Why housing demand is up and inventory is down in 2026

One year ago, I talked about how we were about to see a positive shift in the housing market, and with our weekly Weekly pending sales

Our Mortgage purchase application data

Purchase application data is a forward-looking indicator: growth here leads home sales by roughly 30-90 days.  Last week was a shock to many, as we saw 7% week-to-week growth and 17% year-over-year growth. The reason for the shock is that Here’s 2026 so far:

• 10 positive week-to-week prints
• 10 negative week-to-week prints
• 2 flat week-to-week prints
• 10 weeks of double-digit year-over-year growth
• 20 weeks of positive year-over-year growth
• 2 negative year-over-year prints

Personally, I would like to see more positive week-to-week data. When we get at least 12-14 weeks of positive weekly data, it amounts to a couple of hundred thousand more home sales. But with volume growth picking up a tad this year and considering rates went up, it’s not bad. 

Housing inventory

Housing inventory is probably a bigger shock than the positive year-over-year demand. With so many headlines about the biggest seller market in history, etc., it was not in anyone’s playbook that inventory would be negative in June of 2026. What happened here?

Last year, inventory growth was very high; at one point, we had New listings

New listings data has always been key for the tracker and I want to keep this as simple as possible. The normal range for new listings data is typically between 80,000 and 100,000. Last year, new listings data reached my 80,000 forecast, but it didn’t show enough growth to get back to normal. Last week we had year-over-year growth, but not enough to reach the normal range and seasonality will be kicking in soon. 

With new listings data still slightly below normal, there isn’t a lot of new supply coming on to the market, so we work with the supply and demand equilibrium from above. Never forget that most home sellers are also buyers and supply is a function of demand with housing economics. 

Some context for those who believe that the new listings data resembles the housing bubble years: new listings during that time ranged from 250,000 to 400,000 per week for several years.

Here is last week’s new listings data for the past two years:

• 2026: 81,754
• 2025: 78,284

10-year yield and mortgage rates

In the In 2026, I have been looking for spreads to get back to normal at 1.80%, but I thought that would happen toward the end of the year, not early. However, in January President Trump directed Fannie Mae and Freddie Mac to Historically, mortgage spreads have ranged from 1.60% to 1.80%. Last week, spreads closed at 1.99%, down from 2.01% 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 7.70% today, not 6.58%.
• If we had the worst levels of 2024, mortgage rates would be 7.32% today 
• If we had the worst levels of 2025, mortgage rates would be 7.13% today.

The week ahead: Iran, Fed meeting and a ton of economic data

It’s going to be a monster week: we will have the market reaction to the hopefully signed Iran conflict deal, the Fed meeting with new Fed Chair Kevin Warsh and a ton of economic data: housing starts, retail sales,and pending home sales.

This week, the focus should be on how the bond market reacts to all the events above because we know that the housing market can shift positively with rates just heading toward 6%.