If we were to incorporate the worst spreads from 2023 into today’s mortgage rates, they would be 0.59% higher. While we are not at average levels with the spreads, the improvement we have seen this year is a positive sign.
In my 2024 forecast, I do not specifically target mortgage rates but rather work off the 10-year yield. The spreads were high in 2023, allowing room for them to decrease, which they have. However, significant movement has already occurred without rate cuts, indicating that more intervention will be needed to lower mortgage rates below 5.75%.
Purchase application data
With mortgage rates dropping over 1% recently, we will monitor purchase application data closely for the remainder of the year. In the last 13 weeks, there have been eight positive and five negative prints in purchase application data. Last week, weekly purchase applications increased by 3%. Despite a 4% year-over-year decline, the lowest since 2022, the positive move in purchase applications is evident with low rates.
Since the decline in mortgage rates from November 2023, there have been 20 positive, 18 negative, and two flat prints in week-to-week purchase application data. Although not much change is observed, sustained rates below 6% could lead to growth similar to that seen in builders’ purchase application data.
Weekly housing inventory data
As mortgage rates have decreased, inventory growth has slowed, with seasonal factors soon coming into play. The total inventory growth in America in 2024 without a housing bubble crash has been a notable story this year.
- Weekly inventory change (Aug. 30-Sept. 6): Inventory decreased from 704,335 to 703,646
- The same week last year (Sept. 1-Sept. 7): Inventory increased from 509,562 to 509,892
- The all-time inventory bottom was in 2022 at 240,497
- The yearly inventory peak for 2024 was at 704,744
- Active listings for this week in 2015 were 1,195,353
New listings data
Growth in new listings data has been a positive trend this year, following the lowest level in 2023. Despite 2024 being the second lowest year ever, the growth in new listings is a positive indicator.
- 2024: 61,599
- 2023: 49,661
- 2022: 58,004
Price-cut percentage
In a typical year, one-third of homes experience price cuts, reflecting standard housing activity. Rising mortgage rates have led to an increase in price cuts, especially with rising inventory. However, this trend has slowed down with falling rates and the onset of seasonality and withdrawals.
Recent price-cut percentages compared to previous years:
- 2024: 39.8%
- 2023: 36%
- 2022: 40%
Weekly pending sales
Real-time demand is shown through Altos Research’s weekly pending contract data, indicating a seasonal decline with some year-over-year growth. It’s important to consider the context of last year’s mortgage rate trends when analyzing the year-over-year data.
- 2024: 358,670
- 2023: 348,317
- 2022: 390,543
The week ahead: Inflation week
Monitoring inflation remains crucial, especially with discussions of rising inflation toward the end of the year. The focus is on month-to-month data due to base effects from last year’s low readings. Bond auctions, jobless claims data, and the used car price index are key indicators to watch this week, particularly in light of last week’s job data.