One of my critical forecasts for 2024 was the growth of new listings data and active inventory, even with higher mortgage rates. However, the new listings data has slightly disappointed me. Many of my CNBC interviews, starting from late last year and just last week, have been on this theme, and new listings have grown in 2024. But, I set targets with a minimum 80,000 new listings for at least one week at the seasonal peak and that didn’t happen; the peak so far was 72,329, and now we are entering the seasonal decline period for new listings.
New listings data
I am pleased that we’ve seen new listings data grow year over year — it’s a big step forward. But, context is critical, and new listings data was working from the lowest bar ever. I wanted to see new listings in the 80,000-110,000 range during the seasonal peak weeks but we haven’t see that. The last time we saw that kind of growth was one week in 2022, when new listings came in at 90,000.
My only concern is that the new listings data does not show consistent growth levels over 2023 so this is something I will keep track of for the rest of the year. The last thing I want to see is a repeat of the second half of 2022 when we saw new listings data take a noticeable seasonal decline. Most sellers are buyers and the housing market needs standard new listing data for the rest of the year.
Here are the number of listings for last week over the previous several years:
2024: 68,407
2023: 61,707
2022: 73,462
Weekly housing inventory data
On the positive side for 2024, and something I recently discussed on the HousingWire Daily podcast, active inventory is growing and growing nicely. While we are not back to normal inventory levels in America, especially considering our population today, we are working our way up the ladder.
Since I am not a mortgage rate lockdown person, seeing inventory grow with mortgage rates at these recent high levels is what I want to see. We can’t assume higher mortgage rates will be here forever, so we must build that buffer of inventory while we can. We didn’t hit my target level this week of between 11,000-17,000 but inventory grew at a good clip of 8,883.
Weekly inventory change (July 19-26): Inventory grew from 668,363 to 677,246
The same week last year (July 21-27): Inventory rose from 480,448 to 485,743
The all-time inventory bottom was in 2022 at 240,497
The yearly inventory peak for 2024 is 677,246
For some context, active listings for this week in 2015 were 1,207,259
Price-cut percentage
In an average year, one-third of all homes take a price cut — this is standard housing activity. As rates have stayed elevated, the price-cut percentage is higher than in the last two years, and certain pockets of the U.S. have higher inventory than the national data. The one big difference in 2024 versus 2022 data is that in 2022, home sales were crashing all year long, and new listings were collapsing to all-time lows in the second half of the year. Now, home sales are just stuck at historic low levels — a big difference.
A few weeks ago, on the HousingWire Daily podcast, I discussed that the price-growth data will cool down in the year’s second half. Here are the price-cut percentages for last week over the previous few years:
2024: 39%
2023: 34%
2022: 36%
Pending sales
Below is the Altos Research 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. Purchase application data tends to look out 30-90 days and the only time we saw any real growth in purchase apps was at the end of 2022 and 2023 when rates fell more than 1%.
2024: 381,704
2023: 375,995
2022: 417,887
Purchase application data
Purchase application data has been slow to respond to lower mortgage rates but four out of the last seven weeks have been positive and as crazy as this sounds, that’s the best 7-week period of 2024 so far. Not much is going on with purchase apps and seasonality ended in May. The only time I’ve seen 12 weeks of positive trending growth was when mortgage rates headed back down to 6% in late 2022 and early 2023. Mortgage rates are still elevated from those levels.
Since mortgage rates started to fall in November 2023, we’ve seen 16 positive prints, 16 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 still unfavorable, with 10 positive prints, 16 negative prints, and two flat prints.
10-year yield and mortgage rates
For sometime now, I have talked about how the 10-year yield will be a stubborn nut to crack around this 4.20% level and that has proven true once again. We can’t seem to get any traction above or under this but the median trend down in the bond market is still there as long as the labor data gets softer. Even with all the progress we have made on inflation, the 10-year yield is still at 4.20% today. We didn’t get much movement on rates for the last two weeks, but we do have a Fed meeting and jobs week coming up.
Mortgage spreads
Imagine if mortgage spreads hadn’t improved this year — we would have a much different housing story today. If mortgage spreads were typical today, we would have sub-6% mortgage rates without the 10-year yield falling much. Imagine if both fell together! However, the fact that we got some improvement is a big deal in my book, just like the spreads getting worse last year was a negative housing story.
If we took the worst levels of the spreads from 2023 and incorporated those today, mortgage rates would be 0.58% higher right now. While we are far from being average with the spreads, the fact that we have seen this improvement is a plus this year.
The week ahead: Fed meeting and jobs week!
It’s primetime this week for economic data and the Fed meeting — what else can you ask for when the 10-year yield is at the key 4.20% level? We not only have jobs week and the Fed meeting, we have home price data, pending home sales and data from a key Fed wage tracker known as the employment cost index.
On Monday’s podcast I talk about whether the Fed will cut rates this week — tune in to find out! I believe the verbiage will be so key now because of all the recent labor data getting softer on them. So buckle up, we have a ton of stuff that can move rates short term but more important longer term as well.
