10-year
yield
and
mortgage
rates

In
my

2025
forecast,
I
anticipated
the
following
ranges:

• Mortgage
  rates
  will
  be
  between
  5.75%
  and
  7.25%
• The
  10-year
  yield
  will
  fluctuate
  between
  3.80%
  and
  4.70%

Last
week,
we
observed
a
positive
trend,
as
the
10-year
yield
gradually
declined
from
a
high
of
4.43%
to
4.24%.
This
drop
has
also
contributed
to
a
slight
decrease
in
mortgage
rates.
While
mortgage
spreads
remain
elevated
compared
to
recent
figures
from
2025,
the
calm
action
last
week
is
a
relief
to
those
trying
to
navigate
this
wild
ride. 

It’s
important
to
note
that,
despite
some
softer
economic
data,
key
indicators
such
as
retail
sales,
durable
goods,
new
home
sales
and
labor
statistics
remain
steady.
This
resilience
suggests
that
the
harder
data
lines
haven’t
been
hit
by
the
trade
war
impacts
yet. 

As
we
navigate
the
complexities
of
2025,
we
are
addressing
the
balance
between
potential
declines
in
economic
data
and
the
upward
pressures
on
inflation
resulting
from
supply
shortages
and
rising
inflation
expectations
linked
to

tariffs. 

Ultimately,
market
trends
will
dictate
the
direction
of
bond
yields
and
mortgage
rates,
and
there
is
a
sense
of
optimism
that
better
news
regarding
the
trade
war
can
stabilize
the
markets.
We
can
better
respond
to
the
changing
landscape
by
staying
informed
on
how
the
markets
react
to
the
data
and
headlines.

Mortgage
spreads

Since
2022,
mortgage
spreads
have
been
consistently
elevated
above
historical
norms,
significantly
worsening
after
the

Silicon
Valley
Bank

crisis
in
2023.
It’s
clear
that
without
this
deterioration,
we
would
not
have
experienced
mortgage
rates

reaching
8%
that
year.
However,
starting
in
2024,
the
spread
improvement
effectively
helped
lower
mortgage
rates.

In
2025,
the
spreads
have
performed
better
and
improved
when
bond
yields
increased,
reducing
the
damage
of
higher
yields.
However,
recent
market
volatility
has
caused
the
spreads
to
widen,
which
has
also
prevented
mortgage
rates
from
being
a
bit
lower.

If
the
spreads
were
as
unfavorable
as
they
were
at
the
peak
of
2023,
mortgage
rates
would
currently
be
0.68%
higher.
Conversely,
if
the
spreads
returned
to
their
normal
range,
mortgage
rates
would
be
0.62%
to
0.82%
lower
than
today’s
level.

Historically,
mortgage
spreads
should
range
between
1.60%-1.80%. 

Purchase
application
data

Given
the
recent
rise
in
mortgage
rates,
I
expected
a
more
pronounced
decline
in
the
week-to-week
and
year-over-year
figures
for

purchase
applications.
As
illustrated
below,
the
market
was
affected
when
mortgage
rates
increased
from
6.54%
to
7.10%.
However,
the
decrease
was
less
than
I
had
anticipated.
We
shall
see
what
happens
this
week
now
that
rates
have
fallen
slightly. 

In
the
past
few
years,
the
forward-looking
housing
data
tends
to
improve
when
mortgage
rates
fall
from
6.64%
to
6%.
So,
to
have
purchase
application
data
still
positive
year
over
year
in
late
April,
with
mortgage
rates
trending
above
this
range
most
of
the
year,
is
an
encouraging
sign 

Here
is
the
weekly
data
for
2025:

• 7
  positive
  readings
• 5
  negative
  readings
• 3
  flat
  prints

Total
pending
sales

The
latest
weekly
total
pending
contract
data
from

Altos
offers
valuable
insights
into
current
trends
in
housing
demand.
Usually,
it
takes
mortgage
rates
to
trend
closer
to
6%
to
get
real
growth
in
housing.
The
data
has
been
showing
good
progress
with
elevated
rates,
but
the
recent
data
has
cooled
down.
While
our
total
pending
sales
are
slightly
positive
year
over
year,
our
weekly
data
has
shown
more
softness
that
I
would
attribute
to
higher
rates,
rather
than
from
the
Easter
holiday. 

Weekly
pending
sales
for
the
last
week
over
the
past
several
years:

• 2025:
  398,736
• 2024:
  398,097
• 2023:
  368,113

Weekly
housing
inventory
data

The
most
encouraging
development
in
the
housing
market
for
2024
and
2025
is
the
increase
in
inventory.
I
explained
the
reasons
behind
this
trend
in
an

article
on
Friday.
For
the
housing
market
to
operate
more
effectively
in
the
long
term,
it
was
essential
to
see
a
rise
in

inventory.
As
someone
skeptical
about
the
mortgage
rate
lockdown
theory,
I
believe
this
inventory
growth
is
a
positive
step
in
the
right
direction.
While
we
haven’t
fully
returned
to
normal
levels
yet,
we
are
progressing
toward
a
healthier
housing
market.

• Weekly
  inventory
  change
  (April
  18-April
  25):
  Inventory
  rose
  from
  
  719,400
  to
  
  731,989
• The
  same
  week
  last
  year
  (April
  19-April
  26):
  Inventory
  rose
  from
  
  542,651
  to
  
  556,291
• 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
  
  1,071,283

New
listings
data

The
new
listings
data
for
the
past
two
years
has
faced
challenges,
but
now
we
see
a
promising
shift.
Last
year,
I
projected
that
a
minimum
of
80,000
homes
would
be
listed
weekly
during
the
peak
seasonal
months,
and
while
I
was
off
by
5,000,
I
remain
hopeful
for
this
year.
We
are
on
the
brink
of
reaching
that
mark
again.
This
last
week
saw
a
noticeable
decline,
but
much
of
that
concerns
the
Easter
holiday.
The
fact
is,
70%-80%
of
home
sellers
are
homebuyers,
so
getting
the
new
listing
back
to
normal
levels
is
a
plus.

To
give
you
perspective,
during
the

years
of
the
housing
bubble
crash,
new
listings
were
soaring
between
250,000
and
400,000
per
week
for
many
years.
The
growth
in
new
listings
data
is
just
trying
to
return
to
normal,
where
the
seasonal
peaks
range
between
80,000
and
110,000
per
week.
The
national
new
listing
data
for
last
week
over
the
previous
several
years:

• 2025:
  69,891
• 2024:
  72,089
• 2023:
  63,236

Price-cut
percentage

In
a
typical
year,
about
one-third
of
homes
undergo
price
reductions,
highlighting
the
housing
market’s
dynamic
nature.
As
inventory
levels
increase
and
mortgage
rates
rise,
many
homeowners
are
making
adjustments
to
their
sale
prices.

In
my
2025
price
forecast,
I
anticipated
a
modest
increase
in
home
prices
of
around
1.77%.
This
means
yet
another
year
of
a
negative
real
home
price
forecast
for
2025.
What
can
make
my
forecast
wrong
is
a
drop
in
mortgage
rates
to
near 
6%,
which
can
make
my
forecast
too
low
again.
In
2024,
my
price
forecast
of
2.33%
was
incorrect
as
it
was
too
low,
and
I
lost
it
when
mortgage
rates
headed
toward
6% 

The
increase
in
price
cuts
this
year
compared
to
last
serves
as
a
valuable
insight,
reinforcing
the
validity
of
my
conservative
growth
forecast
for
2025.
Below,
you
will
find
a
summary
of
the
price
cuts
from
previous
weeks
over
the
last
few
years,
which
can
provide
further
context
for
our
evolving
market
conditions:

• 2025:
  35.6%
• 2024:
  33%
• 2023:
  29%

The
week
ahead:
Jobs
and
inflation
data,
plus
crazy
headlines

This
week
will
feature
a
substantial
amount
of
economic
data,
including
reports
on
jobs,
PCE
inflation,
home
price,
and
pending
home
sales.
I
know
how
closely
these
numbers
can
affect
our
daily
lives
and
decisions.
It’s
important
to
remember
that
at
any
moment,
a
headline
could
emerge
that
might
shift
the
bond
market,
for
better
or
for
worse.
Now,
the
jobless
claims
data
has
held
up
well
the
first
four
months
of
2025
but
certain
economists
and
some
Fed
Presidents
are
expecting
the
hard
data
to
get
worse
during
the
summer
months.
I
am
waiting
to
see
what
happens
to
the
jobless
claims
data.

Despite
the
lag
in
economic
data
and
some
indicators
showing
people
making
purchases
before
the
tariffs
are
imposed,
observing
how
the
bond
market
responds
to
each
report
and
headline
is
crucial.

See
all
of
the
previous
Housing
Market
Tracker
articles

here.