Demand for housing now reflects a positive trend

Demand for housing started to pick up more than three months ago and has stabilized the housing market. One reason many people are behind on home data is that they rely on outdated reports that are three to six months old. This is why it’s critical to track weekly live housing data – while understanding that weekly data can be highly volatile, especially around national holidays like Columbus Day, which result in a long weekend.

Today I want to focus on showing the data showing that the housing market stabilized in mid-June and how the decline in mortgage rates below 6.64% has changed the specific dynamics in the housing economy, similar to what we have observed since late 2022 and mid-2024. Let’s look at the data!

Homebuilder confidence is rising

A few months ago I moved on CNBC to talk about how the new home sales market and home builders behave differently as mortgage rates move toward 6% once they fall below 6.64%

Weeks later I went back on CNBC to talk about the report on new home sales at a three-year high – and how you don’t need a mortgage rate of 3%, 4% or 5% to get things going, just moving towards 6% and holding that could work for the homebuilders.

But what about the small builders – those who don’t have access to large balance sheets and higher profit margins to pay the interest. Last week we received an update on the confidence of the builders, and that was also a positive surprise. Even small builders, now for the fourth time since 2022, have seen growth in their six-month outlook as mortgage rates move toward 6%.

New home sales recently hit a three-year high. I’m very skeptical about this print because month-to-month new home sales data can be extremely wild, so I expect revisions, but we certainly saw growth in the latest new home sales report, which has shocked so many market participants. If you look at the full new home sales report, new home sales are up, prices are up, and inventory is down.

Home inventory for existing homes

Housing inventory was the best story for the housing market in 2025, but as mortgage rates fell, demand increased only slightly, and this cooled inventory growth so much that it halved in percentage terms by 2025.

This was evident from our home inventory data 33% the year-over-year growth earlier this year and now it has happened 16.24%. I identified this shift in mid-June, and now that we’re in mid-October with rates near the 2025 low, this seals the deal for 2025. Unless there’s some crazy market event in the next four to six weeks, we can expect the seasonal decline in housing inventory soon and start gearing up for 2026. I expected we would have seen a new high in inventory recently, but that call has been not right yet and I’m running out of time. reject before the season.

In recent years, our housing stock typically peaks in October or November, but this year it looks like the peak will be in the first week of August. As mortgage rates fell, demand picked up and the dynamics between supply and demand changed. You would never have seen this coming unless you looked at the weekly housing data.

Last week the stock rose slightly.

• Weekly Inventory Change (October 10 – October 17): Inventory increased from 856,870 Unpleasant 859,419
• Same week last year (October 11 – October 18): Stock rose from 732,378 Unpleasant 739,401

Price reduction percentage

We also see that the price reduction rate has been stabilizing recently. From mid-June the growth rate cooled, and now we can easily see the stabilization in this data line, which is now below the 2022 level, where we saw prices drop noticeably in the second half of the year, which was not related to the traditional seasonality of prices.

New entries

Our new advertising data peaked on May 23 and then began a seasonal decline. I had hoped that we would stay between 80,000 and 100,000 during the peak seasonal months, just like we saw before the corona crisis, but that did not happen. Now the seasonal decline will take us back to a low before the seasonal surge next year.

I always remind everyone that this data line was running 250,000 to 400,000 per week for years during the housing bubble crash. Again, believe in people who have an economic model instead of doom porn. It’s October 2025, folks.

The one thing about weekly housing data is that it can be significantly affected by holiday weekends, such as Columbus Day. However, no holiday weekend can reverse a trend and this trend of ever-improving housing data has been going on for months – you just need to know where to look

Mortgage rates and demand

Mortgage interest rates are almost at their lowest level since the beginning of the year, with a ten-year interest rate of 4%. This is the third time this year that we have tried to break that crucial level in the bond market. The fact that we are having this discussion indicates that many who argued that higher interest rates were inevitable due to inflation, tariffs, federal debt, deficits, and the supply of government bonds have overlooked a fundamental principle: 65% to 75% of where 10-year rates and 30-year mortgage rates can go are still determined by Federal Reserve policy.

Moreover, employment data will always be important to a Federal Reserve operating under a dual mandate. I have spoken about this topic in this episode of the HousingWire Daily podcast and on Friday I wrote about what could take us to the bottom of my 2025 forecast – to interest rates of 5.75%. It has been difficult to get below 4% of the ten-year yield in 2025, but now it is knocking on the door.

What about the question? The trend in purchase requests has been generally positive year over year. However, it’s the week-to-week data that really matters. Since mortgage rates fell below 6.64% and approached 6%, we have had seven positive weeks and four negative weeks.

Additionally, there have been eleven consecutive weeks of double-digit year-over-year growth. Just last week we saw a 20% increase year-on-year. I would always like to see at least 12 to 14 weeks of positive week-to-week data to say it’s something material, leaving another 5 to 7 weeks to seal the deal in 2025.

Here are the weekly data for 2025 so far:

• 19 positive measurements
• 15 negative measurements
• 6 flat prints
• 37 consecutive weeks of positive year-over-year data
• 24 consecutive weeks of double-digit growth, year after year

Weekly open sales data

Our weekly ongoing sales data has consistently shown slight year-over-year growth since mid-May. However, this data may be affected by factors such as weekly holidays or a government shutdown, which may delay the shutdown. Typically, it takes about 30 to 60 days for these pending sales to appear in the Existing Home Sales Report.

Demand isn’t skyrocketing by any means, but it’s good enough to shift housing data, as you can see above. Again, if you don’t track housing data weekly with the above variables, you’ll be three to six months behind.

Conclusion

Overall, the housing market in 2025 is not as dire as some people suggest, especially given the challenges we have faced. If mortgage rates had remained above 7.25%, as some predicted, the situation would have been very different. However, lower mortgage rates have once again had a positive effect, similar to what we saw at the end of 2022 and mid-2024.

The main difference this year compared to last year is that mortgage rates rose around this time last year and ultimately exceeded 7%. Imagine the potential if we could maintain rates around 6% for an extended period of time, something we have not been able to do for years.

This week we have the existing home sales report, but not the new home sales report if the government is still closed. However, the government has told us that they will release the CPI inflation report on Friday – a week before the Federal Reserve meets.