Check out the latest listings from the past few years:
- 2024: 62,876
- 2023: 57,229
- 2022: 59,458
Price-cut percentage
In a typical year, about one-third of homes experience a price cut. The increase in mortgage rates in recent years has led to a rise in price cuts, especially with an increase in inventory. When mortgage rates decreased, the price-cut percentage also decreased slightly. As rates are rising again, it will be interesting to see how this affects the data. Seasonal trends typically result in a decrease in price-cut percentages towards the end of the year. The chart below illustrates a period when active inventory levels were at 240,000, resulting in historically low price-cut percentages.
A few months ago, in a HousingWire Daily podcast, it was mentioned that price growth would slow down in the second half of the year. However, it seems that the forecasted price growth for 2024 of 2.33% may be underestimated.
The price-cut percentage data is currently below the levels of 2022 and risks following an earlier seasonal decline compared to 2022 and 2023. With recent increases in mortgage rates, the next 10 weeks will be crucial in determining any significant changes in the data.
Here are the price-cut percentages from last week in the past few years:
- 2024: 39.62%
- 2023: 38%
- 2022: 42%
10-year yield and mortgage rates
The forecast for 2024 includes:
- A range for mortgage rates between 7.25%-5.75%
- A range for the 10-year yield between 4.25%-3.21%
Channel ranges for mortgage rates and the 10-year yield are forecasted to monitor key economic data points and anticipate rate movements. The relationship between the 10-year yield and 30-year mortgage rates is crucial in understanding market dynamics.
A critical threshold around 3.80% on the 10-year yield has been identified, with corresponding mortgage rates of approximately 6.25% for 2024. Economic data and labor trends play a significant role in determining whether rates will stay below this level or decrease further.
Monitoring labor data over inflation remains a priority, as recent economic and labor reports have exceeded expectations. The podcast linked provides insights into the impact of these events on market conditions.
Mortgage spreads
The mortgage spread situation has improved in 2024 compared to 2023, indicating a positive trend. While not yet back to normal levels, the progress in spreads is a positive sign for the mortgage market. The improvement in spreads prior to the Fed rate cut suggests further potential for decline in the future.
Purchase application data
Recent increases in mortgage rates may impact purchase application data in the coming weeks. Previous instances of rate hikes have shown varying effects on weekly purchase application trends. Monitoring these trends is essential to understanding market demand dynamics.
Weekly purchase application data during periods of rising rates and falling rates have shown fluctuations in demand levels. It will be important to observe how higher rates affect market activity moving forward.
Weekly pending sales
Real-time demand can be assessed through Altos Research weekly pending contract data, which exhibits seasonal fluctuations. The impact of rising rates on this data line will be crucial to monitor, especially considering the positive year-over-year trends.
Observing weekly pending sales from the past few years:
- 2024: 350,455
- 2023: 325,584
- 2022: 351,527
The week ahead: Fed speeches, retail sales and housing starts
The upcoming week will feature speeches from various Fed presidents, bond auctions, and retail sales data. Monitoring the impact of rising rates on purchase applications, builder confidence, and housing starts will provide insights into market conditions.