Shocking analysts, mortgage purchase applications, recently released, actually grew 25% year-over-year. Growing purchase applications relate to a spurt in home sales – or at least the number of homes that will soon go under contract and eventually close. (Of course, mortgage purchase applications cannot capture the smaller percentage of homes with cash-paying buyers.)
“Wow, wow, wow, wow,” said housing exert Logan Mohtashami in his podcast, responding to the report showing huge growth in purchase applications. This surprising surge came despite:
- Stubbornly high interest rates,
- Trump’s inflationary “guerilla tariffs”(as he calls them), and
- High, but stabilizing home prices.
What caused the recent surge in purchase applications? Americans still need to buy homes, said Mohtashami of Housing Wire. “People don’t act like middle-aged stock brokers (spouting economic doom),” he joked. “Ordinary people have lives, they go to work, they have sex, they eat grapefruit in the morning.” And they continue to purchase homes.
To put into perspective the sharp growth in purchase applications, Mohtashami reminded us that “the bar was set very low. We’re working from (purchase-applications) levels that had been extremely low.”
Weekly housing inventory data
The most promising aspects of the housing market in 2025 for buyers:
- The increase in inventory and the slowing growth rate of home prices nationally.
- After several years following the COVID-19 pandemic, this year seems to reflect “a nearly perfect balance” between sellers and buyers. Behind us are the days of homes selling in a weekend with multiple offers, and buyers waiving home inspections to make their bids more attractive to sellers.
Home price cuts have returned
In a “typical” year, approximately one-third of homes experience price reductions. In this new market, homeowners adjust their sale prices as inventory levels rise and mortgage rates stay elevated. The growing price cuts and increasing Days on Market should not be viewed as a market collapse, but a return to a more sane, balanced market. Real-estate agents advising their clients on how to price their homes must also adjust to the new market reality.
Said the Housing Wire analyst: “The price-cut percentage looks perfectly healthy to me in a rising inventory environment where affordability is an issue; this is something I love dearly about the 2025 housing market.
Who knows what adverse impact Trump’s “guerrilla tariffs” will have on the economy. We’ll learn over the next year. Regardless, Americans still need homes in any economy. That is comforting news for now.