Housing demand stable despite higher rates
Housing demand has slowed in 2026 but remains stable, with mortgage rates staying below 7%. New listings and inventory show steady growth, while price cuts and pending sales reflect a market adjusting to elevated financing costs.
Higher mortgage rates have moderated housing data in 2026, but the year has been more orderly than previous ones as rates have not broken above 7%. According to a HousingWire report, mortgage rates above 6.64% typically slow housing demand, but major material changes have been limited this year beyond growth flattening or turning slightly negative year-over-year.
One concern with higher rates is whether sellers would withdraw, causing new listings to decline. That hasn't happened. New listings have been very steady for the past few months. This supports the theme that the housing story has been fairly stable in 2026, despite external drama.
New listing data
A key to a healthier post-COVID market was normalizing new listings, since most sellers are also buyers. Many believed no one would sell a home with a 3% mortgage to buy at over 6%. Yet this has been happening since 2022. If it weren't, existing home sales would have fallen more and new listings would be much lower.
New listings data, though in seasonal decline, looks stable over recent weeks with elevated rates. This is a healthy aspect for 2026. The year saw a few weeks with over 80,000 new listings during peak months, the highest in years. Normally, new listings range between 80,000 and 100,000 weekly during peaks. During the housing bubble, they ranged from 250,000 to 400,000 per week for several years.
| Year | New Listings (Last Week) |
|---|---|
| 2026 | 66,874 |
| 2025 | 63,762 |
Housing inventory
Housing inventory has seen its mildest growth this year versus recent years. However, as mortgage rates moved above 6.64%, inventory growth picked up as expected. Year-over-year comparisons will now make it easier to show growth for the rest of 2026, because rates were falling at this time last year and inventory growth slowed then.
Last week saw mild week-to-week growth, with the year-over-year increase at 2.21%. The weekly inventory change for August 21-28, 2026, saw a rise from 874,784 to 879,764. In the same week last year (August 22-29, 2025), inventory fell from 861,226 to 860,719.
Price cuts and mortgage rates
Typically, about one-third of homes see price reductions before selling. This year's price-cut percentage was slightly lower than last year initially. As mortgage rates have risen versus 2025, this data was expected to rise to parity or higher. Last week's figure was slightly higher year-over-year.
The price-cut percentage for last week was 42.10% in 2026, compared to 42% in 2025. In a 2026 home-price forecast, the report's author called for a national decline of 0.62% for the year. Most home price indexes, however, show growth between 1% and 2%. With rates rising again, the forecast of a decline might prove correct if the trend of higher rates, inventory, and price cuts continues.
Mortgage rates ended last week near 6.81%, close to yearly highs. The 10-year yield has been stuck in a channel between 4.62% and 4.74% for many weeks. Mortgage spreads have kept rates under 7%. Last week, spreads were at 1.97%, up from 1.96% the week before. Historically, they range from 1.60% to 1.80%. The report compares where rates would be with the worst spread levels of recent years.
| Scenario (Worst Spread Level) | Implied Mortgage Rate |
|---|---|
| 2023 | 7.95% |
| 2024 | 7.57% |
| 2025 | 7.38% |
Sales and purchase data
Now that more time has been spent above the key rate level of 6.64%, a slowdown in sales is more apparent. It's not a big negative slowdown year, but negative year-over-year data is showing in bigger numbers. For the past few years, demand grows when rates near 6%, then fades when they exceed 6.64%.
Last week's year-over-year pending sales data was nearly flat. Comparisons are harder because mortgage rates were falling at this time last year. If rates were well above 7% for a duration, demand weakness would be more apparent.
| Year | Pending Sales (Last Week) |
|---|---|
| 2026 | 65,036 |
| 2025 | 65,701 |
Purchase application data, which looks ahead 30-90 days, has shown softness with rates above 6.64%. After growing weekly earlier this year, there have recently been five mild negative year-over-year prints. Last week, the index was flat week-to-week but down 5% year-over-year. The report provides stats on purchase application trends for 2026.
- 13 positive week-to-week prints
- 17 negative week-to-week prints
- 3 flat week-to-week prints
- 10 weeks of double-digit year-over-year growth
- 25 weeks of positive year-over-year growth
- 7 negative year-over-year prints
Looking ahead, the report states that for lower rates, the Iran conflict would need to end and a new trade war with Canada would need to be contained. This week is jobs week. A solid jobs report would be needed to get four more Fed governors to vote for rate hikes in September. However, so much is already priced into rates that hikes matter less than resolving the conflict and trade war.
