Have lower mortgage rates started to slow housing inventory? I have a simple weekly growth model Altos Inventory information: When the interest rate is higher, exceeding 7.25%, the inventory should be at 11,000-17,000 weekly. This has happened six times this year, and while it would be an average inventory growth level with a higher rate of growth, it didn’t happen once last year.
Now, with mortgage rates recently falling below the 7.25% level, inventory can no longer match this growth pattern. Still, I think last month’s inventory growth was healthy. We are getting closer to the seasonal decline in active inventories, which may be one of the reasons for the slowdown. However, the 2024 numbers look much healthier than the 2023 numbers, as we desperately need to move away from historically low levels of active listings.
Weekly housing inventory data
As the traditional seasonal decline in active inventories approaches, we are working toward a return to 2019 levels. Oddly, these levels were the lowest in the five years prior to 2020. Inventories increased this week compared with last quarter 5,721.
- Weekly inventory changes (August 9 to August 16): Inventory growth from 692,752 arrive 698,473
- Same week last year (August 11-August 18): Inventories rose 492,903 arrive 497,361
- Historical inventory bottom occurs in 2022 240,497
- Annual inventory peak in 2024 will occur this week 698,473
- For some purposes, active listings this week in 2015 were 1 212,129
New listing data
Another positive story is new listings data – a key variable in explaining inventory growth this year. While I didn’t meet my minimum goal of adding 80,000 new listings during this year’s peak season, I’m pleased to see the growth. Two weeks ago I did get a little excited about the increase in new listings as mortgage rates dropped, but we didn’t get a great follow-up this week. However, 2024 is still an improvement on 2023, which was the lowest year on record for new listings.
Here are the number of new listings last week over the past few years:
- 2024: 67,153
- 2023: 59,158
- 2022: 67,560
Price reduction percentage
On average, one in three homes loses price every year—standard housing activity. As mortgage rates rose earlier this year, leading to a buildup of inventory, the percentage price reductions were higher than in the past two years. We are getting closer to the point where the 2024 price reduction percentage data will be below 2022 levels every week.
A few months 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: 39.4%
- 2023: 36%
- 2022: 39%
Items for sale each week
Below is altos research corp. Weekly open contract data shows immediate demand compared with the same period last year. We are only showing signs of growth year over year.
- 2024: 365,681
- 2023: 365,097
- 2022: 408,689
Purchase application data
With mortgage rates recently down more than 1%, we’ll draw a line at this point to track purchase application data for the remainder of the year. In the past 10 weeks, purchase application data six positive factors relatively four negatives. Keep in mind that buying apps typically observe 30-90 days before sales figures are reached, so there won’t be an immediate impact. Nonetheless, it does explain the recent Nar While people were looking for major negative data, the pending home sales data came in better than expected.
Since mortgage rates began to fall in November 2023, we have seen 18 positive photos, 17 negatives and Two flat prints in weekly data. However, as mortgage rates began to rise earlier this year, we observed a decline in demand.
10-Year Yield vs. Mortgage Rates
My 2024 predictions include
- Mortgage interest rates range from 7.25%-5.75%
- The 10-year Treasury bond yield is between 4.25% and 3.21%
Due to hot inflation data and economic data exceeding expectations earlier, this year’s 10-year government bond yield is as high as 4.70%. However, as mortgage spreads improve in 2024, mortgage rates are not tracking 10-year rates as closely as they were last year.
Now, we are trying to break through the key 10-year yield level of 3.80%, which has been difficult since the beginning of the year. We need more soft economic and labor data to break out and stay lower. So far, that hasn’t happened, and we’ve had three tests of this level, so it’s going to be difficult for mortgage rates to get below 6% without a break above this level.
mortgage spread
Mortgage spreads a negative storyline in 2023 as Silicon Valley Bank The resulting banking crisis pushed them to new cycle highs. We don’t have that variable this year, and spreads are improving sooner than I thought, which is helping mortgage pricing. We also have significant downside to our spreads.
If we took the worst spread levels from 2023 and combined them to today, mortgage rates would be 0.50% Now higher. While our spreads are far from average, the improvement we’ve seen this year is a plus.
The week ahead: Powell’s Jackson Hole talk
We have a big event in Jackson Hole on Friday where Fed Chairman Jerome Powell will give a speech. Powell is widely expected to lay the groundwork for a first federal funds rate cut in September. We have to remember that even though the Fed has cut interest rates three times, they still have restrictive policies. We’ll hear more from the Fed Chairman this week, and we’ll get data on existing and new home sales, as well as some bond and manufacturing data. In short, we have a lot to change this week
