Has spring housing demand already started?

[ad_1]

chart visualization

Table of Contents

10-year yield and mortgage rates

My 2025 forecast included:

  • A range for mortgage rates between 7.25%-5.75%
  • A range for the 10-year yield between 4.70%-3.80%

Recently, the 10-year yield has been hovering around a key level of 4.60%, showing little meaningful movement either way. We are near the top of the 10-year yield and mortgage rates forecast for 2025. As we enter jobs week, I wrote about the significance of labor data for mortgage rates in 2025 and highlighted which data points deserve more attention in this article.

Mortgage rates did briefly stay above my 7.25% level in 2024, but for the most part, the range stuck for most of the year because mortgage spreads improved.

chart visualization

Mortgage spreads

If mortgage spreads did not improve in 2024, we would have already lost some construction workers due to rising rates. However, we should be thankful that spreads improved last year and remain favorable.

If we apply the worst spread levels from 2023 to today’s rates, we would see an increase of an additional 0.77% on the mortgage rate, bringing us close to 8%. Conversely, if mortgage spreads were typical, we could expect mortgage rates to be approximately 0.76% to 0.86% lower today.

chart visualization

Weekly housing inventory data

We are heading into 2025, and historically, housing inventory tends to bottom in March and April, at least following the COVID pandemic. In the last decade before that, we would see the lowest inventory in late January or February and then inventory would start rising. Last year’s lowest point for inventory was in February, so we will monitor this closely.

I don’t want inventory to reach its lowest point in April, as that would be too late in the year. 

  • Weekly inventory change (Dec. 27-Jan. 3): Inventory fell from 650,992 to 635,432
  • The same week last year (Dec. 29-Jan. 5): Inventory fell from 513,240 to 499,143 
  • The all-time inventory bottom was in 2022 at 240,497
  • The inventory peak for 2024 was 739,434
  • For some context, active listings for the same week in 2015 were 959,028
chart visualization

New listings

I am very excited about the new listings data this year. Last year, I anticipated growth, and while we did see an increase, it didn’t reach my target levels. Still, I was happy to see growth.

It’s important to remember that most sellers are also buyers and the last two years presented the lowest new listings data in history. This means we can look forward to 2025 as a year when things return to normal, and we should expect to see some weeks where new listings data hits between 80,000-110,000 in the peak season.

Last week was a holiday week, so new listings data dived; things will return to normal soon. This also explains why people shouldn’t take the last two weeks of the year with purchase application data seriously, either. 

New listings data for last week over the past few years:

  • 2025: 18,484
  • 2024: 35,698
  • 2023: 31,995
chart visualization

Price-cut percentage

In an average year, it’s common for about one-third of all homes to see a price cut, reflecting the usual dynamics of the housing market. Rising mortgage rates often lead to an increase in the percentage of homes, reducing their prices. On the flip side, when mortgage rates drop, we typically see a rise in demand, which often stabilizes or even boosts home prices, as we’ve recently experienced with falling rates.

We are experiencing a seasonal decline in this data line, and we will track this closely for any changes in the data, especially as rates trend higher or lower

  • 2025: 34.9%
  • 2024: 33%
  • 2023: 36%
chart visualization

The week ahead: Jobs week, bond auctions and Fed speeches

It’s going to be an intense week ahead! We have jobs week, which includes all four jobs reports, plus bond auctions, Global PMI data, the release of the Fed minutes and speeches from some hawkish Fed presidents. Considering we are at a key level in the bond market, this week could get wild. As always, we’ll watch for jobless claims data every Thursday. Last week, it fell once again.

chart visualization

Buckle up this week; it’s the first week of 2025, and it’s shaping up to be another year of drama.

[ad_2]

Share this content:

I am a passionate blogger with extensive experience in web design. As a seasoned YouTube SEO expert, I have helped numerous creators optimize their content for maximum visibility.

Leave a Comment