Here is a snapshot of the weekly purchase application data as rates began to rise in late January:
- 14 negative prints
- 2 flat prints
- 2 positive prints
Although the volume of purchase application data didn’t show significant downside earlier in the year, the weekly data was predominantly negative. The trend shifted in late January when mortgage rates started to climb, resulting in a decrease in demand.
Now, let’s take a look at the weekly purchase application data since mortgage rates began to decline in mid-June:
- 12 positive prints
- 5 negative prints
- 6 consecutive weeks of positive gains
- 9% positive year-over-year growth last week
While the fluctuations in volume have been minimal this year, there is a noticeable difference in the data now. The 12 weeks of positive data coincided with mortgage rates trending towards 6%. The recent increase in rates over the past few weeks will be interesting to monitor.
Weekly pending sales
Below is the Altos Research weekly pending contract data reflecting real-time demand. The data line is seasonally influenced, as shown in the chart below. It’s important to consider the positive year-over-year data in light of mortgage rates reaching 8% a year ago. The recent decline in mortgage rates has strengthened the weekly data, but the recent uptick in rates may hinder this progress.
- 2024: 354,816
- 2023: 326,593
- 2022: 358,740
Weekly housing inventory data
Three weeks ago marked the peak inventory growth in 2024, hitting the model range without the influence of higher mortgage rates. However, inventory growth slowed in the following weeks, reaching 3,273. While seasonality plays a role, the notable achievement in 2024 was increasing active inventory, a feat not accomplished from 2020-2023.
- Weekly inventory change (Sept. 27-Oct 4): Inventory rose from 731,017 to 734,290
- The same week last year (Sept. 28-Oct 5): Inventory rose from 534,746 to 537,032
- The all-time inventory bottom was in 2022 at 240,497
- The yearly inventory peak for 2024 is 734,290
- For context, active listings for this week in 2015 were 1,169,733
New listings data
2024 has seen a positive trend in new listings data, addressing the need for more sellers. While falling short of the minimum target during peak months, the bounce from 2023, the lowest level ever, is a noteworthy improvement.
- 2024: 60,655
- 2023: 58,103
- 2022: 58,083
Price-cut percentage
In an average year, one-third of homes experience a price cut, reflecting standard housing activity. The increase in mortgage rates has led to a rise in price cuts, particularly with rising inventory. The recent decline in rates has moderated the price-cut percentage. The Pending New Median Price Index has shown significant growth, which will be discussed in the upcoming Altos podcast.
Comparing price-cut percentages over the past few years:
- 2024: 39.5%
- 2023: 38%
- 2022: 42%
The week ahead: Fed speeches, bond auctions, and inflation week
This week, we anticipate insights from several Fed presidents following the recent jobs report. Additionally, bond auctions and CPI/PPI inflation data will be released. However, the labor market remains a key driver of the current scenario. Monitoring the reaction of purchase application data to mortgage rate fluctuations will provide valuable insights into market trends.