If we were to apply the worst spreads from 2023 to today, mortgage rates would currently be 0.48% higher. Although we are still below average in terms of spreads, the improvement we have seen this year is a positive development.
10-year yield and mortgage rates
Last week, inflation data and testimony from Federal Reserve President Jerome Powell were positive for mortgage rates as the 10-year yield dropped to 4.20%. Breaking below this level has been challenging, so the key for this week is to see continued bond buying after the breach of 4.20%. Otherwise, we may need additional economic data or Fed announcements to push the yield lower.
Purchase application data
Recent trends in purchase applications have been positive, with four out of the last five weeks showing growth. Even though mortgage rates are not at 6%, which historically corresponds to positive trending purchase apps, the current improvement is noteworthy. It will be crucial to monitor this trend over the next six months as positive data could impact future existing home sales reports.
Since the decline in mortgage rates in November 2023, there have been 16 positive, 14 negative, and two flat prints in the week-to-week data. However, with rates rising earlier this year, demand has decreased. The year-to-date data for 2024 still shows 10 positive, 14 negative, and two flat prints.
Weekly housing inventory data
This week’s inventory data was affected by the July 4th holiday, so any decline should be viewed in that context. It is expected that inventory levels will normalize in the coming weeks.
- Weekly inventory change (July 5-12): Inventory decreased from 652,573 to 651,453
- The same week last year (July 7-14): Inventory increased from 466,534 to 471,603
- All-time inventory bottom in 2022: 240,497
- Yearly inventory peak for 2024: 652,573
- Active listings for the same week in 2015: 1,197,439
New listings data
New listings saw a significant decline this week, likely due to the holiday weekend. It will be interesting to monitor this trend in the coming weeks, especially as the seasonal decline period approaches.
Notably, new listings this week are lower than in previous years, marking a new low in new listing data. Here are the new listings for the last week over several years:
- 2024: 56,638
- 2023: 57,304
- 2022: 71,790
Price-cut percentage
As rates remain elevated, the price-cut percentage has increased compared to the last two years. This is a common occurrence in the housing market, especially when certain regions have higher inventory levels.
Recent data suggests that price growth will cool down in the second half of the year. Here are the price-cut percentages for last week over the past few years:
- 2024: 38%
- 2023: 33%
- 2022: 33%
Pending sales
Weekly pending contract data from Altos Research shows a slight increase in demand this year compared to the previous year. This data provides real-time insights into market demand.
- 2024: 381,524
- 2023: 377,650
- 2022: 419,524
The week ahead: Powell talks again, plus retail sales and housing starts
This week, we can expect more insights from Powell and other Fed presidents, along with key economic data such as retail sales and housing starts. It will be important to monitor single-family permits in the housing starts data and jobless claims for further market indicators.