Below are the number of listings for the previous week over the past few years:
- 2024: 68,407
- 2023: 61,707
- 2022: 73,462
Weekly Housing Inventory Data
In a positive development for 2024, active inventory is steadily increasing. While we are still not at normal inventory levels considering the current population, progress is being made. This growth in inventory alongside the current high mortgage rates is encouraging. It’s important to build up inventory levels while rates are elevated, as they may not remain this way indefinitely. Although we did not reach my target range of 11,000-17,000 this week, inventory saw a solid increase of 8,883.
- Weekly Inventory Change (July 19-26): Inventory increased from 668,363 to 677,246
- Same Week Last Year (July 21-27): Inventory rose from 480,448 to 485,743
- All-time Inventory Bottom was in 2022 at 240,497
- Yearly Inventory Peak for 2024 is 677,246
- For context, active listings for this week in 2015 were 1,207,259
Price-Cut Percentage
In a typical year, about one-third of all homes experience a price cut, which is a common occurrence in the housing market. As mortgage rates have remained elevated, the price-cut percentage is higher compared to the past two years. Certain regions in the U.S. have higher inventory levels than the national average. A significant difference between 2024 and 2022 data is that in 2022, home sales were declining throughout the year, leading to record low new listings in the latter half. Currently, home sales are stagnant at historically low levels.
A few weeks ago, on the HousingWire Daily podcast, it was mentioned that price-growth data will likely cool down in the second half of the year. Here are the price-cut percentages for the previous week over the past few years:
- 2024: 39%
- 2023: 34%
- 2022: 36%
Pending Sales
Below is the Altos Research weekly pending contract data year-over-year to demonstrate real-time demand. With more sellers also being buyers, there is slightly higher demand this year. Purchase application data typically looks ahead 30-90 days, and significant growth in purchase applications was only seen at the end of 2022 and 2023 when rates dropped by over 1%.
- 2024: 381,704
- 2023: 375,995
- 2022: 417,887
Purchase Application Data
While purchase application data has been slow to respond to lower mortgage rates, four out of the last seven weeks have shown positive trends. This is the most favorable 7-week period in 2024 so far. Not much activity is observed in purchase applications since the end of the seasonal peak in May. The most significant growth in purchase applications occurred when mortgage rates fell back to 6% in late 2022 and early 2023. Current mortgage rates remain elevated compared to those levels.
Since the decline in mortgage rates began in November 2023, there have been 16 positive, 16 negative, and two flat prints in the week-to-week data. However, as rates started to rise earlier this year, demand decreased. The year-to-date data for 2024 shows 10 positive prints, 16 negative prints, and two flat prints.
10-Year Yield and Mortgage Rates
The 10-year yield has been hovering around the 4.20% mark, showing resistance to significant movements. Despite progress in combating inflation, the 10-year yield remains at 4.20%. While there hasn’t been much movement in rates in the past two weeks, upcoming events such as the Fed meeting and jobs week could impact rates.
Mortgage Spreads
If mortgage spreads had not improved this year, the housing market would look very different today. Improved mortgage spreads have helped keep rates relatively stable. Although spreads are not yet at average levels, the progress made this year is significant.
If we reverted to the worst spread levels from 2023, mortgage rates would be 0.58% higher currently. While we are still below average in terms of spreads, the improvement seen this year is a positive development.
The Week Ahead: Fed Meeting and Jobs Week!
This week is crucial for economic data with the upcoming Fed meeting and jobs week coinciding with the 10-year yield at a key level of 4.20%. Alongside the Fed meeting and job data, there will be releases of home price data, pending home sales, and the employment cost index. Listen to Monday’s podcast for insights on the potential Fed rate cuts this week. The verbiage used will be crucial given the recent softening of labor data. Stay informed as upcoming events could influence short-term and long-term rate trends.