Newsletter: Issue 29, 2026

G’day

Mortgage rates remained relatively stable this week as softer inflation, weaker consumer spending and recent labor-market data provided some support.

Meanwhile, the number of homes available for sale moved slightly above last year’s level. The increase is only 1.28%, but it is worth watching as elevated mortgage rates continue to slow housing demand.

The market isn’t experiencing a dramatic shift. Instead, we’re seeing gradual changes in inventory, price reductions and affordability that could influence the remainder of the year.

In this issue:

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Mortgage rates remained relatively stable this week, with Freddie Mac's weekly survey putting the average 30-year fixed rate at 6.67%.

The bigger story was a string of softer economic reports: July consumer inflation eased slightly, producer prices were flat for the month, and Friday's retail sales report showed consumer spending unexpectedly declined 0.6%.

Combined with the recent weakening in the labor market, those reports reduced expectations for a Federal Reserve rate hike in September and helped Treasury yields move lower following Friday's retail sales release. Housing remains constrained by affordability, however, with July existing-home sales falling 1.7% as elevated mortgage rates and record home prices continued to weigh on buyers. Inventory has improved to roughly a 4.6-month supply, giving buyers more negotiating room than they have had in recent years.

Bottom line: The economic data is beginning to lean in a more rate-friendly direction, but we're not out of the woods yet. Buyers may have more leverage and selection than they realize, while sellers need to recognize that today's affordability-sensitive buyer is increasingly selective on both price and condition.

Ryan R. Walmsley | Sr. Loan Officer, American Pacific Mortgage | NMLS #382258

The number of single-family homes available for sale is now approximately 1.28% higher than it was a year ago.

That isn’t substantial growth, but it marks a change from the relatively uneventful inventory trend we have seen throughout 2026.

Higher mortgage rates generally weaken demand because monthly payments become less affordable. Homes take longer to sell, which allows more active listings to accumulate.

Logan Mohtashami’s weekly housing data has consistently shown demand slowing when mortgage rates move above approximately 6.64%. Rates have recently been around that level, but they haven’t moved above 7%, so the resulting increase in inventory has remained modest.

Improved mortgage spreads have helped keep rates below 7%, despite Treasury yields remaining near their yearly highs. Without that improvement, mortgage rates and inventory could both be considerably higher.

It’s also important to remember that inventory has already recovered significantly from the record-low levels experienced during the pandemic. As the market moves closer to more historically normal inventory levels, producing further growth naturally becomes more difficult.

The question now is whether inventory can continue increasing before the normal seasonal decline begins later in the year.

Approximately one-third of homes typically receive a price reduction before they sell. Price adjustments are a normal feature of the housing market and aren’t automatically a sign that home values are falling.

The percentage of listings receiving price reductions has remained below last year’s level throughout much of 2026.

That difference is now narrowing.

Mortgage rates are higher than they were at this point last year, placing additional pressure on affordability and slowing buyer demand. If rates remain elevated or move higher, the percentage of homes reducing their asking price could soon match or exceed last year’s level.

That doesn’t mean national home prices are suddenly falling sharply.

Most national home-price indexes are still showing annual growth of approximately 1% to 2%. However, price growth has slowed considerably, and continued pressure from mortgage rates could flatten prices further.

The national numbers also don’t tell us exactly what is happening within an individual neighborhood. Local inventory, recent sales, property condition and competing listings remain far more useful when determining how a particular home should be priced.

This week’s reports point to a housing market moving gradually rather than dramatically.

Softer inflation, weaker consumer spending and the recent slowdown in employment are creating a more supportive environment for mortgage rates. However, rates remain elevated and geopolitical uncertainty is continuing to influence Treasury yields.

At the same time, inventory is finally showing slight year-over-year growth. An increase of 1.28% isn’t enough to transform the market, but it gives buyers more homes to compare and makes accurate pricing increasingly important for sellers.

For buyers, the combination of additional inventory and slower sales can create opportunities to negotiate on price, repairs, concessions or closing costs. Mortgage rates remain the main affordability obstacle, but the current market may offer more flexibility elsewhere in the transaction.

For sellers, the message remains consistent: buyers are highly selective and focused on value. A home that is priced appropriately and presented well can still attract attention, but starting above the market can lead to extended time on market and an eventual price adjustment.

This isn’t a market collapse, nor is it the beginning of a major housing recovery. It is a slow-moving market in which affordability continues to determine demand.

This week brings reports on builder confidence, housing starts and pending home sales.

I’ll be watching whether inventory can maintain its modest year-over-year growth and whether the percentage of listings with price reductions moves closer to or above last year’s level.

Mortgage rates remain the deciding factor. If they move higher, demand could weaken further and inventory may continue growing. If rates ease, buyer activity could improve and slow that inventory growth.

I’ll keep you posted.

See you next week,

The West Valley market has its own story right now — and if you are buying or selling, you deserve real answers, not noise. Head to my website for straight talk, no pressure, and a calm read on exactly where you stand.