Mortgage rates fell and demand steadied as inventory dipped

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%

What a crazy time in the bond market recently: the key level of 5.35% has not only held since early October, but the reversal has been truly nice to watch. The midterm elections, which changed the control of the House and Senate, have added another variable into the mortgage rate equation. I discussed what Congress can do to help lower mortgage rates on this episode of the HousingWire Daily podcast with Editor in Chief Sarah Wheeler, but for now the head-and-shoulders pattern of the 10-year yield is still somewhat intact, though a fight for it to break lower is happening.

I wouldn’t get too excited about mortgage rates until the 10-year yield can break under 4.70% and have follow-through bond buying, but mortgage rates have fallen and demand has stabilized over the last few weeks. 

Mortgage spreads

Mortgage spreads have worsened recently, but they’re still trending near multiyear lows. Traditionally, when mortgage rates escalate with the 10-year yield and then make a big reversal — like we just had from a 5.35% 10-year yield top that dropped down toward 4.82% —  spreads do get worse to try to compress mortgage rate volatility.

That said, if mortgage spreads weren’t near multiyear lows right now, we’d have no chance of getting mortgage rates below 7.25%, and demand wouldn’t have stabilized recently. Now that spreads have moved up from this year’s lows, we can clearly see that mortgage rates would be sub-7% if spreads return to that level.

Historically, mortgage spreads have ranged from 1.60% to 1.80%. Last week, spreads rose to 2.27% from 2.23% a week earlier.

Let’s compare last week’s mortgage rates to where they would have been at the best spread levels this year and the worst levels of this cycle.

• If we had the best levels of spreads in 2026, mortgage rates would be 6.72% today, not 7.17%.
• If we had the worst mortgage spread levels of 2023, mortgage rates would be 8.11% today, not 7.17%.

Weekly pending sales

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

The key for the last three weeks: lower rates, even above 7%, have stabilized demand, as our weekly pending sales have shown. Now, this isn’t growth, just stabilization from a noticeable slowdown when mortgage rates got toward 7.60%. The last three years and 10 months show that housing demand grows when mortgage rates fall below 6.64% and head toward 6%; above 7%, we don’t have much growth data beyond seasonal demand. Last year at this time, mortgage rates were headed toward 6%, so the year-over-year comps will be hard for some time.

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

• 2026: 51,764
• 2025:  59,164

Purchase applications

Purchase application data, which looks out 30-90 days, has softened as mortgage rates rose above 6.64% and are now above 7%. We had a small decline week to week; I can see the stabilization here as well and the year-over-year comps will also be very difficult here, as last year at this time rates were heading toward 6%. Earlier in the year, when rates were lower, pretty much every week this year showed growth.  

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

• 16 positive week-to-week prints
• 24 negative week-to-week prints
• 5 flat week-to-week prints
• 10 weeks of double-digit year-over-year growth
• 25 weeks of positive year-over-year growth
• 15 negative year-over-year prints

Housing inventory

Housing inventory growth has been very tame this year, with some weeks being down year over year. However, when mortgage rates got above 6.64% and then headed toward 7.60%, we did see some growth pick up. Also, rates were lower last year so demand was heading toward a nine-month high in December, which means it the comps will be easier to show growth in inventory. 

Inventory growth is running at 7.18% even with easier comps. 

• Weekly inventory change (Oct. 30-Nov. 6): Inventory fell from 914,833 to 902,740
• Same week last year (Oct. 31-Nov 7): Inventory fell from 856,751 to 842,257

New listings

New listings are in their typical seasonal decline; 2026 has been the healthiest new-listings year since 2022, with over 80,000 new listings per week a few times this year. The concern I had was that if higher rates cause sellers to stop listing their homes — as they did in the second half of 2022 — that would hurt supply and demand. However, that hasn’t happened in any meaningful way. Most home sellers are buyers, and now that rates have fallen a smidge, it looks like we can end the year on a positive note for 2026 for new listings. 

In a normal environment, new listings range from 80,000 to 100,000 per week during peak periods. For context, during the housing bubble years, new listings 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: 54,479
• 2025: 55,486

Price-cut percentage

Typically, about one-third of homes see price reductions before they sell, reflecting the housing market’s dynamic nature. Overall, price-cut percentages this year have been lower than last year. This held true until rates moved above 6.64% and then above 7%; demand fell, and the year-over-year price-cut percentage rose 1%.

In my 2026 home-price forecast, I called for a national decline of -0.62% for the year. Home-price growth really isn’t going anywhere this year, and my -0.62% forecast may be hard to achieve, since most home-price indexes show growth between 1% and 2%. However, with higher rates and a rising price-cut percentage, we will be closer to the forecast. Clearly, if rates hadn’t risen above 6.75%, pricing data wouldn’t have shown the recent slowdown. 

The price-cut percentage for last week:

• 2026: 43.%
• 2025: 42%

The week ahead:  Inflation week, Iran conflict,  Fed speeches, and AI stocks

You want to keep an eye on how AI stocks trade this week, in particular CoreWeave’s stock price and how the 10-year yield reacts. For now, there’s an interesting correlation between the two, but I expect it to fade over time. 

It’s inflation week again, with both CPI and PPI reports. Over the next 12 months, if the Iran conflict ends and the trade war doesn’t get worse, the question is whether bond traders will put more weight on those two factors than on the current inflation reports, which could improve in the future. This would be a huge positive for mortgage rates, but still, it will take a lot of work to end the trade war and the conflict. Existing home sales will come out and it won’t be pretty.

We also have a lot of Fed speeches this week and it’s critical now to see what they say and how the bond market reacts to their talking points. Also, with the midterms over, I will be watching whether any of them start to talk about the end of the conflict and trade war being a positive for their future outlook.