Housing inventory is growing, but national home prices aren’t dropping dramatically, as the recent S&P CoreLogic Case Shiller index clearly showed. Why? The rules of supply and demand economics always end up winning and weekly new listing data is key.
New listing data is growing year over year, but it will be the second-lowest new listing data ever recorded in history. It looks like we won’t see my minimum target of 80,000 new listings during the peak seasonal period and the yearly high should be only 72,329.
Today, we will examine new listing data more extensively to provide a clear example of a stressed seller market and compare that to where we are today. The last time we had a stressed seller market was when national home prices crashed in 2008-2011 and even with more inventory, we’re nowhere close to those levels.
New listings data
The seasonal peak period is in, and we don’t even see the extra selling this year that we did in 2022, which was also a normal-looking year. Here is the new listings data for this week for the last three years:
2024 70,606
2023: 61,749
2022: 90,741
Our pre-listing data has declined recently, so it doesn’t look good for my 80K minimum peak call in 2024. As we can see, 2023 and 2024 data look much different than 2022 data when home sales crashed.
Now, let’s look at the new listings data for several years before COVID-19; these are the weekly data for this week. As you can see below, between 80,000 and 100,000 is the norm, and we had some weeks in the past decade when the seasonal peak was at 110,000.
2015 81,875
2016 80,293
2017 84,293
2018 98,972
2019 87,278
Now, let me show you what stressed sellers’ data looks like. The numbers speak for themselves and if anyone you know has been saying housing looks like 2008 for the past 10 years, I will tell you that the person doesn’t read.
2009 281,734
2010 345,146
2011 396,955
2012 318,041
Weekly housing inventory data
I am almost ready to give an A grade for inventory this year. For the fifth time this year, inventory hit my target level with elevated mortgage rates. Getting 6-12 weeks of this is enough for me to be very happy. My rule of thumb has been that inventory should have some weekly positive prints between 11,000 and 17,000 as long as rates are above 7.25%. Last week, we saw a positive inventory growth of 11,638!
Weekly inventory change (June 14-June 21): Inventory rose from 634,132 to 645,770
The same week last year (June 16-June 23), Inventory rose from 460,668 to 466,534
The all-time inventory bottom was in 2022 at 240,497
This week is the inventory peak for 2024 at 645,770
For some context, active listings for this week in 2015 were 1,184,616
Price-cut percentage
In an average year, one-third of all homes take a price cut — this is regular housing activity that happens every year. When mortgage rates increase, demand falls, and the price-cut percentage grows. When rates drop and demand improves, the price-cut percentage can fall.
This data line is seasonal and we have seen consistent year-over-year price-cut percentage growth since the end of March. This is much different than what we saw in 2023. Last year, inventory growth was very slow and new listing data was trending at the lowest levels ever. 2024 has a much healthier inventory level.
A few weeks ago, on the HousingWire Daily podcast, I discussed that the price-growth data will cool down in the second half of the year. Here are the price-cut percentages for last week over the previous few years:
2024: 38%
2023: 32%
2022: 31%
Pending sales
Below is our weekly pending contract data year-over-year to show real-time demand. With more sellers who are buyers, we have a tad more demand this year. This contract data will grow if mortgage rates head lower and stay lower. This is why it’s vital to follow the 10-year yield, mortgage purchase apps,and weekly pending contract data to get real-time clues on demand well ahead of the existing home sales reports.
So far, our pending contract data is still showing growth:
2024: 397,569
2023: 385,084
2022: 445,519
10-year yield and mortgage rates
Last week, the 10-year yield didn’t have too much fireworks, with just back-and-forth action in a small channel. Mortgage rates didn’t move much, except for what happened on Friday (explained below). Here is the week’s action before Friday:
What happened on Friday? The PCE inflation data came in slightly tamer than anticipated, and bond yields fell. Then, all of a sudden, yields spiked, and I got a barrage of questions about what was happening. Sometimes, the end-of-the-quarter money flowing into bonds can create extreme moves up and down on a summer trading day on a Friday. Is their fund blowing up, and do they need to sell their bonds? Maybe. Is the Bank of Japan selling their treasuries to get ready to defend their currency? I will go with the end-of-quarter trading as the explanation.
Mortgage spreads
The spread between the 30-year mortgage rate and the 10-year yield has been an issue since 2022, and things got worse after the March 2023 banking crisis. However, this year, spreads have improved.
If we took the worst levels of the spreads from 2023 and incorporated those today, mortgage rates would be 0.51% higher. While we are far from being average with the spreads, the fact that we have seen this improvement is a plus this year.
Purchase application data
Last week was the third straight week of gains in the purchase application data — the first real winning streak of 2024. But, I caution everyone not to get too excited unless we have at least a 12-week positive trend going just because we are working from the lowest bar ever, so growth isn’t saying much unless it’s with duration. However, it’s the first positive streak we have in the data line.
Since the onset of falling mortgage rates in November 2023, we’ve seen 15 positive prints, 13 negative prints, and two flat prints in the week-to-week data. However, as mortgage rates began to rise earlier this year, we observed a decline in demand. The year-to-date data for 2024 is unfavorable, with 9 positive prints, 13 negative prints, and two flat prints. This suggests that we’re not experiencing real mortgage demand growth at high rates, and the fluctuations we see in the data are merely rebounded from low levels.
The week ahead: Powell, ISM, jobs week and fireworks!
This is going to be a crazy week, folks. First, it’s jobs week, and the labor market is very important now for rates since we have shown for months that the labor market, while not breaking, has been getting softer. We have ISM manufacturing data on Monday and we have Federal Reserve Chairman Powell giving a speech on Tuesday, when job openings will also be reported. Thursday is July the 4th and then Jobs Friday! This might be the craziest week of the year so far, so buckle up and get ready for some economic bond-trading fireworks.
