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%

Two
jobs
Fridays
ago,
I
discussed
that
if
the
Godzilla

tariffs
weren’t
part
of
the
equation,
the
10-year
yield
should
be
trading
at
4.35%.
Consumption
in
the
economy
is
still
holding
up
and
the
labor
triggers
that
I
would
need
to
see
to
talk
more
about
a
recession
haven’t
happened
yet. After
another
jobs
week
which
shows
the
labor
market
not
breaking
yet,
the
fact
that
the
10-year
yield
is
near
4.35%
isn’t
a
shock
to
me. 

Now
the
question
is
what
the
economy
will
look
like
in
a
few
months.
This
is
why
President
Trump
is
talking
about
wanting
lower
rates.
Even
he
knows
that
we
can
see
economic
disruptions
with
the
trade
war
going
on,
especially
with
no
deals
in
place.
Last
week
on
Thursday
and
Friday
we
saw
economic
data
exceed
estimates,
causing
the
10-year
yield
to
rise
from
4.14%
to
4.31%,
pushing
mortgage
rates
higher.

Mortgage
spreads

Mortgage
spreads
have
been
elevated
since
2022,
but
have
improved
since
their
peak
in
2023.
However,
recent
market
volatility
has
made
the
spreads worse
since
the
lows
we
saw
earlier
this
year. 

If
the
spreads
were
as
bad
as
they
were
at
the
peak
of
2023,
mortgage
rates
would
currently
be
0.56%
%
higher.
Conversely,
if
the
spreads
returned
to
their
normal
range,
mortgage
rates
would
be
0.94%
to
1.14%
lower
than
today’s
level.
That
would
mean
sub-6
%
mortgage
rates
today. 

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

Purchase
application
data

Since
Feb.
5,
the
purchase
application
data
has
demonstrated
13
consecutive
weeks
of
positive
year-over-year
growth.
This
is
particularly
noteworthy
given
that
it
happened
at
the
end
of
April,
even
with
mortgage
rates
exceeding
6.64%
for
most
of
the
year.

Additionally,
despite
a
recent
increase
of
over
50
basis
points
in
mortgage
rates,
the
persistence
of
positive
year-over-year
growth
is
impressive.
However,
the
growth
rate
for
purchase
applications
has
significantly
slowed
and
is
approaching
a
flat
or
potentially
negative
growth
year
over
year.
We
will
observe
the
upcoming
data
release
to
determine
if
this
positive
streak
continues.
The
chart
below
illustrates
that
it
has
been
a
favorable
year
for
purchase
application
data
on
a
year-over-year
basis.

Here
is
the
weekly
data
for
2025:

• 7
  positive
  readings
• 6
  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.
Last
week,
pending
home
sales
from
the

National
Association
of
Realtors
(NAR)
did
show
a
big
beat
of
estimates
and
our
weekly
data
tends
to
be
ahead
of
the
NAR
reports.
Higher
rates
have
been
cooling
down
the
purchase
application
data
recently;
the
growth
rate
is
cooling.
However,
for
demand
to
hold
up
this
well
with
elevated
rates
just
shows
that
if
we
can
get
just
toward
6%
and
stay
there,
we
can
grow
sales,
which
has
been
my
theme
since
early
2023. 

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

• 2025:
  402,366
• 2024:
  397,305
• 2023:
  368,490

Weekly
housing
inventory
data

The
most
encouraging
development
in
the
housing
market
for
2024
and
2025
is
the
increase
in

inventory
—
it’s
essential
for
the
housing
market
to
operate
more
effectively
in
the
long
term.
We
have
had
a
solid
bounce-back
in
inventory
growth
from
the
Easter
Holiday.

• Weekly
  inventory
  change
  (April
  25-May
  3):
  Inventory
  rose
  from
  
  728,755
  to
  
  744,225
• The
  same
  week
  last
  year
  (April
  26-May
  4):
  Inventory
  rose
  from
  
  556,291
  to
  
  559,961
• The
  all-time
  inventory
  bottom
  was
  in
  2022
  at
  
  240,497
• The
  inventory
  peak
  for
  2025
  is
  
  744,225
• For
  some
  context,
  active
  listings
  for
  the
  same
  week
  in
  2015
  were
  
  1,081,867

New
listings
data

Another
positive
story
for
2025
is
that
new
listings
data
is
growing
and
I
am
very
close
to
getting
my
minimum
call
of
80,000
during
the
peak
seasonal
period.
We
have
another
nice
snap
back
here
from
the
Easter
holiday.

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
we
see
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:
  78,078
• 2024:
  70,943
• 2023:
  57,862

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
reinforces
the
validity
of
my
conservative
growth
forecast
for
2025.
Below
is
a
summary
of
the
price
cuts
from
previous
weeks
over
the
last
few
years:

• 2025:
  36.5%
• 2024:
  33%
• 2023:
  29%

The
week
ahead:
Global
PMI,
bond
auctions
and
Fed
speeches 

This
week,
we
will
get
the
global
PMI
data
and
bond
auctions.
On
Friday,
several
Fed
presidents
will
speak,
providing
valuable
insights.
This
is
an
exciting
time
as
they
each
bring
unique
perspectives
on
managing
the
trade
war,
informed
by
the
feedback
they
receive
from
businesses
in
their
respective
districts.
Also,
on
Thursday,
we
have
jobless
claims
data,
which
last
week
showed
a
big
spike
related
to
two
states.

Also,
we
will
see
if
the
purchase
application
data
can
continue
its
13-week
winning
streak
of
positive
year-over-year
data.
This
has
been
the
most
surprising
housing
data
line
for
me
in
2025,
as
mortgage
rates
have
remained
elevated.