It’s been a week since the NAR settlement changes took effect. Have these changes impacted any of the housing data we track each week? Since buyer’s premium payments are not as transparent as they used to be, I had been expecting delays in the home buying process as people adjusted to the new rules.
The last time we saw this effect was in 2015, when mortgage lenders had to start consolidating TRID, it caused a one-month plunge in existing home sales because it took longer to close the deal. Those sales rebounded over the next month as everyone figured out how to operate. Let’s see if something similar happens in the first official data week after the NAR settlement changes.
Weekly housing inventory data
Due to the recent decline in mortgage rates, inventory growth has slowed below my weekly target of 11,000-17,000. This is not surprising since my goal is an average weekly growth rate of over 7%. My premise is that higher interest rates create more inventory growth because they limit mortgage demand, so a slowdown in the inventory growth rate looks normal to me. There’s nothing in this data that makes me feel meaningfully affected by the NAR settlement changes. Home inventory grew last week 6,271.
- Weekly inventory changes (August 16 to August 23): Inventory growth from 698,473 arrive 704,744
- Same week last year (August 18-August 25): Stocks rose 497,361 arrive 503,924
- Historical inventory bottom occurs in 2022 240,497
- Annual inventory peak in 2024 will occur this week 704,744
- For some purposes, active listings this week in 2015 were 1,215,873
New listing data
New listings data are experiencing traditional seasonal declines. 2024 is the second-lowest new launch year on record, but we still saw growth from last year, which is positive. There’s nothing here that strikes me as unusual.
Here are the number of new listings last week over the past few years:
- 2024: 64,595
- 2023: 54,584
- 2022: 64,670
Price reduction percentage
On average, one in three homes loses price every year—standard housing activity. Rising mortgage rates last year and this year have led to deeper price cuts, especially as inventory builds. The data line has slowed recently as interest rates have fallen, but we are seeing some growth every week.
In theory, if the seller doesn’t pay the buyer’s commission out of the seller’s proceeds, the seller makes the buyer’s home more expensive and the buyer has to bring more money to close the deal. While we’re seeing some growth every week, there’s nothing conclusive about the price reduction percentage data.
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: 39.9%
- 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 do see demand picking up a bit week over week, the year-over-year growth is different than last week. Still, there’s nothing here that makes me think the law has changed anything.
- 2024: 368,363
- 2023: 361,337
- 2022: 405,363
In summary, I don’t see any indication in the above data that we haven’t seen the impact of the NAR settlement changes yet. This is just the first week: I’ll be monitoring this for four weeks to see if this impacts the monthly sales numbers like TRID, but as of today, there has been no impact.
10-Year Yield vs. Mortgage Rates
My predictions for 2024 include:
- Mortgage interest rates range from 7.25%-5.75%
- The 10-year Treasury bond yield is between 4.25% and 3.21%
Even with Jerome Powell’s negative jobs revision report and baby turn last week, the famous 3.80% level I’ve discussed all year has held on to the bottom line. This is very impressive. Likewise, if labor and economic data soften, we could lower yields and mortgage rates.
mortgage spread
Mortgage spreads a negative storyline in 2023 as Silicon Valley Bank The resulting banking crisis pushed them to new cycle highs. This year we don’t have that variable and spreads have improved.
If we took the worst spread levels from 2023 and combined them to today, mortgage rates would be 0.49% Now higher. While our spreads are far from average, the improvement we’ve seen this year is a plus.
in my interview CNBC On Friday with Yahoo Finance, I discussed future rate cuts and how a more dovish Fed should lower spreads, bringing rates down 0.75%-1% and back to more normal levels.
Purchase application data
With mortgage rates down more than 1% recently, we’ll draw the line at this point and track purchase application data for the remainder of the year. Purchase application data over the past 11 weeks six positive factors relatively five negatives. The weekly decline last week was 5%.
Since mortgage rates began to fall in November 2023, we have seen 18 positive photos, 18 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 week ahead: Housing report and PCE inflation data
It’s going to be a less dramatic week in terms of economic data, but we have a lot of housing reports, some home price data reports, pending home sales and buying apps. The Fed’s main inflation data – quarterly and monthly reports on personal consumption expenditures – are due out this week. Federal Reserve Chairman Waller will also deliver a speech. I’d be interested to see if the 3.80% level is maintained again this week.
