Housing inventory just turned negative year over year

Housing inventory officially went negative year-over-year last week. This might be a shocker to some people, but not for readers of our Housing Market Tracker, since I believe the housing inventory story started shifting in mid-June of 2025. Lets go over last week’s data and explain what’s happening.

Housing Inventory

First things first: the Memorial Day holiday affected last week’s data, so look for a rebound next week. That said, the slow growth in inventory has been going on for some time. Last year, inventory growth was really good at one point; it up 33% year over year, which put a huge smile on my face. However, that higher inventory also came with higher rates. 

Mortgage rates for the most part in 2026 have been under 6.64% — the lowest rate curve we have seen since 2022 — and demand has held up even as rates rose from 5.99% to 6.75%. Rates ended last week at 6.56%. If the Iran conflict hadn’t happened and rates hadn’t broken higher, demand would have been a tad better and inventory a tad lower. Still, inventory levels are at multiyear highs, not at the unhealthy levels of 2020-2023. So, it’s a big plus that we are here today, even with the negative year-over-year print last week.

• Weekly inventory change: (May 22-May 29): Inventory rose from 794,286 to 795,921
• Same week last year: (May 23-May 30): Inventory rose from 794,286 to 803,479

New listings

New listings took an epic dive last week, as they do every year after Memorial Day weekend, so I am still looking for my first back-to-back new listings print over 80,000 this year. Normal new listings from 2013-2019 range from 80,000 to 100,000 per week during the seasonal peak period so right now we are working our way back to normal, which is very healthy.

Some context for those who get nervous about growth in new listings and think this market 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: 71,249
• 2025: 70,414

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, the price-cut percentage this year has been lower than last year.

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. 

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. In essence, not much is going on with prices nationally to the upside or downside — regional areas differ of course. 

The price-cut percentage for last week:

• 2026: 36.88%
• 2025: 38%

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%

Last week the big news was that the Iran conflict could actually be over. On May 19 the 10-year yield rose to a yearly high of 4.68% as the conflict was escalating into a bad place, but ended the week at 4.44%. It’s been all about Iran lately, but we are getting back to a more normal environment for rates, which I covered on this episode of the HousingWire Daily podcast.

The one good aspect that I enjoyed about last week is that softer economic data made the 10-year yield fall a tad. This week is jobs week, but if the Iran conflict is truly over, we might have seen the peak in yields and rates as long as the growth rate of inflation starts to fall and the economy doesn’t overheat.

Mortgage spreads

Mortgage spreads remain a positive story for housing in 2026, as mortgage rates would have spent considerable time above 7% without better spreads. Now, one important thing to know about spreads is that they can worsen in the short term if yields fall sharply. This has happened twice now in 2026, so the fact that spreads got slightly worse last week makes sense with yields falling as they did.

Historically, mortgage spreads have ranged from 1.60% to 1.80%. Last week, spreads closed at 2.03%, up  from 1.90% 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 7.64% today, not 6.56%.
• If we had the worst levels of 2024, mortgage rates would be 7.26% today.
• If we had the worst levels of 2025, mortgage rates would be 7.07% today.

The only reason mortgage rates never rose above 7% during the conflict is that mortgage spreads have remained low during this period.

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. We will see that this week. Memorial Day weekend significantly affected this data line, which had been trending upward; for the most part, the housing data has held up amid rising rates. 

Housing data tends to get softer when mortgage rates are above 6.64%, as in the past few years, so let’s not attribute all the softness to the holiday just yet. That said, mortgage rates are off the year’s highs now and we still have year-over-year growth here. 

Weekly pending sales last week over the last two years:

• 2026: 69,215
• 2025: 68,071

Mortgage purchase application data

Purchase application data is a forward-looking indicator: growth here leads home sales by roughly 30-90 days. Last week, we were basically flat week-to-week in purchase apps, but they were up 5% year over year.  

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 week on week while showing positive year-over-year growth for most of the year. Now that mortgage rates are above 6.64%, I will be keeping a close eye on whether this data goes negative, as it has in the past, especially if rates head over 7%.

Here’s 2026 so far:

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

The week ahead: Jobs week and Iran, in that order

For the first time in a while, I can say economic data matters again for rates, as we have a jobs week and — if the Iran conflict is truly over — we can take some of the worst-case economic scenarios off the table. We have a lot of data this week, but jobs data and then getting more closure on Iran are the two most important things