Key facts
- Mortgage rates have hit a yearly high, impacting housing demand.
- While year-over-year home sales remain positive, the growth rate is slowing.
- Pending home sales and purchase applications indicate a market slowdown.
- Mortgage spreads have improved, helping to keep rates lower than they otherwise would be.
- Housing inventory is showing slight year-over-year growth as mortgage rates increase.
- The upcoming week will be influenced by news on the Iran conflict, a Federal Reserve meeting, and an inflation report.
Mortgage rates have reached a yearly high, signaling a slowdown in housing demand despite still positive year-over-year sales figures. Historically, demand tends to wane when rates exceed 6.64% and approach 7%. This pattern has been observed since early 2023, with sales data fluctuating based on rate movements.
Weekly pending home sales data shows a slight year-over-year decline two weeks ago, followed by a marginal increase last week, indicating a cooling growth rate. Similarly, total pending home sales data reflects continued growth but at a decelerating pace.
Purchase application data experienced a seasonal increase week-to-week following the July 4th holiday, but year-over-year growth was minimal at 0.2%, reinforcing the trend of a slowing market. Future comparisons will be more challenging as rates were lower last year.
The 10-year Treasury yield has surpassed forecast ranges, influenced by geopolitical events like the Iran conflict. Mortgage spreads have improved significantly in 2026, which has been a key factor in keeping mortgage rates below 6.64% for much of the year, thereby supporting housing demand.
Housing inventory has seen a slight year-over-year increase as rates have risen, though new listings are experiencing a seasonal decline. The percentage of homes with price reductions remains lower than last year.
This week's market focus will be on developments related to the Iran conflict, the Federal Reserve's upcoming meeting, and a key inflation report.