Now that seasonality is in full swing in the purchase application data, it’s in preparation. And so far this year is off to a good start.
Here’s a summary of last week’s housing market:
- Purchase requisition data showed positive weekly growth again, with a more pronounced bounce back from the bottom.
- Decrease in housing inventory 6,468 Units, a more pronounced decline from the previous week.
- Mortgage rates have not changed much, as 10-year yields have not fallen from the key levels I discussed.
When I talk about seasonality, I’m talking about the second week of January to the first week of May. Total amounts traditionally decline after May, so you’ll have a good idea of what spring will look like by the end of March.
Consistently growing every week twenty five% When 3%Importantly, however, the year-over-year decline has stopped and has risen significantly from the bottom.
But remember that this is always the case. 2022 saw a waterfall dive in purchasing apps. This is a historic dive. So you have a shallow bar to bounce off of. Will this move give us a longer leg to run and we need to lower mortgage rates to get more growth in this data line?
The key to purchase application data is that this line of data takes 30-90 days. Therefore, it takes at least 30-90 days for the growth seen here to reach sales data. As we’ve been emphasizing for some time, this data line started to improve on November 9, 2022. It takes until February or March to be reflected in sales data for January and February.
Last week’s pending latest home sales data turned positive. This is consistent with the results from November to December.Low levels of bounce so far, but housing has stopped bleeding and we showing some growth.
Focus on weekly data to give you a forward-looking idea of where your sales are headed. I hope that the evidence presented above and the fact that no one is talking about how the data internals of the purchasing application have improved since November 9th gives my model some credence. “America is Back” Recovery Model of 2020.
weekly housing inventory
There is another downside report for weekly inventory, as this week also markedly decreased inventory from the previous week. We’re facing a timeline where inventories could decline just because demand has picked up slightly from the trough, and I’m monitoring that.
We paused for about two weeks after being concerned about how quickly our inventory would dwindle earlier this year.But now it’s falling again and stocks are 6,468. This is not what I want to see, but this is the reality of the world in 2020 and beyond.
Hopefully 2023 will give us an earlier seasonal stock push than we’ve had in the last two years, but thankfully stocks this year are still higher than last year.
- Weekly Inventory Fluctuation (January 20-27, 2023): Fell From 472,122 To 465,654
- Same week last year (January 21-28, 2022): 276,865 To 271,954
June 2022, i predicted As long as mortgage rates remain high, demand may weaken over time and inventories may rise, and in 2023, inventories may return to 2019 levels, potentially causing a bankruptcy of inventories. I have. 1.52 million Use NAR inventory levels.
Shortly after making that prediction, new listings data began to drop rapidly, at a faster-than-usual pace, and the prediction fell apart. This forecast becomes even more complicated if weekly inventory levels do not increase.
NAR data lags a bit, but latest existing home sales report shows inventory short 1,000,000 Also. It will be his second time in recent modern history that the inventory will start below his 1,000,000.
NAR’s total inventory is now 970,000.
It’s important to monitor your purchasing app and inventory levels heading into spring as we need to see the traditional inventory buildup that has occurred every spring season other than 2020. The question is whether the upward trend in demand will affect inventories. Growth, and is this already happening?
Despite the heavy hit to demand in 2022, it has been difficult to bring total inventory levels back to 2019 levels. This was the lowest active list in 40 years before the Covid 19 pandemic hit us.
We hope traditional spring season inventory levels grow faster than we’ve seen in the last two years. So far, this hasn’t happened yet — at least in a meaningful way.
10-Year Yield and Mortgage Interest Rates
Mortgage rates were relatively flat last week. The 10-year yield could not go below the critical level I was talking about. 3.42%-3.45%.
For now we’re just floating 6.15%-6.21%, Mortgage rates last week. This came at a time when last week’s PCE inflation data showed a continued slowdown in inflation gains. That inflation data didn’t move the market.
Part of my 10-year yield forecast for 2023 is that if the economy stays strong, the 10-year yield range will be 3.21%-4.25%means mortgage interest rates between 5.75%-7.25%A weak economy could drive bond yields down sharply 2.72%, Bring home loan interest rates closer Five%.
Economic data are solid enough to stave off recession rumors as the labor market is still holding up. However, more data will be released next week. federal reserve meeting.
a week ahead
It’s going to be a busy week thanks to the Fed meeting, jobs data, unemployment claims data and Friday’s jobs report. All of these can move the market. Oh, looks like fun!
The Federal Reserve wants to see weakness in the labor market and wage growth. We’ll see if Powell has anything to say about the current market betting on future rate cuts.
This week, we’ll also learn about whether job openings data will decrease or increase. He believes the Fed will reduce inflation by reducing job openings. While wage growth has slowed, the Federal Reserve hopes to see further weakness in labor data.
He will also visit the wonderful state of Texas and speak in Houston and San Antonio.
If labor market and wage growth weaken, bond yields should fall. But as we’ve been talking about over the past few weeks, bond yields have been less likely to fall recently. For example, last Friday’s PCE inflation report showed a clear downward trend, but bond yields didn’t go down that day.
A busy and important week awaits us as we cap off an exciting January. Overall, January was a positive month for housing data, but we’d like to see more inventory by now. But the fact that we’re above last year’s level is a plus for everyone.
We’ll be keeping an eye on all the data this week to give you an update on the US housing market.