Housing demand stays firm, pushing inventory close to negative YOY

It’s been a day full of news about a possible peace deal with Iran, which would be great news for housing. However, even though mortgage rates have risen due to the conflict lasting longer than anyone initially thought, housing demand has held up, and housing inventory is now on the verge of going negative year over year in our weekly single-family listings data. 

Housing inventory going negative year over year in 2026? Who had that in their bingo card? Even with mortgage rates up as much as 0.76% from the year’s lows at one point, housing demand, for the most part, has held up well in 2026.

Last week, our weekly pending home sales data showed positive week-to-week and year-over-year growth, while housing inventory only grew 0.89% year over year. Let’s take a look at the weekend tracker and note that the Memorial Day weekend will impact the tracker data next weekend.

Housing inventory

Housing inventory being on the verge of going negative year over year is really about two things:

• First, the inventory growth in the first part of last year was really good, but it came with higher mortgage rates.
• Secondly, when mortgage rates fell below 6.64% and headed toward 6%, demand improved, and we are at levels where year-over-year comps are very hard to show growth. This will change after June of this year.

Inventory growth is running at 0.89%. Even if we go negative year over year soon, we are in a much healthier spot with inventory than we were from 2020 to 2023. Home-price growth is in check, and we will have another year in which wages rise faster than home prices.

• Weekly inventory change: (May 16-May 22): Inventory rose from  777,913 to 794,286
• Same week last year: (May 17 -May 23): Inventory rose from 767,250 to 787,287

New listings

New listings data grew week-to-week and year-over-year, and we are over 80,000 again! While we aren’t back to the normal 80,000-100,000 new listings we would typically see, we are getting closer to normal.  This is a very healthy story for the housing market. Next week, due to the holiday, we will get a hit in the new listings data, but overall, an improvement from last year in this data line.

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: 85,159
• 2025: 83,143

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. 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 while inventory is negative year over year.

So far we see no material change to the price cut percentage this year, as the price cut percentage data has been slightly lower this year versus last year, even with mortgage rates rising the last few weeks. 

The price-cut percentage for last week:

• 2026: 36.77%
• 2025: 37%

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 this next week. We are now at the seasonal peak of our weekly pending sales data. Last week was the first time this year that rates were above 6.64% but still under 7%; mortgage rates are still lower today than they were at this time last year. 

Weekly pending sales last week over the last two years:

• 2026: 79,370
• 2025: 72,312

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 decline in purchase apps but they were up 8% 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
• 1 flat week-to-week print
• 9 weeks of double-digit year-over-year growth
• 17 weeks of positive year-over-year growth
• 2 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%

Last week, the 10-year yield broke above 4.60% and.reached a high of 4.68%. One of my talking points this year has been that if this Iran conflict continued past March 21, we have a clear path to 4.60%. It took a bit longer than I thought, due to multiple claims of a deal happening soon. Also, last year, Godzilla tariffs pushed yields toward 4.60%, which made the White House blink. If the deal announced today is true and holds up, the biggest negative variable for the economy and housing has been pushed aside. 

Mortgage rates rose to a high last week of 6.75% before falling to 6.65% by the end of the week. 

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 spreads 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 1.90%, down from 1.92% 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 7.86% today, not 6.65%.
• If we had the worst levels of 2024, mortgage rates would be 7.48% today.
• If we had the worst levels of 2025, mortgage rates would be 7.29% today.

Mind that spreads have been the biggest variable affecting the housing market since mid-June of 2025.

The week ahead: Iran, Iran and Iran

Next week is a short week due to Memorial Day, and if the announced terms of the Iran peace deal hold, this part of housing economic history could come to an end. I want to see how the bond market reacts to such news, since this conflict has lasted longer than anyone thought and it might take some time for the 10-year yield to get below 4.24% again.  

If the conflict is over, some of the data we are looking at next week and month won’t matter as much because oil prices and bond yields should be heading lower. Since most data lines are backward-looking, we need to be mindful of the positive impact of this conflict ending.