The housing market has recently witnessed a noteworthy trend: mortgage purchase applications for existing homes have sustained an extraordinary 22-week period of annual growth. This remarkable streak includes nine consecutive weeks where growth exceeded double digits, a development that, under normal circumstances, would command widespread attention. However, due to various market complexities, this significant data point has largely been overlooked. Understanding the nuances behind this consistent expansion in purchase applications is crucial for grasping the current state and future trajectory of the housing sector.
It is worth noting that holiday periods, such as the Fourth of July, can introduce temporary volatility into weekly data sets. Similar to the disruptions observed around Christmas and New Year's, these holidays can skew short-term readings. Despite such transient fluctuations, the sustained growth in purchase applications offers valuable insights, as this data typically foreshadows actual sales activity by 30 to 90 days.
Historically, the volume of purchase applications has closely mirrored the trajectory of existing home sales. However, the current landscape presents a unique scenario. While current application levels are still modest when compared to benchmarks from a decade or two ago, the consistent double-digit annual increases indicate a burgeoning momentum. For this growth to translate into a substantial resurgence in existing home sales, it would necessitate several more months of such robust expansion. This upward trend is further corroborated by weekly pending sales data, reinforcing the narrative of a market gradually gaining strength.
Several factors contribute to this persistent growth. Compared to the preceding year, 2024 has seen generally lower mortgage rates, albeit with some fluctuations. Furthermore, there has been a noticeable increase in new housing listings. Given that a significant proportion of home sellers are also prospective homebuyers, this dynamic directly impacts the volume of purchase applications. Even with mortgage rates hovering above 6.64%, a threshold that has historically been considered necessary for substantial market improvement, the purchase application growth has continued unabated. This suggests an underlying resilience and demand within the market.
Recent data indicates a flat week-over-week growth in purchase applications, with a mere 0.1% increase. However, the unadjusted figures revealed a more substantial 10% weekly rise, though this raw data is typically not factored into official assessments. More significantly, the year-over-year growth maintained a strong 16%. Analyzing the weekly purchase application data for 2025 reveals 11 positive readings, 9 negative readings, and 5 flat prints, culminating in 22 consecutive weeks of positive year-over-year data, with 9 of those weeks exhibiting double-digit growth.
Forecasts for 2025 initially projected mortgage rates to range between 5.75% and 7.25%, with the 10-year Treasury yield fluctuating between 3.80% and 4.70%. Recent labor market reports have presented a mixed picture. While job openings and jobless claims showed positive signs, the ADP report indicated a decline in jobs. The Jobs Friday report, released on a Thursday, surpassed estimates primarily due to an increase in government jobs, suggesting that without this seasonal quirk, overall job creation would have been considerably lower. Following this report, the 10-year yield rebounded towards the critical 4.35% mark, with mortgage rates settling around 6.75% after briefly dipping to 6.67%.
Mortgage spreads, which had been elevated since 2022, have shown improvement from their 2023 peak. Despite some volatility earlier in the year linked to trade tariffs, the market has stabilized, and spreads have narrowed. Had spreads remained at their 2023 highs, mortgage rates would be nearly 0.71% higher. Conversely, a return to historical normal ranges (1.60% to 1.80%) would see rates drop by 0.59% to 0.79%. The current stability in spreads, coinciding with stock markets reaching new highs, indicates a more favorable lending environment.
The holiday period significantly impacted new listing data, causing a temporary dip below last year's figures. However, this is largely seen as a transient effect, with expectations for a rebound. Nonetheless, the market is now entering its seasonal decline phase for the remainder of the year. Weekly new listings for 2025 were recorded at 69,700, slightly below the 71,159 seen in 2024 for the same period. Similarly, weekly pending home sales also experienced a notable decline due to the holiday, with 66,967 sales in 2025 compared to 67,986 in 2024. In contrast, total pending home sales, being less susceptible to weekly fluctuations, continued their year-over-year growth, reaching 396,652 in 2025 versus 381,054 in 2024. Housing inventory has shown healthy week-to-week growth, rising from 831,110 to 853,180. This marks a significant improvement from the previous year, where inventory increased from 645,713 to 652,518 during the same period, positioning housing inventory as one of the most positive aspects of the 2025 market. Price reduction percentages, at 40.6% for 2025 compared to 38% in 2024, also reflect the holiday impact on market adjustments. Before the recent holiday, housing data exhibited a degree of stability and resilience, highlighting how external events can temporarily distort fresh weekly readings.
Looking ahead, market participants are closely monitoring renewed discussions around potential trade tariffs. Recent announcements suggest plans to impose 10% tariffs on approximately 100 countries, which could significantly impact global markets and influence the Federal Reserve's monetary policy decisions. Key economic indicators, including bond auctions, speeches by Federal Reserve officials, and data on used car prices, will be under scrutiny. Additionally, weekly jobless claims data remains a crucial labor market barometer ahead of the upcoming Fed meeting. If trade tensions escalate or significant tax legislation is introduced, these factors are likely to dominate market sentiment throughout the summer months.
