Final week, the housing knowledge demonstrated stability whilst we strategy potential tariff enforcements. Mortgage charges have remained largely unchanged, and there was a slight lower in housing stock. Moreover, pending contracts mirrored a modest year-over-year decline, whereas buy software knowledge remained flat from week to week. At this juncture, it’s necessary to observe whether or not the numerous tariff plans introduced by the Trump administration can be enacted, one thing I mentioned right here.
10-year yield and mortgage charges
My 2025 forecast contains:
- A spread for mortgage charges between 7.25%-5.75%
- A spread for the 10-year yield between 4.70%-3.80%
The ten-year yield closed the week at 4.54%. Regardless of information of bigger tariffs looming, we solely skilled some gentle volatility on Friday because of confusion concerning the tariffs. The ten-year yield did rise from 4.51% to roughly 4.58% earlier than falling a couple of foundation factors towards the shut of the day. In actuality, mortgage charges didn’t change a lot over the previous week even with all of the information headlines.
Mortgage spreads
A real blessing during the last yr is that mortgage spreads improved and nonetheless are significantly better this week than the height mortgage unfold of 2023. If we had the mortgage spreads of 2023, mortgage charges could be nearer to eight% in the present day somewhat than close to 7%.
If we had been to use the worst unfold ranges from 2023 to in the present day’s mortgage charges, we might see a rise of an extra 0.72%. This might result in headlines questioning whether or not mortgage charges may surpass 8%. Thankfully, that’s not the case. In reality, if mortgage spreads had been at their typical ranges, we might see mortgage charges roughly 0.81% to 0.94% decrease than present charges. This might convey mortgage charges down close to 6%, which might undoubtedly drive a robust restoration in dwelling gross sales.
In my 2025 forecast, I predicted that common spreads would enhance to between 0.27% and 0.41%, a optimistic discount from the two.54% common in 2024. We’re on monitor to realize this goal unfold vary and if we are able to obtain that 0.27%-0.41% enchancment in spreads, it is going to be useful when the 10-year yield falls. The important thing factor to recollect is that mortgage charges could be quite a bit worse if the spreads didn’t enhance in 2024 and now in 2025.
Buy software knowledge
As we start the yr, the acquisition software knowledge has proven a light optimistic development, regardless of elevated mortgage charges. Right here’s a abstract of the current knowledge:
- 2 optimistic readings
- 1 flat studying
Final week, the weekly knowledge was flat, however there was a decline of 4% yr over yr. Traditionally, when mortgage charges are excessive, the acquisition software knowledge tends to replicate unfavorable developments. As an example, final yr, the acquisition software knowledge confirmed 14 unfavorable readings, 2 optimistic readings, and a couple of flat readings when mortgage charges ranged between 6.75% and seven.50%.
We are going to hold a detailed eye on the info in February and we can be discussing this and different housing financial matters at our massive Housing Financial Summit Feb. 26 in Dallas.
Weekly pending gross sales
The newest weekly pending contract knowledge from Altos Analysis affords worthwhile insights into present developments in housing demand. This dataset has proven a notable enchancment for the reason that summer time of 2024, primarily fueled by a lower in mortgage charges, making home-buying extra inexpensive for a lot of shoppers. In comparison with the identical timeframe in 2022 and 2023, the info displays a stronger housing market during the last 12 weeks of 2024.
Nevertheless, I wish to notice that in current weeks, we now have seen unfavorable year-over-year progress when evaluating our present figures final yr. That is nothing too massive, however it’s a slight decline. Nevertheless, mortgage charges rising from 6% to 7.25% did zap among the demand from the housing market.
We’re nonetheless displaying increased progress versus 2023 ranges. This development warrants cautious monitoring, particularly in February.
Weekly pending contracts for the previous week over the previous a number of years:
- 2025: 282,172
- 2024: 287,779
- 2023: 271,842
Weekly housing stock knowledge
One of the best story for me in 2024 was stock progress as we had been working our method again to regular. That story has continued in 2025, although we noticed a slight decline in housing stock this week. That is very regular, and we’ll see the seasonal backside quickly after which the normal seasonal improve for spring.
- Weekly stock change (Jan. 24-Jan. 31): Stock fell from 636,580 to 634,979
- The identical week final yr (Jan. 26 -Feb. 2): Stock fell from 503,192 to 497,347
- The all-time stock backside was in 2022 at 240,497
- The stock peak for 2024 was 739,434
- For some context, energetic listings for a similar week in 2015 had been 936,263
New listings knowledge
Our new itemizing knowledge from Altos Analysis displays houses that come to the market with out a right away contract, offering us with a real-time view of any promoting strain out there. Over the previous 5 years, we now have seen the bottom exercise ranges in historical past. This yr, we should always get to common new listings knowledge above 80,000 per week throughout the peak seasonal months of Might, June and July. I made that decision final yr however fell quick by about 5,000 per week.
Notice: throughout the housing bubble crash years, this knowledge line was operating between 250,000-400,000 per week. The brand new itemizing knowledge for final week during the last a number of years:
- 2025: 48,886
- 2024: 44,162
- 2023: 42,843
Worth-cut share
In a median yr, it’s typical for about one-third of all houses to expertise a worth reduce, which displays the standard dynamics of the housing market. Final yr, I had a low forecast of solely 2.33% nominal worth progress, which turned out to be too low. For 2025, I’m forecasting progress of 1.77% this yr, indicating one other yr of unfavorable actual home-price progress. Should you study the info, it reveals that the proportion of worth cuts is already forming a backside. This development is because of a mixture of upper stock and elevated rates of interest.
Worth reduce percentages for final week over the earlier a number of years:
- 2025: 33.09%
- 2024: 31%
- 2023: 33%
The week forward: Buckle up, it’s tariff and jobs week!
We have now a busy week forward! First, we’ll discover out what tariffs are in place and whether or not they are going to be enforced or not. I recorded an episode of the HousingWire Every day podcast on Friday that may air on Monday, discussing this subject.
Extra importantly, it’s jobs week! We have now 4 studies popping out, culminating within the important Jobs Friday report. Final week, we acquired knowledge on jobless claims, and it confirmed enchancment.
This week could also be rather more unstable in comparison with final week. Simply bear in mind to disregard the noise till you see one thing in writing or in an financial report. We can be right here day-after-day this week to assist make sense of all of it.
