Mortgage purchase application details
Mortgage purchase application data is a forward-looking indicator as it typically takes about 30 to 90 days for purchasing apps to lead to home sales. In some cases it may even be longer, as most sellers are homebuyers and it depends on how long it takes to sell and buy their next home.
The key for purchasing apps is to collectively have positive week-over-week and year-over-year growth data, which we’ve seen over the last 19 weeks. We are now at a multi-year high through 2026.
- 11 positive prints from week to week
- 8 negative prints from week to week
- 19 weeks of double-digit year-over-year growth
Last week we had 19% year-over-year growth and app purchases at a multi-year high. I’m still surprised by the double-digit year-over-year growth, as annual compilations are much harder now than earlier in the year.
Below you will find the data for the entire year. Earlier this year, when mortgage rates were above 6.64%, we didn’t really have much positive week-on-week data. But even at rates above 6.64%, the data held up better than in previous years.
- 23 positive measurements
- 19 negative measurements
- 6 flat prints
- 45 consecutive weeks of positive year-over-year data
- 32 consecutive weeks of double-digit growth, year after year
Total weekly pending home sales
Our aggregate weekly rolling home sales data is indicative of 30 to 60 days, and last week we hit a four-year peak in demand. If mortgage rates remain around 6% in early 2026, it looks encouraging for sales growth in 2026. Here are the weekly pending home sales for the past four years:
2025: 309,719
2024: 303,849
2023: 275,022
2022: 277,102
Mortgage interest rates, spreads and the 10-year interest rate
In my forecast for 2025 I expected the following margins:
- Mortgage interest between 5.75% and 7.25%
- The 10-year interest rate fluctuates between 3.80% and 4.70%
Ten-year interest rates and mortgage rates have been near annual lows for several months. Even with the Fed meeting behind us and the third rate cut set for 2025, it has been difficult to get below 4% of the 10-year rate, which seems right to me. As long as we have a neutral policy on the books, the 10-year yield should not fall below 3.80%, unless the labor market is breaking or the bond market believes in an economic growth scare, such as in 2023 and 2024.
Mortgage rates hovered between 6.36% and 6.32% last week, according to Mortgage News Daily. Pollywhich tracks locked loans across all credit profiles, showed an interest rate of 6.34%.
Mortgage spreads
For 2025, I was looking for an improvement in mortgage spreads of 0.27%-0.41%, with an average of 2.54% for 2024, and this week the data was better than that, with an improvement of 0.48%. Historically, mortgage spreads have fluctuated between 1.60% and 1.80%. If current spreads were as bad as they were at the 2023 high, mortgage rates would be roughly 1.04% higher, at 7.36%. Conversely, if spreads return to their normal range, mortgage rates would be 0.46% to 0.26% lower than current levels, meaning they would be 5.86% to 6.06%.
Weekly home inventory data
The housing stock is now showing the traditional seasonal decline, but this year we have seen good growth. At one point we had inventory growth of 33% over last year, but that dropped to 13.69% last week. In mid-June I noticed that the housing market was shifting and that it would take three to six months for people to realize this was happening because they were working with very old data.
- Weekly Inventory Change (December 5-12): Inventory has decreased from 795,212 Unpleasant 775,339
- Same week last year (December 6 – December 13): Stock fell from 689,964 Unpleasant 682,152
New advertising data
New listings are also experiencing the traditional seasonal decline. I was very excited earlier this year when my prediction for weekly new listings – above 80,000 – finally came true. But my excitement was short-lived when new listings data peaked in late May and then began a downward trend. Regardless, 2025 was a huge improvement over 2023, which had the lowest new listings data ever, followed by 2024. 2025 appears to be the third lowest in history.
To give you some perspective, during the years of the housing bubble, the number of new homes crashed between 250,000 and 400,000 per week for years. Here is the new advertising data from the past two years:
Price reduction percentage
In an average year, about a third of homes experience price reductions, which underlines the dynamic nature of the housing market. Many homeowners are adjusting their sales prices as inventory levels rise and mortgage rates remain high.
For my Price prediction 2025I expected a modest increase in house prices of 1.77% and it looks like we will end the year at that level. The seasonal price cut rate slump has arrived as we prepare for 2026. Last week’s price cut rates over the past two years:
The week ahead: Lots of data coming
Lots of data coming out this week, including builder confidence, the jobs report, inflation, retail sales, bond auctions and unemployment claims. We are about to break a key level with the 10-year yield that could push mortgage rates up slightly. So it will be interesting to see how the bond market, mortgage rates and spreads behave with all the upcoming data.
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