Housing demand favors markets with pricing alignment

"Housing demand in 2026 has not disappeared under the weight of elevated mortgage rates. But it is becoming increasingly selective. The latest housing data suggests buyers are concentrating in markets where pricing remains more aligned with purchasing power while higher-cost markets and pandemic-era boom regions are seeing more normalized conditions emerge."

"In his latest Housing Market Tracker, HousingWire Lead Analyst Logan Mohtashami noted that weekly pending home sales climbed to 79,220, up from 74,212 a year ago, while active inventory growth is approaching negative year-over-year territory. If we had the worst mortgage spread levels of 2023, mortgage rates would be 7.57% today, not 6.42%, Mohtashami wrote."

"Historically, mortgage spreads have ranged between 1.60% and 1.80%. Last week, spreads closed at 1.96%, helping keep mortgage rates below the psychologically important 7% threshold. That spread improvement is helping preserve housing demand nationally. But where that demand is actually showing up is becoming increasingly tied to affordability and market functionality."

"Several Midwest housing markets are now posting some of the strongest inventory absorption trends in the country. Cleveland currently carries roughly 1.2 months of inventory, while Columbus, Ohio, sits near 1.3 months. Detroit remains similarly constrained. In Cleveland, homes are being absorbed at more than 20% of total inventory weekly, nearly double the national pace of roughly 12%."

Weekly pending home sales rose to 79,220, up from 74,212 a year earlier, while active inventory growth is nearing negative year-over-year territory. Mortgage rates remain below the 7% threshold partly because mortgage spreads improved, with spreads closing at 1.96% and historically ranging between 1.60% and 1.80%. Demand is increasingly tied to affordability and market functionality. Several Midwest markets show strong inventory absorption, including Cleveland at about 1.2 months of inventory and Columbus near 1.3 months, with Cleveland absorbing over 20% of inventory weekly. Detroit remains constrained, while some Sun Belt markets such as Houston, San Antonio, and Austin show higher inventory levels and move closer to balanced conditions.

Read at www.housingwire.com