Last week, we saw a Santa Claus rally in mortgage rates and improved housing demand. The economy continues to create jobs, as wages grow at an annual rate of 4%. We also see growth in our pending contract data compared to 2022 and 2023. In addition, the purchase request data brought another surprise with positive results.
As I’ve said for years, coming out of low home sales numbers makes it easier to see positive changes. Let’s get into the holiday spirit with this week’s Housing Market Tracker data!
Weekly pending sales
Weekly pending contract data from Altos Research provides an insightful look at real-time housing demand. However, like most real estate information, this information is seasonal. When mortgage rates began to fall in June, there was a traditional slowdown between buy and sell applications. But, we have seen an improvement in our weekly pending contract data and today, despite the higher levels, the trend remains better than what we experienced in 2023 and most of 2024.
If mortgage rates can stay between 5.75%-6.25% a year, the demand for housing and sales can increase and surprise many people as the bar is so low we can all stumble over it.
Here are the weekly pending sales for the past few years:
- 2024: 315,566
- 2023: 278,735
- 2022: 282,313
Buy app data
The latest shopping app data surprised a lot of people. For the first time all year, I saw a real shock on social media where the purchase application data had some fine print and even high loan rates.
Is this the early season demand push we’re seeing now? We have more than 162 million people working, so the size of our workforce can add more demand to the seasonal push. Let’s see how the year ends, but as mortgage rates have risen, the data has been positive over the past eight weeks.
- 5 fine prints
- 3 negative prints
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
With two years of data, we see a positive trend in the growth of purchase requests when loan rates approach 6%. That’s why I’m very suspicious of the seasonal increase in buy-now applications, as mortgage rates have increased from 6% to 7% over the past two months.
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%
The 10-year yield ended the week heading towards low levels. Ironically, it wasn’t the weekly jobs data that shook the bond market this week, but the ISM services index, which came in soft and sent bond yields down sharply.
We had a good week for mortgage rates because Friday’s rates were very good on a day with very little movement in yields. As we have discussed many times, it was good for the prices that the key technical level calculated at 4.40%-4.50% caught them and pulled them back.
Mortgage spreads
The mortgage spread situation has improved significantly this year, especially compared to the tough times in 2023. If we had a very bad spread in 2023, the housing conversation would be very different today, as mortgage rates were much higher throughout the year. long term at 0.60%. Last week, the 10-year yield was more influenced by the ISM services report than any labor report.
For the rest of the week, the spread was unimpressive. However, on Friday, we saw a decline in the 10-year yield and widened spreads, leading to better prices.
Weekly housing inventory data
Home inventory fell last week, which is normal for this time of year. The peak in the 2024 inventory will be 739,434, which is not a typical inventory level, but good enough for me to feel pretty good about the housing market. Year-over-year inventory growth is the best housing story for 2024.
- Weekly inventory changes (Nov. 29-Dec. 6): Inventory decreased from 706,554 to 690,015
- In the same week last year (Nov. 30 Dec. 7): Inventory fell from 555,717 to 546,424
- The all-time inventory low was in 2022 240,497
- 2024 peak inventory so far 739,434
- In another context, the active listing for this week in 2015 was 1,050780
New List
The new listings data is meeting its traditional seasonal decline, and the dramatic drop we saw last week was typical, considering it was Thanksgiving. We should expect a jump in data this week. New listings haven’t reached the numbers I expected this year; I came close, but it was 5,000 short. However, one of the best news in 2024 was the growth we saw in new listing data.
New listing data for last week:
- 2024: 30,754
- 2023: 43,188
- 2022: 39,49
Discount percentages
In an average year, about one-third of all homes receive a price reduction, which is a common occurrence in the housing market. When housing prices rise, the percentage of homes that reduce their prices increases significantly. On the contrary, this trend decreases when prices fall and demand increases, as we have seen recently with the decline in rates.
However, even with the high percentage of price cuts recorded in 2024, national home prices did not drop, let alone crash. So, to those budding real estate analysts trying to use our data to suggest that house prices are falling, we encourage you to do better in 2025.
Here are last week’s price reduction percentages compared to previous years:
- 2024: 38.4%
- 2023: 38.7%
- 2022: 42%
Next week: Inflation Week!
Next week is inflation week, which includes both Consumer Price Index (CPI) and Producer Price Index (PPI) reports. I The Federal Reserve they will review these reports ahead of their next meeting, which is increasingly suggesting a 0.25% rate cut, on hold pending more data.
Additionally, we will see the final reading of the Unit Labor Cost Wage Index for the year, which the Fed monitors closely, and bond auctions. It will also be interesting to see if mortgage applications continue their positive trend, as mortgage rates have fallen slightly this past week, and what happens to housing demand.
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