Positive housing demand leads to inventory almost going negative YOY

Housing data once again remained resilient last week even as mortgage rates are closer to yearly highs than lows, with demand hitting multiyear highs in our weekly pending home sales data. Housing isn’t booming by any means, but it’s holding up well considering all the drama we have had in 2026. Also, our weekly active inventory data is on the verge of going negative year over year.

The housing market dynamic shifted mid-June of 2025 when lower mortgage rates stimulated demand and the inventory growth we saw early in 2025 simply couldn’t be sustained. That baseline shift remains intact, largely because mortgage rates haven’t risen above 7% due to improved mortgage spreads. Let’s take a look and see where we are at.

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. Mortgage rates have stayed below 6.64% for most of 2026, which has allowed housing demand to stay firm, even with the snowstorms early in the year and the Iran conflict. 

The weekly pending sales data is still positive year over year, and grew slightly week to week. We are at the seasonal peak period with our data line, and considering all the drama housing has had to deal with, it’s not bad.

Weekly pending sales usually take 30-60 days to hit the sales data. Typically, mortgage rates above 6.64% and those breaking over 7% really impact the data negatively. Under 6.25% has been the sweet spot over the past several years, excluding short-term variables.

Weekly pending sales last week over the last two years:

• 2026: 79,220
• 2025: 74,212

Mortgage purchase application data

Purchase application data is a forward-looking indicator: growth here leads home sales by roughly 30-90 days. Last week, we saw a 3% week-to-week decline and a 5% year-over-year increase.

For purchase apps, what I really value is at least 12-14 weeks of positive week-to-week data. If we can get that positive week-to-week data to go with year-over-year growth, then we have something cooking. For 2026, we are basically flat on the week-to-week, while showing positive year-over-year growth for most of the year. 

Here’s 2026 so far:

• 8 positive week-over-week prints
• 8 negative week-to-week prints
• 1 flat week-to-week print
• 9 weeks of double-digit year-over-year growth
• 15 weeks of positive year-over-year growth
• 2 negative year-over-year print

Housing inventory

Since the middle of June 2025, housing inventory data has been slowing. We had good growth in 2025, but that growth rate would have been hard to sustain with mortgage rates under 6.64% and demand picking up a tad. Now, inventory is on the verge of going negative year over year. Last year at this time, we had really good growth because mortgage rates were above 6.64% — that isn’t the case in 2026, so the growth rate slowed as it should have. After June, the year-over-year comps will start to get easier for growth, so inventory being on the verge of going negative isn’t a shock to me. 

Inventory growth is running at 1.49% year over year, down from a peak of 33% last year, but even if we go negative year over year for some weeks, we are currently in a much better spot with inventory levels, which are at a multiyear high and far from the savagely unhealthy levels of 2020 -2023. 

• Weekly inventory change: (May 1- May 8): Inventory rose from 761,604 to 767,132
• Same week last year: (May 2-May 9): Inventory rose from 744,228 to 757,898

New listings

I am very excited about the new listings data last week. We are over 80,000 again, and I’m hoping that we can, for the first time in a while, get back-to-back weeks of 80,000 new listings. Normal new listings data runs between 80,000 and 100,000 during the seasonal peak period.

Some context for those who think this market resembles the housing bubble years: new listings ranged from 250,000 to 400,000 per week for several years. Conversely, the peak in new listings post-COVID was 91,000 in 2022. 

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

• 2026: 80,803
• 2025: 80,337

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 in 2026, the price cut percentage has been lower year over year. 

In my 2026 home-price forecast, I had a negative 0.62% call for the year nationally. However, mortgage rates went lower than I thought they would at the start of this year, and when the FHFA’s announced the purchase of mortgage-backed securities, it pushed mortgage spreads lower than I expected earlier in the year. I believed we would get toward the 1.80% level later in 2026. Not much is happening with prices this year, which is exactly what housing needs: another year of wage growth growing faster than prices. 

The price-cut percentage for last week:

• 2026: 36.06%
• 2025: 37%

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 the 10-year yield was really moving more on Iran war headlines than on the jobs data, and it dropped about 10 basis points. Even with a good ADP report, decent job openings, low jobless claims and a big beat on jobs Friday, the bond market is on pins and needles about any kind of deal to end the Iran conflict.

Mortgage rates moved from a high of 6.56% down to 6.42% last week according to Mortgage News Daily, and 6.49% according to the Polly rate lock data. It’s the weekend, so we shall see if we get any meaningful news on the conflict.

Mortgage spreads

Mortgage spreads remain a positive story for housing in 2026, as mortgage rates would have easily been over 7% in 2023 and 2024, and close to 7% in 2025, given the current 10-year yield level and the worst spread levels back then. Spreads have improved over the last few weeks, almost getting back to the lows in 2026, which is a multiyear low at that.

Historically, mortgage spreads have ranged from 1.60% to 1.80%. Last week, spreads closed at 1.96%, up from from 1.93% 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 7.57% today, not 6.42%.
• If we had the worst levels of 2024, mortgage rates would be 7.19% today.
• If we had the worst levels of 2025, mortgage rates would be 7.00% today.

The week ahead: Iran, inflation week, existing home sales, retail sales and Fed speeches

We have a lot of data coming out this week, including existing home sales, so get ready for another eventful week of headlines. Also, make sure to keep an eye out for speeches by Fed governors and how the market reacts to them, since we are in Civil War mode at the Federal Reserve between those who want rate cuts as soon as possible and the hawks, who don’t want any rate cuts and are even talking about rate hikes. Once again, the market will be on high alert for any update about the Iran conflict.