Mortgage interest rates and bond markets
The 10-year yield has been volatile this past week as a key support line that I have been talking about for weeks broke after the Fed meeting, sending the 10-year yield to its highest since 2007. Friday brought some relief, with mortgage rates very close to their highest levels for the year.This week’s mortgage interest rates are 7.28%became the best 7.47%, and finished 7.39%. The highest price for the year is 7.49%.
I have noticed the spread between the 10-year Treasury yield and mortgage rates improving in recent weeks, and last week, even as the 10-year yield hit a year-to-date high, interest rates hit new highs. Did not update.
Although the Fed sounded hawkish in its speech on Wednesday, the rate hike cycle is now over and there could be just one more rate hike if it deems it warranted. Although the labor market is no longer as tight, jobless claims are again strong and near monthly lows. The four-week rolling average of jobless claims was 217,000, far from the key level. 323,000 It’s a level that I think will trigger a change in Fed policy.
Weekly housing inventory data
I’m concerned that weekly new property data will decline more aggressively every time mortgage rates rise. That’s because homebuyers simply stop listing their home for sale because higher interest rates make it less attractive to sell or buy another home.
last week CNBC, I talked about how I still believe year-over-year data will be flat to positive as we have to deal with rising interest rates for an extended period of time and new listings data doesn’t see a significant decline. A lot of that has to do with this data line remaining at an all-time low. I explained my premise in this interview on CNBC.
While weekly numbers have been choppy in recent new property data, the decline has been orderly, as has been the case throughout the year, despite a spike in mortgage rates. So we’re not worried about another lower bar in the data.
- September 15th: 61,852
- September 23rd: 59,107
Some good news: Weekly active listings increased 9,312. This is not the level I think we should be seeing when mortgage rates are this high. 11,000～17,000 Every week, but considering it’s almost the end of September, this is more than enough. I’m very much in favor of supply because more supply brings balance. It will be difficult to increase housing supply this year, as home sales have remained stable compared to last year’s massive collapse in demand.
according to Altos Research:
- Weekly inventory changes (September 15th-22nd): Inventory has increased 518,626 to 527,938
- Same week of the previous year (September 16th to 23rd): In stock 552,042 to 556,865
- The bottom price of inventory in 2022 is 240,194
- So far, the inventory peaks for 2023 are: 527,938
- Check out this week’s active list for context. 2015 was 1,198,033
Historically, one-third of all homes lose value each year.Last week’s price drop was lower than the same period last year. Four%.This occurs at rates greater than or equal to 7%, Part of the reason is that housing stock has been down year-on-year since mid-June. Inventories rose rapidly last year as the mortgage rate shock towards 7% produced faster and higher price reduction data.
There is still a huge affordability problem in the housing market, with more price reductions than from 2015 to 2017.Back then we ran 33%; in 2018 and 2019it was 36%.
- 2021 28%
- 2022 41%
- 2023 37%
Purchase application data
Purchase request data 2% It rose last week, marking the highest count since the beginning of the year. 17 positive prints, 18 negative prints, And one flat week. Starting on November 9, 2022, 24 positive prints versus 18 negative prints And one flat week.Weekly data softens as mortgage rates trend upwards 7%. However, there is no collapse like last year.
The week ahead: Housing and inflation data
In the future, new home sales, pending home sales, S&P Core Logic Case Shiller house price index and FHFA House price index. Pending home sales statistics should soften due to the recent spike in mortgage rates. There is also the PCE Inflation Report, which is the main inflation data tracked by the Fed. As always, Thursday’s unemployment claims data will be key to this cycle and mortgage rates.