Housing inventory growth is starting to stall

Weekly housing inventory data

As I have emphasized in 2025 and 2024, inventory growth has been the best story in housing as we transition from a savagely unhealthy housing market to a normal one. Some people were surprised by last week’s existing home sales report, which showed the inventory of existing homes declined slightly. However, the NAR inventory data typically peaks in the summer, so if we don’t see much growth in that data line, it’s not shocking. Our Altos data provides fresh weekly inventory data that isn’t tied to a home in contract, giving us a real look at what is available for sale.

Last week, inventory growth slowed from the previous week’s growth rate. 

• Weekly inventory change (July 18-July 25): Inventory rose from 856,751 to 860,426
• The same week last year (July 19-July 26): Inventory rose from 668,358 to 677,246

New listings data

It appears that the peak week for new listings in 2025 was May 23, with a total of 83,143 listings. While I was pleased to hit my minimum weekly target of 80,000 new listings, I was disappointed that we didn’t see a few weeks with numbers between 80,000 and 100,000, which would be typical for a peak new listings period. But, I will celebrate the victories as they come, especially since we didn’t achieve this level at all in 2023 or 2024, which were the lowest new listing years in U.S. history.

To give you some perspective, during the years of the housing bubble crash, new listings were soaring between 250,000 and 400,000 per week for many years. Here’s last week’s new listings data over the past two years:

• 2025: 71,521
• 2024: 68,404

Price-cut percentage

In a typical year, approximately one-third of homes experience price reductions, highlighting the dynamic nature of the housing market. Homeowners adjust their sale prices as inventory levels rise and mortgage rates stay elevated. With more inventory and higher rates, our price-cut percentage data is higher than last year.

For my 2025 price forecast, I anticipated a modest increase in home prices of approximately 1.77%. This suggests that 2025 will likely see negative real home prices again. In 2024, my forecast of a 2.33% increase proved inaccurate, primarily because rates fell to around 6% and demand improved in the second half of the year. As a result, home prices increased by 4% in 2024. 

The rise in price reductions this year compared to last year reinforces my cautious growth forecast for 2025. Here are the percentages of homes that saw price reductions in the previous week in the last two years:

• 2025: 41.6%
• 2024: 39%

Purchase application data

Last week, the purchase application data showed a 3% week-to-week increase and a 22% year-over-year growth. This data line has confused pretty much everyone in America, so I decided to write an in-depth article about the growth we have seen this year.

The key point to remember about 2025 is that the increase in purchase application data has occurred despite mortgage rates not decreasing from 6.64% to 6%. This rate range has been the only one in which the data has improved beyond the typical seasonal demand curve observed in purchase application data.

Here is the weekly data for 2025:

• 13 positive readings
• 10 negative readings
• 5 flat prints
• 25 straight weeks of positive year-over-year data
• 12 consecutive weeks of double-digit growth year over year 

Weekly pending sales

Our weekly pending home sales provide a week-to-week glimpse into the data; however, this data line can also be impacted by holidays and any short-term shocks. We did see some growth week to week here, and it’s still slightly higher than last year. 

Weekly pending sales for last week:

• 2025: 70,609
• 2024: 64,765

Total pending sales

The latest total pending sales data from Altos provides valuable insights into current trends in housing demand. Last year, we observed a significant shift when mortgage rates decreased from 6.64% to around 6%. The year-over-year growth we are experiencing this year is mostly due to a low bar. Remember: comparable data for 2024 will be very low until November for the existing home sales report as well. 

Total pending sales: 

• 2025: 384, 307
• 2024: 382,429

10-year yield and mortgage rates

In my 2025 forecast, I anticipated the following ranges:

• Mortgage rates between 5.75% and 7.25%
• The 10-year yield fluctuating between 3.80% and 4.70%

Last week was another week of crazy headlines, with President Trump even visiting the renovations at the Federal Reserve with Fed Chair Jerome Powell, but not much went on with mortgage rates. The 10-year yield didn’t fluctuate too much, and mortgage rates started the week at 6.78% and ended the week at 6.81%. It’s jobs and Fed week coming up, so get ready for some market moves based on the data and the Fed’s announcements. 

Mortgage spreads

The improvement in mortgage spreads in 2025 has significantly helped the housing market, as demand could have been worse if mortgage spreads hadn’t improved. With more rate cuts and a dovish tone from the Fed, the spreads can slowly improve over time. I was looking for a 0.27%-0.41% improvement in 2025, working from a 2.54% average in 2024. So far, we haven’t hit that level, but we’ve gotten really close.

If the spreads were as bad as they were at the peak of 2023, mortgage rates would currently be 0.76 % higher. Conversely, if the spreads returned to their normal range, mortgage rates would be 0.54%-0.74% lower than today’s level. Historically, mortgage spreads have ranged between 1.60% and 1.80%.

The best levels of normal spreads would mean mortgage rates at 6.07% to 6.27% today, a notable difference.

The week ahead: It’s jobs week and Fed week!

There isn’t much more to add, except that we have a dramatic week ahead for economic news, with four labor reports and the upcoming Federal Reserve meeting. The recent jobless claims data has shown improvement, which is an important indicator that the Fed closely monitors.

The key points from the jobs report released on Friday will include private payroll data, which focuses on employment excluding government workers, as well as trends in wage growth. These two factors are important indicators that the Federal Reserve is monitoring. When it comes to the Fed, the language used, as well as the questions and answers in the presser, are critical.