As of mid-2022 when mortgage rates peaked, two facts were clear: new listing data was trending toward record lows and inventory was able to grow from record lows due to consistently high mortgage rates. We saw some growth in new listings this year compared to 2023 levels, which is good for housing. However, with the recent increase in mortgage rates, it’s possible that some sellers will just call it quits. Let’s see what last week’s data tells us.
New listing data
One place to see if real estate agents are calling is our new listing data, which can clearly show when real estate agents are hesitant to list their homes. So far, I haven’t seen anything that would lead me to believe that is the case, including last week, as we saw a slight drop in new listing data.
While I didn’t get my weekly forecast of 80,000 new listings this year during the peak months of the season, the fact that we saw some growth is good for 2024. So far, I haven’t seen anything that suggests it’s that high. Loan rates have had a negative impact on new listings. I hope that the seasonal decline in this data line will remain consistent with a slight year-over-year increase.
Here are last week’s new listings for the past few years:
- 2024: 60,158
- 2023: 56,634
- 2022: 56,522
Weekly housing inventory data
If we were to see an increase in sellers calling it quits, it would have an impact on active listing data. Although we did see a slight decrease last week, I wouldn’t say it’s because of higher mortgage rates.
For a short time this year, I’ve been getting a line of inventory data for my dream homes and growing inventory tied to my model of 11,000-17,000 homes per week with low mortgage rates and good, forward-looking demand. That has changed recently; the rate of growth of assets slowed down and turned negative last week. As we’ve seen over the past few years, we’re getting close to seeing seasonal declines in active listings, so a week-to-week drop isn’t a big deal.
We have data on sellers withdrawing their listings; that’s a way to see if the sellers in the market just quit. However, a slight week-to-week drop doesn’t mean much for the active roster since it’s almost Halloween. As you can see, we have made progress in asset growth every year.
- Weekly inventory changes (Oct. 18-Oct. 25): Inventory decreased from 739,434 to 737,997
- In the same week last year (Oct. 20-Oct. 27): Inventory increased from 554,350 to 562,556
- The all-time inventory low was in 2022 at 240,497
- The highest annual inventory for 2024 to date is 739,434
- In other context, active listings for this week in 2015 were 1,168,936
Discount percentages
In an average year, one-third of all households reduce prices – this is a common real estate activity. Rising mortgage rates last year and this year have created an increasing number of downgrades. With the reality of rising rates and growing assets, the data on the percentage of price reductions should be raised compared to times when prices were low and the demand for loans increased.
A few months ago, on the HousingWire Daily podcast, I said that price growth data would cool in the second half of the year. Now, I’m 100% surprised that the price has stayed as strong as it has in our weekly data, so my forecast for national home price growth of 2.33% is at risk of being too low.
Here are the last week’s price reduction percentages over the last few years:
- 2024: 39.5%
- 2023: 39%
- 2022: 43%
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%
We’ve had a lot of confused buyers, mortgage loan officers, and real estate agents over the past five weeks. I understand the shock of seeing mortgage rates go up as fast as they do. CNBC recently you asked me to talk about this. If you want an in-depth explanation of why mortgage rates have risen since the Fed’s rate cuts, I covered this topic in a recent HousingWire Daily podcast. We have a jobs week coming up, which could move the bond market; what none of us want to see is a break in the 10-year yield above 4.40%, which could drive up mortgage rates.
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 could 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, loan rates would be 0.75% higher today. If mortgage spreads had returned to normal, you would have seen mortgage rates fall by 0.71%—0.81%.
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. 2022 sales had the fastest crash ever, and 2023 home sales were at a record low, so take growth in context with those two facts.
Imagine if mortgage rates stayed at 6% for 12 months; if that were the case, sales would easily increase year after year. We have more home listings this year than last to encourage growth sales when prices drop.
Here are the weekly pending sales for the past few years:
- 2024: 356,127
- 2023: 319,464
- 2022: 339,016
Buy app data
The success of the purchase request data ended at high rates and we now have several weeks in a row. Last week’s decline almost put us in flat territory year-over-year, even with the lowest comps. In-app purchases were down 5% week-over-week and down just 3% year-over-year.
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
As mortgage rates started to drop in mid-June, here’s what the purchase requests looked like:
- 12 fine prints
- 5 negative prints
- 1 flat
- 3 positive positive growth prints year after year
As housing prices rise again, here’s where we are:
- 2 negative prints
- 0 weekly fine prints
We have favorable year-over-year return data due to the low bar.
Next week: Jobs, inflation, bond auctions and housing prices
Are you ready for a Halloween week of data that could drive bond yields screaming in some way? Here they are! We have a jobs week, along with inflation data and PCE reports, several bond auctions and national home price reports.
Of course, operating above inflation always lowers yields. Weak labor data lowered yields from June to September and last month’s jobs week beat estimates and sent bond yields higher. The key this week is to see how the bond market reacts to each labor report because we have moved close to a 70-basis-point higher in the 10-year yield since the morning of the Fed’s rate cut. For the 10-year yield, the key level we don’t want to exceed is 4.40%.
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