Mortgage rates are at yearly highs, but housing demand is still positive

Mortgage rates and the 10-year yield both hit yearly highs after the Friday massacre in the bond market, as we didn’t get any positive news on ending the conflict in Iran. Even with all that, our weekly pending home sales data is still positive year over year, for now. The weekly mortgage purchase application data was positive year-over-year and week-over-week. However, when mortgage rates rise above 6.64% and get over 7%, housing demand has slowed over the past few years. 

Let’s take a look at the weekend tracker and make sense of all the madness last week.

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%

We closed last Friday at 4.596% on the 10-year, which was the high end of my 2026 forecast. Back in March, I wrote that if this conflict continues, we have a clear pathway to 4.60% on the 10-year yield, which would take us to 6.75% on mortgage rates. Well, better-than-expected mortgage spreads have prevented rates from reaching 6.75% for now. 

My real concern is the June to September timeline; our oil reserves are dwindling and by the second week of June, we will be in a bad place — and things just get worse if no deal is made. This is all about the Iran conflict now, as the market is now pricing a rate hike in 2027, as I discussed here.

Mortgage spreads

Mortgage spreads remain a positive story for housing in 2026, as mortgage rates would be closer to 8% today if we had the worst levels of mortgage spread from 2023. In fact, mortgage rates would be well above 7% in any of the past few years.

Historically, mortgage spreads have ranged from 1.60% to 1.80%. Last week, spreads closed at 1.92%, down from from 1.96% 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 7.84% today, not 6.65%.
• If we had the worst levels of 2024, mortgage rates would be 7.46% today.
• If we had the worst levels of 2025, mortgage rates would be 7.27% today.

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 are now at the seasonal peak in our weekly pending home sales data, so year-over-year comparisons will be more critical here. We had easy comps to show year-over-year growth this week. 

Weekly pending sales usually take 30-60 days to hit the sales data. Typically, mortgage rates above 6.64% and those breaking over 7% really impact the data negatively. Under 6.25% has been the sweet spot over the past several years, excluding short-term variables. I went on CNBC in March and said if the conflict didn’t raise rates, we were poised for growth with our weekly pending sales and purchase apps — we would have growth if rates stay under 6.25%.

Weekly pending sales last week over the last two years:

• 2026: 78,006
• 2025: 73,523

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 saw a 4% week-to-week increase and a 7% year-over-year increase. However, rates were lower at the time this survey was taken. 

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 the week-to-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 to to see if this data goes negative as it has in the past, especially if rates head over 7%. 

Here’s 2026 so far:

• 9 positive week-over-week prints
• 8 negative week-to-week prints
• 1 flat week-to-week print
• 9 weeks of double-digit year-over-year growth
• 16 weeks of positive year-over-year growth
• 2 negative year-over-year print

Housing inventory

The housing inventory story has really stayed the same since mid-June of 2025, when I wrote about how the housing market was shifting, and it might take people 6-9 months to realize this unless they read our Housing Market Tracker. Inventory growth on a year-over-year basis has really slowed down, but is still positive year over year.

Inventory growth is running at 1.38% year over year, down from a peak of 33% last year, but even if we go negative year over year for some weeks, we are currently in a much better spot with inventory levels, which are at a multiyear high and far from the savagely unhealthy levels of 2020 -2023. 

• Weekly inventory change: (May 8- May 16): Inventory rose from  767,132 to 777,913
• Same week last year: (May 9-May 17): Inventory rose fro  757,898 to 767,250

New listings

I was very excited about the new listing data from two weeks ago, when we got over 80,000, and I am still looking for the elusive back-to-back weeks of new listings data over 80,000 during the seasonal peak period. We didn’t get that last week as we had a slight decline, but it’s still higher than last year at this time. Normal new listings data runs between 80,000 and 100,000 during the seasonal peak period.

Some context for those who think this market resembles the housing bubble years: new listings ranged from 250,000 to 400,000 per week for several years. Conversely, the peak in new listings post-COVID was 91,000 in 2022. So, if I doubled the highest new listings in the past few years it wouldn’t even match the lowest period during the crash years. I wrote about why a 2008 housing crash can’t happen again here.

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

• 2026: 78,000
• 2025: 76,112

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 in 2026, the price-cut percentage has been lower year over year. 

In my 2026 home-price forecast, I had a negative 0.62% call for the year nationally. However, mortgage rates went lower than I thought they would at the start of this year, and when the FHFA announced the purchase of mortgage-backed securities, it pushed mortgage spreads lower than I expected earlier in the year. I was looking for spreads to reach 1.80% level by the end of the year.

Now that mortgage rates are higher, I will be keeping an eye on the pricing data if they keep going higher. 

The price-cut percentage for last week:

• 2026: 36.50%
• 2025: 37%

The week ahead:  Iran, oil prices, Fed speeches and housing starts 

The closer we get to June, the more mindful we need to be about oil prices, the bond market, inflation and Fed governors. One month from now, if we get no closure to the Iran conflict and oil reserves continue to dwindle, it could be an even bigger issue for everyone around the world as we go into September.

This week we have a number of Fed governors scheduled to speak and more and more of them are getting vocally hawkish. We do have housing starts data as well. However, it’s all about the conflict in Iran, especially if President Trump decides to end the ceasefire and start attacking again.