Housing demand stays positive with mortgage rates near 2026 highs

Despite rising mortgage rates, the conflict in the Middle East pushing oil prices higher and headlines that say AI is going to take all the jobs, housing demand remains positive year over year. It sounds strange, but for the most part, especially if we take the snowstorm data away from early in the year, housing demand has held firm. Last week was another example of that, as our weekly pending home sales data and purchase application data were both positive year-over-year, even with rates near yearly highs.

Housing activity snapped back, as it traditionally does after a holiday weekend. We saw growth in weekly pending sales, new listings and active inventory, which is still negative year over year by just a smidge. Housing has Housing data tends to soften when mortgage rates are above 6.64% and especially when rates break above 7%, as they have over the past few years, but tends to do better when rates are below 6.64% and heading toward 6%. 

Weekly pending sales last week over the last two years:

• 2026: 75,935
• 2025: 69,636

For purchase apps, what I really value is at least 12-14 weeks of positive week-to-week data. If we can get that positive week-to-week data to go with year-over-year growth, then we have something cooking. For 2026, we are basically flat on a week-on-week basis, and given the rise in rates, that is a victory. On the other hand, most of the year has seen positive year-over-year growth, aside from two weeks with tough year-over-year comps.

Mortgage rates between 5.75% and 6.75%

The 10-year yield fluctuating between 3.80% and 4.60%

Last week was jobs week, and the labor data, job openings, ADP and job Friday numbers were all good, sending the 10-year yield higher and Mortgage spreads

Mortgage spreads remain a Historically, mortgage spreads have ranged from 1.60% to 1.80%. Last week, spreads closed at 2.01%, down from 2.03% the week before.

Let’s compare last week’s mortgage rates to where they would have been over the last three years, given the 10-year yield’s current level:

• If we had the worst mortgage spread levels of 2023, mortgage rates would be 7.76% today, not 6.66%.
• If we had the worst levels of 2024, mortgage rates would be 7.38% today 
• If we had the worst levels of 2025, mortgage rates would be 7.19% today.

Housing inventory

Housing inventory saw its traditional snapback in growth after the Memorial Day holiday, but it’s still down slightly year over year. However, we are at much healthier levels than during 2020-2023. As we move on from this week, all the extremely low comps for inventory will fade, as the housing market shifted mid-June 2025.

• Weekly inventory change: (May 29 -June 5): Inventory rose from 795,921 to 806,198
• Same week last year: (May 30-June 6): Inventory rose from 803,479 to 808,524

Price-cut percentage

Typically, about one-third of homes undergo price reductions before they sell, reflecting the dynamic nature of the housing market. For the most part, this year’s price-cut percentage has been lower than last year’s.

In my 2026 home-price forecast, I had a negative 0.62% call for the year nationally. Mortgage rates fell more than I anticipated early in the year, and housing demand has remained firm even as rates have risen. My forecast will be hard to be correct if rates go lower and inventory trends are negative year over year. However, if I am wrong, it shouldn’t be by a lot, as inventory and higher rates will keep a lid on home-price growth in 2026

So far, we see no material change in the percentage of price cuts this year, as the data has been slightly lower than last year — even with mortgage rates rising over the last few weeks. I am a bit surprised the price cut percentage didn’t rebound more this week. 

The price-cut percentage for last week:

• 2026: 37.53%
• 2025: 39%