Did housing stock peak in August this year?

Weekly home inventory data

In recent years, the seasonal peak in our active listings has occurred in October or November, especially when mortgage rates began to rise late in the year. However, in mid-June I noticed some shifts in the housing market, after which mortgage rates fell below 6.64% – a level that has generally led to stronger demand.

If we were to see the seasonal peak on August 1, 2025, it would be much earlier than in previous years and resemble what we used to see in the pre-COVID-19 era.

Last week the stock fell.

• Weekly Inventory Change (October 3 – October 10): Inventory decreased from 863,972 Unpleasant 856,870
• Same week last year (October 4 – October 11): Stock fell from 734,257 Unpleasant 732,378

Regardless of how inventory ends up in 2025, this has been the most positive story for housing as supply grew, price growth cooled, and we have a much healthier housing market. On this episode of the HousingWire Daily podcast, I looked at the possibility that adjustable rate mortgages (ARMs) would lead us to a sub-6% mortgage market by 2026.

New advertising data

New listings data peaked the week of May 23 this year, reaching a total of 83,143 listings. Since then, this number has gradually decreased. This is very early in the year to see the seasonal spike in new listings.

However, I was excited to see stability in this data line recently. Most home sellers are also buyers, so it’s encouraging to see this stability this late in the year. 2025 will still be one of the lowest years for new listings 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:

• 2025: 64,770
• 2024: 62,879

Price reduction percentage

In an average year, about a third of homes experience price drops before they are sold. Homeowners often lower their sales prices as inventory rises and mortgage rates remain high. That is why the percentage of price reductions in 2025 will be higher than last year. This has been another great year for residential construction as the market has become much more buyer friendly in 2025.

For my Price prediction 2025I expected a modest increase in house prices of about 1.77%. This indicates that negative house prices are likely to return in 2025. In 2024, my prediction of a 2.33% increase proved inaccurate, especially as rates fell to around 6% and demand improved in the second half of the year. As a result, house prices rose by 4% in 2024. The increase in price cuts this year, compared to last year, reinforces my cautious growth forecast for 2025. This growth rate has also cooled recently.

These are the percentages of homes that have been reduced in price in recent years:

10-year interest rate and mortgage 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%

Well, Friday came and Trump the trade war escalatedbringing the ten-year interest rate closer to 4% and lowering mortgage rates. This is mainly because stock prices have fallen and money is flowing into the bond market amid fears that things could get even worse on Monday morning. This is no surprise, as Godzilla rates also pushed 10-year yields to 4% in April.

However, labor data is much weaker now than at the start of the year. We’re close to the bottom of my bond market forecast, so it’s really going to take more weak economic data and market drama for interest rates and mortgage rates to fall from here. Mortgage rates ended the week at 6.32% on Mortgage News Daily, and Polly Rate Lock data ended the week at 6.38%.

Mortgage spreads

This year has seen favorable mortgage prices, mainly due to improvements in mortgage spreads compared to 2023 and 2024. As long as there are no significant market disruptions and the Federal Reserve interest rates continue to drop towards neutral, this trend is expected to continue.

Historically, mortgage spreads have fluctuated between 1.60% and 1.80%. If current spreads were as bad as they were at the 2023 peak, mortgage rates would be 0.95% higher. Conversely, if spreads returned to their normal range, mortgage rates would be 0.55% to 0.35% lower than current levels. The best levels of normal spreads would mean mortgage rates are now at 5.79% to 5.99%.

Buy application data

We tested the housing data for ten weeks with rates below 6.64%, which has been the key level in the past. So far the trend is positive. This week we saw a drop of -1% in the week-to-week data, but it rose 14% year-on-year. This is seven positive weeks and three negative weeks week-on-week, with ten consecutive weeks of double-digit year-over-year growth. But week-to-week data has slowed lately.

Here are the weekly data for 2025 so far:

• 19 positive measurements
• 14 negative measurements
• 6 flat prints
• 36 consecutive weeks of positive year-over-year data
• 23 consecutive weeks of double-digit growth, year after year

Weekly ongoing sales

Our weekly pending home sales provide a week-by-week overview of the data, although pending sales can be affected by holidays and short-term fluctuations. On this data line we are still showing slight year-over-year growth. Pending sales data typically appears in the existing home sales report 30 to 60 days after the sale is completed. Last week marked our highest weekly home sales data for this calendar year since the 2022 market crash.

Weekly open sales for the past week:

• 2025: 63,883
• 2024: 61,238

Coming up next week: the trade war, market drama and Fed speeches

Things could get very intense next week if the situation regarding Chinese tariffs changes continues to escalateas both the stock and bond markets experience significant fluctuations.

Normally we would have several economic reports this week; however, inflation week has been postponed due to the government shutdown. However, the White House has ordered it BLS workers must return and ensure that the Consumer Price Index (CPI) inflation report is released on October 24. While no housing projects will be reported this week, we do have builder confidence data.

Until the government shutdown is resolved, we won’t have much economic data, but we can expect significant market drama. In addition, many members of the Federal Reserve, including Fed Chairman Powell, will be speaking in the coming week. Buckle up, folks – this could be a week where the headlines take a wild turn.