Mortgage interest rates were likely to reach new highs this year, but federal reserve The last Fed meeting took a moderate tone. The last two existing home sales reports showed growth, benefiting from lower mortgage rates. Then mortgage rates rose and purchase application data remained negative for five weeks.
With interest rates reaching year-to-date highs, the Fed turned hawkish at its March meeting, warning mortgage rates could rise toward 8% and dampen demand in 2024. There were concerns. Thankfully that didn’t happen and as I said in the article, Housing Wire Daily Podcast Last week, we dodged a bullet.
Let’s take a look at tracker data to see how mortgage interest rates are affecting housing data as we head into spring.
10-year yield and mortgage interest rate
If you’ve followed me over the past 12 months, you know how important the 10-year Treasury yield of 4.34% has been to my financial performance. Breaking above this level could cause mortgage interest rates to rise. 7.5%-8% Not only did this not happen last week, bond yields fell that week. As you can see below, we held the line again, but we’re not out of the dark woods yet.
As you can see from the graph below, 10-year Treasury yields and mortgage rates have increased significantly since 2022. But every time the 10-year yield declines with duration, as we saw in late 2022 and into 2023, it lowers mortgage rates and allows us to grow sales from these record lows. .
Purchase application data
Purchase application data actually changes depending on the mortgage interest rate. This is what we saw from him at the end of 2022 and into 2023. Due to the recent increase in interest rates, purchase application data was down 1% week over week and down 14% year over year.
From November 2023 onwards, 10 positive and 6 minus Please purchase the printed application form after the holiday adjustment. From this year to today, 4 positives print vs 6 minus Print. What did 2022, 2023, and 2024 show us? When mortgage rates fall, demand rises. Imagine a housing market where mortgage rates are just 6% or less. It will grow in the same way as the new home sales market.
Weekly housing inventory data
The best housing news for 2024 so far is that inventory is increasing year over year. The increase is not only in active inventory, but also in new listings. The inventory data doesn’t show any seller stress, just the typical increase in inventory when rates go up, which appears to be completely normal.
Last week’s inventory status looked like this.
- Weekly inventory fluctuations (March 15th to 22nd): Inventory has increased 507,160 to 512,759
- Same week last year (March 16th to 23rd): Inventory decreased compared to the previous year 414,967 to 413,883
- The all-time low for inventory was in 2022. 240,194
- The peak of inventory in 2023 is 569,898
- For some background, here’s this week’s active list: 2015 was 985,141
New listing data
New listing data continues to increase! This data line is slightly lower than what I expected for him in 2024, but it’s still growing. It’s now just below where it was in 2022, before mortgage rates spiked more than 6%. Weekly new listing data for the past few years is as follows:
- 2024: 60,328
- 2023: 49,933
- 2022: 61,862
For historical context, in 2011, this week’s new listings were: 362,339 .
price reduction rate
Every year, one-third of all homes have their prices reduced before they go on sale. This is regular housing activity and this data line is highly seasonal. If mortgage rates rise and demand takes a hit, discounts could widen further. When interest rates fall, interest rates are lower than normal.
Keep it simple here. Inventory is increasing every year. If interest rates are high and demand remains weak, discount rate data should increase faster, but if interest rates are low and demand recovers, this should not be the case. As you can see below, like most housing data, the data line is highly seasonal.
- 2024: 31.4%
- 2023: 30.4%
- 2022: 17%
The week ahead: Housing and inflation data
Next week, data on new home sales, pending home sales, and the National Home Price Index will be released.I will go CNBC Monday morning we discuss the new home sales report. Of course, the Fed’s main inflation measure, PCE, is scheduled to be released on Friday, a trading holiday, and will be key to interest rates in the near term until the Fed’s next meeting. There’s a lot of data to work with this week.
