Home sales are positive but higher rates slowing demand

Mortgage rates hit a yearly high last week and even though housing demand is still positive year over year, it is slowing down, just not in a big way yet. Typically, in the past few years, when mortgage rates get above 6.64% and then break over 7%, housing demand slows. Housing data always improves when rates move lower than 6.64% and just stay near 6%. We have seen this back-and-forth dance with sales data since the start of 2023 and typically sales don’t go anywhere, but since most of the year has been below 6.64%, housing demand has held firm. 

Mortgage rates still haven’t breached 7% this year, but if rates go higher for longer, the data will fade, so let’s take a look at this weekend’s tracker.

Weekly pending sales

Our pending home sales data provides a week-to-week perspective, though results can be affected by holidays and short-term fluctuations. This weekly pending sales data typically takes 30-60 days to be reflected in the sales data. 

Two weeks ago, we saw a smidge of a decline year over year, and last week we saw a smidge of an increase year over year, but make no mistake, housing is slowing. For now, the growth rate has really cooled off.

Here are the pending sales for last week over the last two years:

• 2026: 70,748
• 2025: 70, 609

Our total pending home sales data, which is more of an average of sales rather than pure weekly data, is showing the same thing: we still have growth, but growth is slowing down. 

• 2026: 396,759
• 2025: 384,307

Mortgage purchase application data

Purchase application data typically sees a week-to-week increase during this calendar week every year. Two weeks ago, we had a 7% decline, and that’s the traditional decline we see due to the July 4th holiday and this week is the seasonal increase that happens after the holiday dive. So the positive 6% week-to-week wasn’t a surprise. The year-over-year growth was only 0.2%, so again, the market is slowing down.

The comps year over year will be more challenging as we enter a time when rates were lower last year than this year. 

Here are the stats on purchase apps so far in 2026:

• 12 positive week-to-week prints
• 14 negative week-to-week prints
• 2 flat week-to-week prints
• 10 weeks of double-digit year-over-year growth
• 24 weeks of positive year-over-year growth
• 3 negative year-over-year prints

10-year yield and mortgage rates

In the 2026 HousingWire forecast, I anticipated the following ranges:

• Mortgage rates between 5.75% and 6.75%
• The 10-year yield fluctuating between 3.80% and 4.60%

Clearly, the upper range of the 2026 forecast for the 10-year and mortgage rates has been broken. The bond market does not like the Iran conflict and both times that yields spiked higher than 4.60% was when the conflict escalated. I recently discussed how high mortgage rates can go with Conflict 2.0 with Editor in Chief Sarah Wheeler on this episode of the HousingWire podcast. So for now, it’s all about Iran conflict 2.0 — and the Fed is meeting this week.

Mortgage spreads

One thing is for sure this year: our entire housing discussion would have been different if mortgage spreads didn’t improve this year. 2023 spreads would have us at 7.98% today. 

The main reason I believe housing demand has stayed firm in 2026 is that mortgage spreads alone have kept mortgage rates below 6.64% most of the year. Without the improvement in mortgage spreads, housing demand wouldn’t have seen the growth it had earlier in the year with our weekly sales data. 

Historically, mortgage spreads have ranged from 1.60% to 1.80%. Last week, spreads were at 1.94%, down from 1.97% 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 7.98% today, not 6.81%.
• If we had the worst levels of 2024, mortgage rates would be 7.60% today. 
• If we had the worst levels of 2025, mortgage rates would be 7.41% today.

Housing inventory

Housing inventory has slowed a lot since mid-June 2025; most of the weeks in the past two months have been negative year over year, only slightly though. However, as rates have risen, inventory growth has picked up a bit, showing slight year-over-year growth. Also, remember, the year-over-year comps will be easier to show growth from now on as well. 

• Weekly inventory change:(July 17-July 24): Inventory rose from 859,359 to 865,233
• Same week last year: (July 18-July 25): Inventory rose from 856,731 to 860,407

New listings

The seasonal decline in new listings has arrived. Traditionally, there would be 80,000-100,000 new listings during the seasonal peak weeks, but we’ve only cracked above 80,000 four times this year and never in back-to-back weeks.  

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. Also, we have a had a ton of crazy foreclosure headlines recently, so I wrote this article on Friday to bring some reality into the foreclosure data. As always, if housing in America was truly breaking, the new listings data will be the first place to see it, so the article shows how to track that properly. 

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

• 2026: 73,109
• 2025:  71,521

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, price-cut percentages this year have been lower than last year. This is a by-product of inventory growth slowing down and, in some weeks, the data being negative year over year. 

In my 2026 home-price forecast, I had a negative 0.62% call for the year nationally. Home-price growth really isn’t going anywhere this year, but the percentage of price cuts has been lower year over year for most of 2026. My forecast of negative -0.62% might be hard to achieve, as most of the home price indexes are showing price growth between 1% and 2%. However, with rates rising again, I might have a chance of being correct in 2026. 

The price-cut percentage for last week:

• 2026: 40.60%
• 2025: 41%

The week ahead: Iran conflict 2.0, the Fed and inflation

This week is very simple: the Iran conflict news will be No. 1 again, as the bond market is really moving around this conflict. President Trump has called off the “massive” attack he had threatened on Thursday, so we will see how the market takes that news. 

Then we have the Fed meeting on Wednesday where there is still a chance of a rate hike, but so much is priced into bonds now that it doesn’t matter much if they hike or not. Finally, on Thursday, we have another inflation report that is important for the following Fed meetings.