New listing data
The seasonal peak is here, and this year we don’t even see the additional sales that 2022 did, which is also looking like a normal year. Here are the new listings data for this week for the past three years:
- 2024 70,606
- 2023: 61,749
- 2022: 90,741
Our pre-launch numbers have been down recently, so for my 80K minimum peak call in 2024, it doesn’t look good. The data at the time of the sales collapse were very different.
Now, let’s look at new listings data from the years before COVID-19; those are the weekly numbers for this week. As shown in the figure below, in 80,000 and 100,000 This is the norm, over the past decade we have had several weeks of seasonal peaks in 110,000.
- 2015 81,875
- 2016 80,293
- 2017 84,293
- 2018 98,972
- 2019 87,278
Now, let me show you what a pressure seller profile looks like. The numbers speak for themselves, and if you know someone who keeps saying that housing over the past 10 years has been like 2008, I’ll tell you, that person can’t read.
- Year 2009 281,734
- year 2010 345,146
- year 2011 396,955
- 2012 318,041
Weekly housing inventory data
I’m almost ready to get an A grade on this year’s stock. With mortgage rates rising, inventory has reached my target level for the fifth time this year. 6-12 weeks is enough time for me to be very happy. My rule of thumb is that the inventory should have some positive print between weeks 11,000 and 17,000 As long as the interest rate is above 7.25%. Last week, we saw stocks growing 11,638!
- Weekly inventory changes (June 14 to June 21): Inventory growth from 634,132 arrive 645,770
- In the same week last year (June 16-June 23), inventories rose 460,668 arrive 466,534
- Historical inventory bottom occurs in 2022 240,497
- This week is peak 2024 inventories 645,770
- For some purposes, active listings this week in 2015 were 1,184,616
Price reduction percentage
On average, one in three homes loses price every year—a regular housing event that happens every year. When mortgage rates rise, demand falls and the price reduction percentage increases. When interest rates fall and demand improves, the price reduction percentage may decrease.
The data line is seasonal, and since the end of March we’ve seen continued year-over-year growth in markdown percentage. This is very different from what we see in 2023. Inventory levels are much healthier in 2024.
A few weeks ago on the HousingWire Daily podcast, I discussed that price growth data would cool down in the second half of the year. Here are last week’s price reduction percentages over the past few years:
- 2024: 38%
- 2023: 32%
- 2022: 31%
for sale
Below is our weekly open contract data to show immediate demand. Our demand has increased this year as more sellers become buyers. If mortgage rates continue to move lower, this contract number will grow. That’s why it’s critical to track 10-year yields, mortgage purchase apps and weekly pending contract data to get immediate leads on demand ahead of the existing home sales report.
So far, our pending contract data is still growing:
- 2024: 397,569
- 2023: 385,084
- 2022: 445,519
10-Year Yield vs. Mortgage Rates
There weren’t a lot of fireworks last week, with the 10-year yield just bouncing back and forth in a small channel. Aside from what happened on Friday (discussed below), mortgage rates were little changed. Here’s a look at the week’s action leading up to Friday:
What happened on Friday? PCE inflation data was slightly lower than expected and bond yields fell. Then, all of a sudden, yields shot up and I got a barrage of questions about what was going on. Sometimes late-quarter inflows into bonds can cause extreme moves up and down on Fridays, the summer trading days. Has their fund gone bankrupt and do they need to sell bonds? perhaps. Is the Bank of Japan selling government bonds in preparation to defend its currency? I’ll use end-of-season trades as an explanation.
mortgage spread
The spread between 30-year mortgage rates and 10-year yields has been an issue since 2022, and it got worse after the March 2023 banking crisis. However, spreads have improved this year.
If we took the worst spread levels from 2023 and combined them to today, mortgage rates would be 0.51% higher. While our spreads are far from average, the improvement we’ve seen this year is a plus.
Purchase application data
Last week was the third straight week of rising purchase application data, the first real streak of 2024. Since starting at the lowest level, growth doesn’t mean much unless it has duration. However, this is the first positive trend we’ve seen on the data line.
Since mortgage rates began to fall in November 2023, we have seen 15 positive photos, 13 negatives, and Two flat prints in weekly data. However, as mortgage rates began to rise earlier this year, we observed a decline in demand. The data so far in 2024 is not promising; 9 positive photos, 13 negatives, and two Flat print. This suggests that we are not experiencing a true surge in mortgage demand and that the volatility we are seeing in the data is simply a rebound from low levels.
The week ahead: Powell, ISM, jobs week and fireworks!
Guys, this is going to be a crazy week. First of all, it’s jobs week and the labor market is very important for interest rates right now because we’ve shown for several months that the labor market, while not collapsing, has been getting softer. We have the Institute for Supply Management (ISM) manufacturing data on Monday and Powell will speak on Tuesday, which will also include job openings. Thursday is July 4th and then it’s Jobs Friday! This could be the craziest week of the year so far, so buckle up and get ready for some economic bond trading fireworks.
