Here are the number of listings for the past week over the previous few years:
- 2024: 68,407
- 2023: 61,707
- 2022: 73,462
Weekly housing inventory data
In a positive development for 2024, active inventory has been steadily increasing. Although we are not yet at normal inventory levels for the current population, progress is being made. It’s encouraging to see inventory growth alongside the recent high mortgage rates. Building up inventory while rates are elevated is essential, considering the possibility of rates decreasing in the future. While we didn’t reach the target level this week of between 11,000-17,000, inventory saw a healthy increase of 8,883.
- Weekly inventory change (July 19-26): Inventory increased from 668,363 to 677,246
- The same week last year (July 21-27): Inventory rose from 480,448 to 485,743
- The lowest inventory point was in 2022 at 240,497
- The highest inventory point for 2024 is 677,246
- For context, active listings for this week in 2015 were 1,207,259
Price-cut percentage
In an average year, about one-third of homes experience price cuts, which is standard in the housing market. Due to sustained high rates, the price-cut percentage is higher compared to the past two years. Some regions in the U.S. have higher inventory levels than the national average. A notable difference between 2024 and 2022 is that in 2022, home sales were declining throughout the year, with new listings reaching all-time lows in the latter half of the year. In contrast, home sales in 2024 are stagnant at historically low levels.
Discussing on a recent podcast, it was predicted that price growth data will cool down in the second half of the year. The price-cut percentages for last week over the previous years are as follows:
- 2024: 39%
- 2023: 34%
- 2022: 36%
Pending sales
Below is the Altos Research weekly pending contract data compared year-over-year to demonstrate real-time demand. The current year shows slightly higher demand due to more sellers also being buyers. Purchase application data typically looks ahead 30-90 days, and the only significant growth in purchase apps was observed at the end of 2022 and 2023 when rates dropped by over 1%.
- 2024: 381,704
- 2023: 375,995
- 2022: 417,887
Purchase application data
Purchase application data has been slow to react to lower mortgage rates, but there have been four positive weeks out of the last seven, marking the most promising period of 2024 so far. Not much activity is seen in purchase apps since seasonality ended in May. The data indicates that demand declined when rates started rising earlier this year. Despite some positive trends in recent weeks, the year-to-date data for 2024 still shows more negative prints compared to positive ones.
10-year yield and mortgage rates
Discussion continues around the 10-year yield hovering around the 4.20% level, with little movement above or below this mark. While progress has been made in inflation, the 10-year yield remains at 4.20% currently. The upcoming Fed meeting and jobs week could potentially impact rates in the short and long term.
Mortgage spreads
The improvement in mortgage spreads this year has had a significant impact on the housing market. If spreads had not improved, mortgage rates would be substantially higher today. While not yet at average levels, the improvement in spreads is a positive development for this year.
The week ahead: Fed meeting and jobs week!
This week is crucial for economic data with the Fed meeting and jobs week taking center stage. With the 10-year yield at a critical level of 4.20%, upcoming data releases could influence rates in the short and long term. Stay tuned for insights on the Fed’s decision and its impact on the market.