Seasonal home filing peaks and troughs have occurred later than usual over the past few years. Last week, we saw a significant drop in both active inventory and new listings, which is normal, but we may have an election bias here. Over the past two years, since mid-November, mortgage rates have come down, and we’ve seen positive, forward-looking data on housing demand. Will it be like that again?
Weekly housing inventory data
If we have seen a peak in inventory, the best case for housing in 2024 is that we have healthy enough inventory growth to handle demand if housing prices fall to 6% or less. Also, my normal healthy inventory growth model – between 11,000 and 17,000 per week – remains consistent this year, as we don’t see more than 17,000 prints in 2024 but fewer prints between 11,000 and 17,000, which we don’t know about’ I didn’t do it at all last year.
- Weekly inventory changes (Nov. 1-Nov. 8): Inventory has fallen 735,718 to 721,576
- In the same week last year (Nov. 3-Nov 10): Inventory increased from 566,882 to 566,941
- The all-time inventory low was in 2022 240,497
- 2024 peak inventory so far 739,434
- In other context, active listings for this week in 2015 were 1,140,557
New listing data
Another good story for 2024 has been the growth of new listing data. Yes, we didn’t hit my target this year – we missed by 5,000 – but growth is growth. Remember all those years of bogus real estate expert stories that we’re going to see tons of new listings because of the Silver Tsunami, the Airbnb boom, and depressed real estate sellers? 2024 will be the second lowest year for new listings ever. And last week, we had the lowest listing data in history.
New listings data can fluctuate wildly from week to week, and this past week was a big dive. Maybe some people decide to wait to list their houses until after the election. However, it’s almost Thanksgiving and a seasonal drop in inventory at this point is common. Here is the latest listing data for the last week over the last few years:
- 2024: 48,863
- 2023: 55,327
- 2022: 52,643
Discount percentages
In an average year, one-third of all households reduce prices – this is a common real estate activity. When mortgage rates go up, the discount percentage increases. If prices fall, and demand rises, this data line can cool down, as it just did.
A few months ago, on the HousingWire Daily podcast, I predicted that price growth data would cool in the second half of the year. I was wrong in this assessment, but our new pending price index finally had a seasonal decline last week.
I was 100% surprised that the price stayed as strong as it is in our weekly data with our inventory levels. The percentage of price cuts is lower in early 2024 than in the previous two years; Low mortgage rates are doing their thing. However, as you can see, with more innovation in 2024, it is a modest move.
Here are the last week’s price reduction percentages over the last few years:
- 2024: 38.8%
- 2023: 39%
- 2022: 43%
Buy app data
High mortgage rates always have an impact on purchase demand data, so the fact that the last four weeks have been trending down is not surprising. Shopping app data takes about 30-90 days to reach sales data, so it will be now that we see a hit.
While mortgage rates are rising at the beginning of the year (between 6.75%-7.50%), this is how the purchase application data looks like:
- 14 negative prints
- 2 flat prints
- 2 fine prints
When mortgage rates started to drop in mid-June, here’s what the purchase requests looked like:
- 12 fine prints
- 5 negative prints
- 1 flat print
- 3 positive positive growth prints year after year
As housing prices rise again, here’s where we are:
- 3 negative prints
- 1 good weekly prints
- 4 straight weeks of good year-over-year data, but the bar is low this time.
Weekly pending sales
Below is Altos weekly pending contract data to show real-time demand. This line of data is very seasonal, as we can see in the chart below, and we have to remember how high mortgage rates were at this time last year. We are now showing growth compared to 2023 and 2022 data in this data line, but context is important. Sales in 2022 had the fastest crash in sales ever, and home sales in 2023 were at a record low, so consider growth content with those two facts.
Top mortgage rates enter weekly data on pending contracts. I was surprised by the continued demand last week, but we can see a slowdown here in the new inventory data. Perhaps there was a delay in the election last week; if so we will see a slight return to inventory next week.
Here are the weekly pending sales for the past few years:
- 2024: 336,624
- 2023: 301,768
- 2022: 314,271
10-year yield and housing rates
My prediction for 2024 included:
- Loan rates range between 7.25% -5.75%
- 10-year yield range between 4.25%-3.21%
Of note last week was the 4.40% rate holding the 10-year yield. It was a wild, fun week with the election and the Fed meeting. However, the downtrend from 5% is still strong for now.
After the election, things calmed down and even more so after the Fed meeting, ending the week at 4.31% .
There have been talks that the economic policies of President-elect Trump will create 8% of the loan. I encourage everyone to listen to this HousingWire Daily podcast we recorded after the election to try to bring some reality to the mortgage rate debate going out over the next four years.
Mortgage spreads
The story of the distribution of mortgages was positive in 2024, and negative in 2023. We have seen a lot of movement this year; Mortgage rates will be much higher today unless spreads improve. Unfortunately, spreads have worsened with the recent rise in mortgage rates. However, if I take the worst spread from last year, the loan rates would be 0.65 % higher today. If mortgage spreads were to return to normal, you would see mortgage rates drop by 0.78%—0.88%.
Next week. Inflation week, retail sales and Fed speeches
It’s inflation week again! We will also have retail sales and several Fed presidents will be giving their views on the economy. After all the drama we had last week, I want to see how the bond market reacts to the inflation and retail sales data now, as bond yields are much higher than the day the Fed cuts rates in September.
Also, we always want to watch the Fed president’s speeches and their names for clues about the future. Again, as always, it is a function of inflation. Keep an eye on the frivolous claims data every Thursday; that’s their broadest line of labor data and that’s what the bond market will follow.
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