Existing home sales stayed positive year over year last week, and weekly pending sales held up at 71,173 versus 66,967 a year earlier even as mortgage rates remained elevated. The market did not need a big break to improve; it needed spreads to stop making rates worse than they already were.
That is why the latest reading matters now. For homebuyers and sellers, the question is not whether rates are high — they are — but whether the financing side is becoming less hostile. Last week’s mortgage spread was 2.01%, down from 2.03% the week before, and that small change helped keep rates below the levels that would have followed from the bond market alone. Since late 2022, housing demand has tended to perform better when mortgage rates fall below 6.64% and move toward 6%, and last week rates were below 6.64% for most of the period.
That cushion helps explain why sales are still growing year over year even after the rate shock of prior years. The 2026 peak mortgage rate forecast was 6.75%, but the latest spread level suggests the market is not yet pricing the worst-case scenario into every loan. Mortgage spreads had widened to over 3% in 2023, so 2.01% is an improvement, and it is one reason the latest weekly pending data may keep feeding into sales numbers over the next 30 to 60 days. Inventory was also near healthier post-2020 levels, which gives buyers more to choose from than they had when supply was tighter.
Still, the backdrop is not clean. The 10-year yield closed the week at 4.49% even after mixed labor data, including a miss in Jobs Friday with negative revisions, a slight ADP miss that still left payroll growth elevated, low jobless claims and job openings that beat estimates. Beth Hammack said lower oil prices were bad for inflation, and that kind of signal helps explain why markets have not given bonds much relief. If oil is easing but the yield stays pinned near 4.49%, mortgage rates may keep relying on spread improvement rather than a broad move lower in financing costs.
That leaves the next two weeks as a test. The weekly Housing Market Tracker will be hit by holiday data, which could make the near-term read noisier just as the market is trying to prove it can keep sales positive without a fresh drop in rates. For now, the evidence says improved mortgage spreads are doing the heavy lifting for Real Estate demand — and that support has to last longer than one good week if sales are going to keep outpacing last year.
