Mortgage interest rate and 10-year yield
What a crazy week! Not long ago, on Friday at Work, I appeared on the HousingWire Daily podcast and said it was time to declare war on the overly restrictive Federal Reserve.You can listen to podcasts here. A few days later, the Fed corrected its mistake. Instead of turning hawkish, and instead making dovish people cry, bond yields did the right thing, with 10-year Treasury yields below 4% and mortgage rates below 7%.
I did it right after the Fed press conference. another podcast Here we’ve outlined why this is so positive for the U.S. economy. You can see that by looking at last week’s statistics. The 10-year Treasury yield fell from last week. 4.25% end the week with 3.91%.home loan interest rate is 7.10% to 6.62% And that week 6.64%.
As previously stated, given the history of economic cycles, bond yields will rise and mortgage rates will fall when the market thinks the Fed’s rate hike cycle is over.we are almost 1.5% Lowering mortgage rates without a single rate cut seems normal to me. Let’s see if we can maintain these gains next week.
Purchase application data
Even before mortgage interest rates fell 7.25%We are seeing positive movement in purchase request data, which continued to increase last week. This means there has been a positive trend over the past five weeks.Purchase app has started Four% It may sound crazy, but year-to-date statistics suggest we could end the year with more positives than negatives. 23 positive and 23 minus, and two flat print.
The last two weeks of the year are usually quiet in the purchasing app due to Christmas and New Year preparations, but I always track my data. But the fact that he had a positive year with mortgage rates reaching 8% proves what I’ve been talking about since his Nov. 9, 2022, and for many years. It is rare for existing home sales trends in the United States to be: 4 million Any period since 1996. We’ve had a core set of 4 million homebuyers every year for over 25 years, and that hasn’t broken down yet.
Weekly housing inventory data
Due to seasonality, weekly active listings data is down as it is at this time of year. Rising mortgage rates led to inventory increases for parts of the fall, with seasonal inventory declines set to begin later this year. But in the end, the law of seasonality always wins out, and stocks are well on their way to becoming less seasonable.
According to last year, Altos Research, the seasonal peak in housing inventory was October 28th. This year’s seasonal peak was November 17th.
- Weekly inventory changes: (December 8th to 15th): inventory has fallen 546,424 to 538,767
- Same week of the previous year (December 9th to December 16th): Inventory decreased from the previous year 536,409 to 522,869
- The bottom price of inventory in 2022 is 240,194
- So far, the inventory peaks for 2023 are: 569,898
- Check out this week’s active list for context. 2015 was 1,037,129
New listing data for 2023 is a positive story. Even though mortgage rates rose, we didn’t see more sellers exiting like we did in 2022 when interest rates were above 6%. Given the stability we have seen in 2023, I was expecting flat to positive year-over-year data for the second half of this year. This is what we are seeing and it is sorely needed. We need more new listings, not fewer. Although this data line has been at an all-time low for 17 months, it is encouraging to see growth now on a year-over-year basis.this was something talked about CNBC months ago.
Last week’s new listing data for the past few years:
- 2023: 39,613
- 2022: 34,973
- 2021: 39,936
Traditionally, one-third of all homes are discounted before they go on sale. As mortgage rates rise and demand falls, more homes will receive price reductions. But even though mortgage rates reached 8% this year, they were always trending below 2022 levels. It will be interesting to see how the 2024 spring season plays out now that mortgage rates have dropped nearly 1.5%. If demand recovers as it is now, the percentage of homes that decide to reduce prices is likely to fall further.
This week’s price drop rates over the past few years:
- 2023: 38%
- 2022: 41%
- 2021: 26%
The week ahead: Housing and inflation
As Housing Week approaches, we have four reports: Builder Confidence, Housing Starts, Existing Home Sales, and New Home Sales. The PCE also includes the Fed’s important inflation data report, and it will be interesting to see how the bond market reacts to this report now that the Fed is discussing rate cuts. right. We also report on key economic indicators.
There will be a lot of data released this week. The thing about existing home sales is that purchase application data started improving five weeks ago. This data line projects his 30-90 days ahead, so this Existing Home Sales report may be too early to consider any positive movement in future data.