Housing Inventory Growth Stalls as Mortgage rates Dip, Government Shutdown Looms
WASHINGTON – A surprising slowdown in housing inventory growth 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 complex picture complicated by potential disruptions from the ongoing government shutdown.
The housing market is showing strong signals of recovery. Through 35 consecutive weeks, purchase applications have demonstrated positive year-over-year data, with 22 of those weeks exhibiting double-digit growth. This momentum has accelerated since mortgage rates fell below 6.64%, approaching the key 6% level closely watched by analysts. In the nine weeks since rates began to decline,the market has experienced 7 positive weeks of application data,alongside only 2 negative weeks,and a current 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 weeks of consistent positive purchase app data are needed to significantly impact housing supply. While the last nine weeks represent the strongest period of the year in terms of week-to-week data, the effect on inventory remains muted. Purchase applications generally translate to sales within 30-90 days.
Weekly pending home sales data offers a near real-time glimpse into market activity, though it can be affected by seasonal factors. The latest data shows a slight year-over-year increase: 64,232 pending sales in 2025 compared to 61,043 in 2024. Last week marked the highest weekly pending home sales figure since the market downturn in 2022.
Looking ahead, the ongoing government shutdown presents a growing threat to data availability and transaction timelines. The absence of the jobless claims report is already confirmed, and further delays in closings are anticipated the longer the shutdown persists. Critically, the release of key inflation reports (CPI and PPI) will be suspended if the shutdown continues into the following week, further obscuring the economic landscape.
Fed speeches and upcoming bond auctions will be monitored, but the primary focus remains on resolving the government shutdown and mitigating its impact on the housing market.
