Mortgage rates fell over the last three weeks, with the 10-year yield holding at key levels and reversing from a 5.35% top toward 4.82%. Demand stabilized during this period, though pending home sales data shows stabilization rather than growth from the slowdown that occurred when rates approached 7.60%.
Inventory declined noticeably last week. Inventory growth is running at 7.18% year over year, despite easier year-over-year comparisons. New listings remain in typical seasonal decline, though 2026 has posted over 80,000 new listings per week several times this year.
Mortgage spreads worsened to 2.27% last week from 2.23% the week prior, but remain near multiyear lows. Historically, spreads range from 1.60% to 1.80%. At current spread levels, mortgage rates sit above 7%. The report notes that if spreads returned to this year's best levels, mortgage rates would fall below 7%.
Purchase application data, which looks ahead 30 to 90 days, showed a small week-over-week decline. The data suggests demand has stabilized as rates fell, though growth appears limited above the 7% threshold.
Price reductions affected homes during the recent rate increase above 6.64% and toward 7.60%, with year-over-year price-cut percentages rising 1% when rates moved above 7%. Year-to-date price-cut percentages remain lower than last year overall.
For buyers and sellers, stabilized demand at current rate levels offers some relief from the slowdown seen at higher rates, though growth remains limited. Sellers face a market where new inventory remains constrained seasonally. Buyers should note that further rate declines depend on the 10-year yield breaking below 4.70% with sustained bond buying.