In
2022,
we
experienced
the
most
significant
decline
in
home
sales
ever
when
mortgage
rates
soared
from

3%
to
7%.
I’ve
observed
that
our
weekly

Housing
Market
Tracker
data
improves
when
mortgage
rates
move
from
6.64%
toward
6%.
We
don’t
need
mortgage
rates
back
in
the
3,
4
or
5%
to
see
a
meaningful
improvement
in
home
sales
— we
just
need
6%.
Here’s
why.

Purchase
application
data
in
2025

Now,

mortgage
rates
only
recently
broke
under
6.64%
but
the
purchase
application
data
has
had
a
positive
year
so
far.
What
gives?

Purchase
application
update
from
today’s
data: 

• Increased
  by
  2%
  week
  over
  week
• Increased
  by
  18%
  year
  over
  year 
• Achieved
  27
  consecutive
  weeks
  of
  positive
  year-over-year
  data 
• Recorded
  14
  consecutive
  weeks
  of
  double-digit
  year-over-year
  growth

Since
late
2022,
when
mortgage
rates
dropped
from
6.64%
to
6%,
there
has
been
a
significant
improvement
in
week-to-week
data.
So
far
this
year,
with
rates
staying
above
that
level
for
most
of
the
year,
we
have
seen
good
growth
compared
to
the
previous
year,
but
the
week-to-week
numbers
have
not
been
as
strong.
For
instance,
when
mortgage
rates
fell
toward
6%
last
year,
the
weekly
purchase
application
data
showed
an
18-week
trend
with
12
positive
weeks,
5
negative
weeks,
and
1
flat
week. 

In
contrast,
this
year,
before
rates
dropped
below
6.64%,
we
experienced
13
positive
weeks,
10
negative
weeks,
and
5
flat
weeks.
Overall,
the
week-to-week
data
last
year
was
more
favorable,
which
contributed
to
a
few
hundred
thousand
additional
home
sales.
However,
we
have
not
yet
seen
similar
growth
in
sales
this
year.

In
late
2022,
when
rates
approached
6%,
there
were
12
consecutive
weeks
of
positive
data,
which
resulted
in
one
of
the
largest
month-to-month
sales
figures
ever
recorded
—
almost
500,000
sales.
If
mortgage
rates
head
down
toward
6%
again,
we
will
get
to
test
it
for
the
third
time.

Homebuilder
confidence
also
gets
better
at
this
level

When
mortgage
rates
approach
6%,
we
typically
see
an
increase
in
homebuilder
data.
This
indicates
a
rise
in
their
confidence,
along
with
improvements
in
subcomponents
such
as
traffic
and
prospective
buyer
metrics.
As
you
can
see
in
the
chart
below,
we
have
had
times
when
all
the
data
moves
higher
and
then
fades
out
as
mortgage
rates
head
higher.

Homebuilders
treat
homes
as
a
commodity,
so
when
they
notice
the
advantages
of
mortgage
rates
around
6%,
their
surveys
usually
reflect
this
improvement,
leading
to
better
new
home
sales
data.
In
recent
years,
builders
have
managed
to
buy
down
mortgage
rates
to
below
6%,
which
is
why
their
home
sales
remain
at
levels
similar
to
those
in
2019.
A
significant
portion
of
this
rate
reduction
has
come
from
large
publicly
traded
builders,
whose
stock
performance
tends
to
improve
when
rates
drop
toward
6%.
However,
the
survey
mentioned
earlier
primarily
focuses
on
smaller
homebuilders.

Conclusion

I
analyze
charts
daily,
and
when
I
say
that
housing
demand
tends
to
improve
as
mortgage
rates
approach
6%,
I’m
not
just
throwing
out
random
numbers;
there’s
substantial
data
to
support
this
claim.
Since
late
2022,
mortgage
rates
have
not
experienced
a
consistent
drop
below
6%.
However,
the
new
home
sales
sector
is
currently
performing
at
levels
similar
to
2019,
which
was
in
a
market
with
sub-6%
mortgage
rates. 

If
existing
home
sales
were
able
to
take
advantage
of
similar
rates,
we
could
potentially
see
an
increase
of
up
to
half
a
million
additional
home
sales.
To
put
this
into
perspective,
existing
home
sales
in
2019
were
around
5
million,
whereas
we
have
been
hovering
around
4
million
for
the
past
few
years.
Therefore,
the
data
above
illustrates
why
a
6%
mortgage
rate
is
significant.