Mortgage spreads
In 2024 and 2025, better mortgage spreads played a crucial role in supporting the U.S. housing market. Without improved spreads, mortgage rates could have been significantly higher. It is estimated that if the worst spread levels from 2023 were applied to current rates, mortgage rates would increase by an additional 0.81%, approaching 8%. Conversely, if spreads were at typical levels, mortgage rates could be around 6%, which is 0.72 to 0.82% lower than the current rates.
Looking ahead to 2025, there is an anticipated improvement in spreads averaging between 0.27% to 0.41%, compared to the average of 2.54% in 2024. The goal is to continue enhancing and maintaining better spreads, especially when yields decrease.
Purchase application data
As we move past the holiday season into 2025, it’s important to analyze the purchase application data. While there was a 27% week-to-week growth in the latest data, it’s essential to view this trend skeptically due to the annual drop around Christmas and New Year’s. Last week, purchase applications rose 27% week-to-week but were down 2% year-over-year. It’s crucial to consider the historical patterns of this data line.
Weekly pending sales
The latest weekly pending contract data from Altos Research provides valuable insights into real-time housing demand trends. While there has been a slight year-over-year decline in pending sales, it remains positive compared to 2023 data. The positive trend in pending sales in recent months can be attributed to mortgage rates trending towards 6% last year.
Weekly housing inventory data
Tracking weekly housing inventory data is essential for understanding market trends. Traditionally, the seasonal low in inventory occurs in January or February, although recent years have shown variations due to the pandemic. It’s crucial to monitor inventory changes to anticipate market conditions.
New listings data
Forecasting new listing growth for 2025 is crucial, considering historical trends. Aiming for increased new listings during peak seasons can positively impact the market. Tracking new listings data provides insights into market dynamics and potential growth.
Price-cut percentage
Understanding price-cut percentages is essential for gauging market competitiveness. Monitoring trends in price cuts can provide valuable insights into pricing strategies and market conditions.
The week ahead: Bond auctions, jobless claims, and existing home sales
Anticipating economic indicators for the upcoming week, such as jobless claims and existing home sales, is crucial for market analysis. Monitoring bond auctions and government policies can impact market trends and interest rates.
Stay informed and prepared for potential market fluctuations in the week ahead.