If the worst spreads from 2023 were applied today, mortgage rates would be 0.48% higher. Although we are not at average spreads, the improvement seen this year is a positive development.
10-year yield and mortgage rates
Last week, inflation data and testimony from Federal Reserve President Jerome Powell were positive for mortgage rates as the 10-year yield dropped to 4.20%. Breaking below this level is crucial, and follow-through bond buying is needed to sustain the decrease in yield.
Purchase application data
Positive trending purchase applications for four out of the last five weeks indicate a favorable trend. Even with mortgage rates below 6%, there has been a boost in purchase apps. Monitoring this trend over the next few months is crucial as it may impact future existing home sales reports.
Since November 2023, there have been 16 positive, 14 negative, and two flat prints in the week-to-week purchase app data. However, the year-to-date data for 2024 shows 10 positive, 14 negative, and two flat prints, indicating a decline in demand as rates rose earlier this year.
Weekly housing inventory data
Inventory data for this week may have been influenced by the July 4th holiday and should return to trend next week. Notable figures include the all-time low inventory in 2022 and the yearly peak in 2024.
New listings data
New listings data saw a decline this week, likely due to the holiday weekend. Anticipate a seasonal decline in new listings as the year progresses. Notably, new listings this week are lower than in previous years.
Price-cut percentage
As rates remain elevated, the price-cut percentage has increased compared to previous years. Expect a cooling in price-growth data in the second half of the year.
Pending sales
Weekly pending contract data from Altos Research shows a slight increase in demand this year compared to previous years. Monitoring these live weekly contracts is essential for understanding real-time demand in the housing market.
The week ahead: Powell talks again, plus retail sales and housing starts
This week, watch for Powell’s speech and statements from other Fed presidents. Retail sales and housing starts data will provide insights into the market’s direction. Pay attention to single-family permits and jobless claims data for further indicators of economic trends.