He says that he’s changed, and he’s making lots of promises. But he had his chance and blew it. He will never see your love again. When ladies want to let their guy know, in no uncertain terms, that it’s over, only one song suffices: “My Lovin’ (You’re Never Gonna Get It),” by the sophisticated ladies of En Vogue. Released in the spring of 1992, it was the debut single of their second album, Funky Divas. The runaway hit reached the Billboard top 10 and hit No. 1 on the R&B chart. Written and produced by the Oakland team of Denzil Foster and Thomas McElroy, former members of Club Nouveau, it boasts one of the most memorable a cappella breakdowns in pop music, beginning with an announcer stating: “And now it’s time for a breakdown.” Radio DJs toyed with this by exaggerating the song’s pause and inserting a comical breakdown before starting it up again.
There’s no comic relief on offer in the U.S. housing market. Total single-family home sales — new plus existing – have run below November 2021’s post-pandemic peak of an annualized rate of 6.51 million for 43 straight months (light green line). That makes for three months longer than the late-2000s housing bust that ran from July 2005’s peak (7.63 million) to November 2008’s trough (3.78 million). In duration, the current slump “wins,” but the peak-to-trough decline shows total sales are “only” 36% off peak today vis-à-vis the 50% compression in the Great Recession.
Given home price appreciation also outran the prior cycle, that tells us there’s more downside to come. According to the New York Fed’s Credit Access Survey, the outlook for mortgage rejection rates has run at an elevated 40% and 50% for two years running (teal line). Since the survey’s inception, expected mortgage rejection rates had been rangebound between 30% to 40%. The step up followed the completion of the Fed’s tightening cycle in July 2023 and April 2023’s trough in the unemployment rate. With headline payroll job growth downshifting sharply after incorporating recent revisions amidst headcount reductions outside education and health care, an improvement in rejections seems out of reach.
Given this backdrop, the pick-up in the Mortgage Bankers’ Association’s (MBA) mortgage application purchase index has a built-in spuriousness to it when contrasted with other indications of weakening housing demand (e.g., pending home sales and homebuilder foot traffic). MBA data do jibe with the New York Fed’s expected mortgage application rate, which bottomed at 5.4% in October 2023 and has since climbed to 7.2% in June 2025 (fuchsia line). Caveat emptor: The higher channel drawn by the MBA’s conventional purchase index may not be sustained in this job market. While the conventional index rose to 201.0 in the week ended August 1st, well north of its February 21st low of 168.8, the magnitude of any true recovery remains challenged by mortgage rates (blue line). At 4.23%, the U.S. 10-year Treasury yield (inverted yellow line) and Freddie Mac’s 30-year mortgage rate at 6.72% (inverted red line) have drifted lower in 2025. But both rates are materially above their respective 2024 lows of 3.65% and 6.08%.
The intersection of elevated rejection expectations and still-rising mortgage applications asks: Who’s applying for these mortgages? One answer is lower-quality buyers down the income stack and FICO scale. Equally, rising joblessness is likely causing lenders to nix agreed-upon deals between buyers and sellers, i.e., cancelling transactions.
To that end, Zelman & Associates’ (ZA) latest weekly Western Markets Homebuilding Report is illustrative. Sharing with the QI Pro chat, Danielle emphasized: “It was CANCELLATIONS that made a boom this week.” Per ZA: “Last week’s cancellation rate increased 500 basis points sequentially to 19%, marking the highest level observed since the first week of November 2023. Cancellation rates had been hovering in the 14-18% range across the past three months.” That ZA noted “the industry’s push toward more spec product limits opportunities for cancellations as buyers sit in backlog for shorter periods of time” acknowledges cancellations have been suppressed in recent years. In other words, today’s higher cancellation rates are that much higher in reality.
Affordability issues brought about by the Fed’s High for Long stance also could be taking a toll. Home selling conditions for upper-income and middle-income households, the largest slices that are homeowners, plumbed to a new cycle low of 100.5 in July (purple line). The current observation harkens back to the lows of the 2001 recession and the downward acceleration in the late-2000s housing bust. More importantly, the momentum during each episode guided home sales. Freshly depressed home selling conditions mean that total home sales could test November 2023’s post-pandemic low of 4.11 million in coming months. Not even the “rally” in buying conditions from the same cohorts (upper and middle), to 44.0 in July from April’s recent low of 27.5 (orange line), spurs higher conviction for the selling rate.
The refrain of “You’re Never Gonna Get It” has also manifested in slumping realtors’ commission checks and a stall in real estate employment growth. Payrolls for this cohort topped in February (light blue line) and have since turned, with the five-month annualized rate sliding from a two-year high of 1.6% in February to -0.1% in July (lilac line). Save the housing bust, there aren’t many episodes in the last quarter century when real estate payrolls contracted on this basis. Guess they heard the announcer?