If we were to apply the worst spreads from 2023 to today, mortgage rates would currently be 0.59% higher. While we are not at average spread levels, the improvement seen this year is a positive sign.
In my 2024 forecast, I do not specifically target mortgage rates, but rather work off the 10-year yield. With spreads being high in 2023, there was room for them to decrease, which they have. Despite a significant move without rate cuts, further assistance is needed to bring mortgage rates below 5.75%.
Purchase application data
Following a more than 1% decrease in mortgage rates recently, we will monitor purchase application data for the remainder of the year. Over the last 13 weeks, there have been eight positive and five negative prints in purchase application data. Weekly purchase applications increased by 3% last week, indicating a positive trend with low rates. Year-over-year decline was 4%, the smallest since 2022, primarily due to a low baseline.
Since the decline in mortgage rates starting in November 2023, there have been 20 positive, 18 negative, and two flat prints in week-to-week purchase application data. While not showing significant movement, getting mortgage rates below 6% and maintaining that level should lead to growth akin to the builders’ purchase application data.
Weekly housing inventory data
As mortgage rates have decreased, inventory growth has slowed, with seasonal factors coming into play soon. Despite the Labor Day holiday last week, the overall inventory growth trend in America has been positive without a housing bubble crash.
- Weekly inventory change (Aug. 30-Sept. 6): Inventory decreased from 704,335 to 703,646
- The same week last year (Sept. 1-Sept. 7): Inventory increased from 509,562 to 509,892
- All-time inventory bottom was in 2022 at 240,497
- Yearly inventory peak for 2024 was at 704,744
- Active listings for this week in 2015 were 1,195,353 for context
New listings data
In a positive trend, new listings data has shown growth this year compared to the lowest levels in 2023. While 2024 falls short of the minimum estimate for peak weekly new listings, it still represents a positive year for new listings.
- 2024: 61,599
- 2023: 49,661
- 2022: 58,004
Price-cut percentage
In a typical year, about one-third of homes undergo a price cut. Rising mortgage rates have led to an increase in price cuts, especially as inventory rises. With rates falling and seasonality taking effect, the pace of price cuts has slowed down recently.
Comparing price-cut percentages from recent years:
- 2024: 39.8%
- 2023: 36%
- 2022: 40%
Weekly pending sales
Real-time demand is reflected in Altos Research’s weekly pending contract data. While experiencing a seasonal decline, there is some year-over-year growth. It’s important to note that last year saw mortgage rates approaching 8% at this time, providing context for the current year-over-year data.
- 2024: 358,670
- 2023: 348,317
- 2022: 390,543
The week ahead: Inflation week
While inflation week may not hold the same significance as before, it remains important to track, especially with concerns about rising inflation in the coming months. The focus now is on month-to-month inflation numbers, with upcoming bond auctions, jobless claims data, and the used car price index to be released this week. The reaction of the bond market following last week’s job data will be worth monitoring.