Housing Market Sees Boost from Lower Mortgage Rates

Lower mortgage rates are driving up demand for homes in 2026. This is shown by a positive week in the Housing Market Tracker data. Both pending home sales and purchase applications increased last week, compared to the same time last year.

Mortgage Rates and Housing Demand

Mortgage rates near 6% tend to strengthen housing demand. However, we haven't seen rates stay at this level for a long time. This year might be the first time this trend holds.

Purchase application data had a good week, with 5% growth from the previous week and 18% growth from the same time last year. The goal is to have at least 12-14 weeks of growth, and so far, the year is going in the right direction.

Impact of Mortgage Rates on Home Sales

These applications usually lead to sales data by 30 to 90 days. Weekly pending home sales also showed positive growth last week, despite being affected by holidays and short-term changes.

Weekly Pending Home Sales

Last week's pending sales were the highest in several years. These figures are usually reflected in the existing home sales report 30 to 60 days after pending sales are recorded.

Global Events and Mortgage Rates

Global events like the summit in Davos and changes in Japan's bond market impacted financial markets. Mortgage rates rose from 6.07% to 6.21%, but this wasn't too bad considering the events that happened.

Mortgage Spreads and Rates

Mortgage rates have stayed stable because mortgage spreads have improved. At this time last year, similar bond market conditions would have resulted in higher rates. Improved spreads have helped limit rate increases.

Housing Inventory Trends

Housing inventory has shown positive trends as the market moves toward normalization. However, the growth rate has slowed down since mid-June 2025.

New Listings and Price Reductions

New listings data for 2026 has been encouraging. The goal is to reach 80,000 new listings per week during peak periods. Typically, about one-third of homes undergo price reductions, reflecting the dynamic nature of the housing market.

Looking Ahead

The Federal Reserve meets this week, but no rate changes are expected. The Q&A session following the meeting will be closely watched. Several home price index reports and inflation data are also scheduled for release this week. As the market continues to evolve, it will be important to observe how supply and demand respond to mortgage rates near 6%.