Weekly housing inventory data
Mortgage interest rates remain above 7% and have not been able to fall below 6.50% for some time. If mortgage interest rates rise, will inventory stop increasing year-on-year? Of course, some would say yes on a year-over-year basis.
Inventory is highly seasonal and seasonal increases in inventory will soon begin. But even before the seasonal push, inventories have increased year-over-year despite rising interest rates. Most home sellers are home buyers, so the moves we’re seeing this year are a healthy step in the right direction to increase balance in the housing market.
Last week’s inventory status looked like this.
- Weekly inventory fluctuations (February 23rd to March 1st): Inventory has increased 497,608 to 498,339
- Same week of the previous year (February 24th to March): Inventory decreased compared to the previous year 430,395 to 419,419
- The most recent stock low 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 958,304
New listing data
New property data is increasing every year, but even in 2024 it’s still a little too low for my tastes. I expected more at this point. As we enter the spring shopping season, where active inventory typically increases, new listings data should be consistent with last year’s spring season over the next few months, ensuring he remains on track to surpass 2023 levels.
Weekly new listing data for the past few years:
- 2024: 52,189
- 2023: 48,156
- 2022: 49,019
We will pay attention to how rising interest rates will affect inventory data as we prepare for seasonal inventory increases. Last year, I predicted that inventory would increase by 11,000 to 17,000 units per week if mortgage rates rose above 7.25%. I expect inventories to grow at this level and at a higher rate this year as well. You will also need to track if mortgage rates drop again, how that will affect new properties and inventory as well. I’m considering a simple inventory growth model. If mortgage rates rise, demand may weaken. This means homes may take longer to sell and inventory may increase.
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. If interest rates fall, your interest rate may be lower than normal.
Inventories are higher than last year and the bottom in inventory may have already been found, so markdown data should rise as the year progresses. In any case, we will keep an eye on this to see if a positive trend actually occurs.
Here are last week’s price reductions over the past few years:
- 2024: 30.5%
- 2023: 31%
- 2022: 17.2%
Mortgage interest rate and 10-year yield
The key to housing in 2024 is the 10-year yield. In my 2024 forecast for him, I set the 10-year yield range to be: 3.21%-4.25%there’s a critical line in the sand 3.37%.If economic indicators are strong, it shouldn’t fall below this. 3.21%But that line will be tested if labor data weakens. This means that mortgage interest rates should stay within the following ranges: 5.75%-7.25% It is based on the baseline assumption that spreads are bad for most of the year. 10-year bond yield rose above 4.25%but mortgage interest rates were never high. 7.25%so the spread worked better than I expected.
We dodged a bullet last week as PCE inflation statistics were lackluster. His PCE inflation rate for 12 months has been running at 2.4%. We were getting close to breaking through the critical line in the sand we’ve been talking about. 4.34%but it didn’t break and I finished the week with. 4.18%. With some soft economic data released on Friday and comments from the Fed governor, the 10-year Treasury yield was having a block party on Friday, as seen below.
As we have discussed so far, 3.80% The level of the 10-year bond yield is extremely important; 4.34% Level matters. We are not broken yet. We don’t want to see more than 4.34% because we could see more drama in the market and see mortgage rates rise further. The last thing we want is for the 10-year Treasury yield to rise above 4.34%, given recent negative purchase application data, but this deals with mortgage rates between 7.25% and 8% in an already slowing market. means to. At a higher rate.
Mortgage rates didn’t move much last week and had not yet reached their all-time high for mortgage rates. 7.25% Still, bond yields are this high. I have work on Friday this week, so it’s going to be interesting. The 10-year bond yield and mortgage interest rates have fluctuated wildly since March 2022.
Purchase application data
This year’s purchase application data is trending negative on a weekly basis as mortgage rates rise towards above 7%. This marks the fifth consecutive week of negative data, breaking an eight-week streak of positive interest rates. This is not a home sales market that will crash in 2022, but it is not growing and will likely stay around this 4 million level for some time until interest rates come down.
Since November 2023, there have been 8 positive purchase applications and 5 negative purchase applications after adjusting for holidays. Year-to-date, there have been two positive prints and five negative prints. This is a carbon copy of what happened in his 2023 when interest rates rose. However, we worked to lower the hurdles for him to sell a home until 2024. So don’t expect a ton of existing home sales to be announced in his next NAR Existing Home Sales Report like last year.
Next week: Get ready for job week!
The jobs report shows that the 10-year Treasury yield remains close enough to important technical levels to make this week very interesting. This week will see the release of job postings, ADP, unemployment claims, and the BLS Employment Friday Report. I’m pro-labor over inflation, so I believe the housing market runs on 10-year yields, so this week is big for housing jobs.
