Housing Inventory Growth Stalls as Mortgage rates Dip, Government Shutdown Looms
WASHINGTON – A surprising slowdown โขin housing โinventory โขgrowth is occurring despite a recent surge in purchase applications, fueled by falling mortgage rates and a resilient market. Year-over-year growth currently stands at 16%, but recent weekly data reveals a complexโค picture complicated by potential disruptions from โฃthe ongoing government shutdown.
The housing market is showing strong signals of recovery. Through 35 โคconsecutive weeks, purchase applications have demonstrated positive year-over-year โdata, with 22 ofโข those weeks exhibiting double-digit growth. This momentumโฃ has accelerated sinceโ mortgage rates fell below 6.64%, approaching the key 6% level closely watched by analysts. In the nineโค weeksโ since ratesโ began to decline,the marketโ has experiencedโค 7โ positive weeks of application data,alongside only 2 negative weeks,and a currentโ streak of 9 straight weeks of double-digit year-over-year growth.
However,translating these applications into actual inventory gains has proven slower than anticipated. Typically, 12-14 weeksโฃ of consistent positive purchase app data are needed to โฃsignificantly impact housing supply. While the last nine weeks represent โขthe strongest period of the year in terms of week-to-week data, the effect on inventory remains muted. Purchase applications generally translate to sales โwithin 30-90 days.
Weekly โฃpending home sales data offers aโข near real-time glimpse into market activity, though it can be affected by seasonal factors. The โlatest data showsโ a slight year-over-year โฃincrease: 64,232โฃ pending sales in 2025 compared to 61,043 in 2024. Last week marked the highest weekly โpending home sales figure since โฃthe market downturn in 2022.
Looking ahead, the ongoing government shutdown presents a growing threat to data availability and transaction timelines. โThe absence of theโฃ jobless claims report โis already confirmed, and further โฃdelaysโ in closings are anticipated the longer theโ shutdownโ persists. Critically, the release ofโค key inflation reports (CPI and PPI) will โbe suspended if the shutdown continues โขinto the โฃfollowing week, further obscuringโ the economic landscape.โ
Fed speeches and upcoming bondโ auctions will be โmonitored,โค but the primary focus โremains on resolving the government shutdown and mitigating its impact on the housing market.