One year ago, I talked about how we were about to see a positive shift in the housing market, and with our weekly Housing Market Tracker articles and podcast, I’ve made sure to explain what has really been going on in the housing market since then and what hasn’t.
As we sit here on a glorious weekend — with a U.S. soccer team victory and the prospect of finally having a real deal ending the conflict with Iran — it’s time to review why housing demand is up year over year, and inventory is down year over year, even with higher rates, the conflict in Iran, recession fears and all the other crazy headlines we have seen in 2026.
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.
Why has this index held up in 2026? Housing demand tends to improve when mortgage rates break under 6.64% and head toward 6%. Last year at this time, the 10-year yield was below 4.50%, and mortgage spreads were improving, so we were heading toward the 6.64% level and below.
For the most part this year, we have been under 6.64%, and we haven’t broken above 7% once. Affordability has slightly improved as wages have grown faster than home prices the last two years, so demand has a bit more footing to grow. If rates had just stayed under 6.25% I was looking for 237,000 more existing home sales this year, which would have easily happened if not for the conflict.
Weekly pending sales last week over the last two years:
- 2026: 75,856
- 2025: 72,039
Mortgage purchase application data
Purchase application data is a forward-looking indicator: growth here leads home sales by roughly 30-90 days. Last week was a shock to many, as we saw 7% week-to-week growth and 17% year-over-year growth. The reason for the shock is that mortgage rates are near yearly highs. I wrote this article to explain what is going on.
Why has this index performed better this year, considering we don’t have the extremely low bar that we did in 2025? Keep it simple: 2026 had the lowest mortgage rate curve at the start of the year since 2022, and affordability has gotten a tad better over the past two years. People don’t stop living; they get married, start a household, have kids and work their way up from low levels. This index has performed better than most people thought it would.
Here’s 2026 so far:
- 10 positive week-to-week prints
- 10 negative week-to-week prints
- 2 flat week-to-week prints
- 10 weeks of double-digit year-over-year growth
- 20 weeks of positive year-over-year growth
- 2 negative year-over-year prints
Personally, I would like to see more positive week-to-week data. When we get at least 12-14 weeks of positive weekly data, it amounts to a couple of hundred thousand more home sales. But with volume growth picking up a tad this year and considering rates went up, it’s not bad.
Housing inventory
Housing inventory is probably a bigger shock than the positive year-over-year demand. With so many headlines about the biggest seller market in history, etc., it was not in anyone’s playbook that inventory would be negative in June of 2026. What happened here?
Last year, inventory growth was very high; at one point, we had 33% year-over-year growth. As mortgage rates started to fall, that type of growth simply can’t be sustained with stronger demand, given that the first half of 2025 saw higher rates. Again, it’s my belief that housing data improved with mortgage rates under 6.64%, and since mortgage spreads were improving, rates were heading lower with the labor data we had last year.
It’s mid-June —one year since the housing market started to turn. Keep it simple: It’s all about the supply-and-demand equilibrium. When rates fell, demand picked up and since rates never exceeded 7%, inventory growth turned negative. Even in a state like Florida, inventory has been noticeably down year over year because it had been working from an elevated level.
- Weekly inventory change: (June 5-June 12): Inventory rose from 806,198 to 816,924
- Same week last year: (May 30-June 6): Inventory rose from 808,524 to 825,718
New listings
New listings data has always been key for the tracker and I want to keep this as simple as possible. The normal range for new listings data is typically between 80,000 and 100,000. Last year, new listings data reached my 80,000 forecast, but it didn’t show enough growth to get back to normal. Last week we had year-over-year growth, but not enough to reach the normal range and seasonality will be kicking in soon.
With new listings data still slightly below normal, there isn’t a lot of new supply coming on to the market, so we work with the supply and demand equilibrium from above. Never forget that most home sellers are also buyers and supply is a function of demand with housing economics.
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.
Here is last week’s new listings data for the past two years:
- 2026: 81,754
- 2025: 78,284
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’s.
In my 2026 home-price forecast, I had a negative 0.62% call for the year nationally. Mortgage rates fell more than I anticipated early in the year. Home-price growth really isn’t going anywhere this year, but the percentage of price cuts is now down 2% year over year. So, it will be harder for my forecast to be correct if rates go lower, demand picks up and inventory heads even lower year over year.
The price-cut percentage for last week:
- 2026: 37.93%
- 2025: 40%
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%
Every year, I set a range for where I believe the 10-year yield can go, then take the anticipated spread difference and go with a rate range. So far, mortgage rates have stayed within my forecast range all year and the 10-year yield only briefly broke above 4.60% at the height of the conflict with Iran. Both rates and the 10-year yield are off their highs. Again, the key to 2026 is that because of mortgage spreads, mortgage rates have rarely spent time above 6.64% and have never gotten above 7%.
Mortgage spreads
Mortgage spreads have been a positive story for the past few years. Because of the Silicon Valley Bank crisis and fear of recession, not a lot of people thought mortgage spreads would improve after 2023 — but I did.
In 2026, I have been looking for spreads to get back to normal at 1.80%, but I thought that would happen toward the end of the year, not early. However, in January President Trump directed Fannie Mae and Freddie Mac to buy $200 billion in mortgage backed securities and spreads returned to 1.81% early in the year. They have been very tame since then — as they should be, even with all the crazy events.
Historically, mortgage spreads have ranged from 1.60% to 1.80%. Last week, spreads closed at 1.99%, down from 2.01% 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 6.58%.
- 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.
The week ahead: Iran, Fed meeting and a ton of economic data
It’s going to be a monster week: we will have the market reaction to the hopefully signed Iran conflict deal, the Fed meeting with new Fed Chair Kevin Warsh and a ton of economic data: housing starts, retail sales,and pending home sales.
This week, the focus should be on how the bond market reacts to all the events above because we know that the housing market can shift positively with rates just heading toward 6%.