buy. 

Some context for those who believe that the new listings data resembles the housing bubble years: new listings during that time ranged from 250,000 to 400,000 per week for several years. Several years!

Here is last week’s new listings data for the past two years:

• 2026: 75,360
• 2025:  69,701

Price-cut percentage

Typically, about one-third of homes undergo price reductions before they sell, reflecting the dynamic nature of the housing market. For the most part, price-cut percentages this year have been lower than last year.

In my 2026 home-price forecast, I had a negative 0.62% call for the year nationally. Home-price growth really isn’t going anywhere this year, but the percentage of price cuts has been lower year over year for most of 2026.  My forecast of negative -0.62% might be hard to achieve: even though home-price growth isn’t positive by much this year, it is still positive.

The price-cut percentage for last week:

• 2026: 39.54%
• 2025: 41%

The week ahead: Existing home sales, bond auctions and Fed speeches

Existing home sales will be reported this week and we will have easy year-over-year comps for growth. After this month is when home sales started to pick up last year so the comps will be more difficult to show growth for the rest of the year, especially in December.

We will also have some bond auctions this week and Dallas Fed President Lorie Logan will be speaking. Logan is one of the Fed hawks and the markets will be waiting to hear what she says now, because oil prices have fallen. It will be an interesting week with bond trading and mortgage rates.