Weekly Housing Inventory Data
While inventory growth slowed to 6,803 this week, well below my weekly target level of 11,000-17,000 as mortgage rates rise, hitting this target level five times this year compared to zero last year is a big reason why 2024 is a much better year for housing than 2023. As you can see below, the inventory growth data is showing a much healthier year than 2023.
Weekly inventory change (June 29 – July 5): Inventory increased from 645,770 to 652,573. During the same week last year (June 30 – July 7), inventory increased from 466,534 to 466,001. The all-time low for inventory was 240,497 in 2022. This week is the peak for inventory in 2024 at 652,573. For reference, in 2015 there were 1,183,882 active listings this week.
Newly listed data
We are currently in the seasonal peak period for new listings. This data line will soon enter a weekly decline, but while it shows year-over-year growth, it is not reaching my minimum target level of 80,000. Here are the new listings over the last week for the past few years:
2024 71,181 2023: 58,289 2022: 89,221
Price reduction rate
Typically, one-third of all homes are discounted in a typical year, a typical housing transaction, and with interest rates remaining high, price cuts are higher than they have been in the past two years, and inventory data in some parts of the U.S. is higher than the national data.
A few weeks ago on the HousingWire Daily podcast, we discussed how price growth data would likely level off later this year.
Here are the percentage price drops over the past few weeks:
2024: 38% 2023: 33% 2022: 32%
Pending Sale
Below is weekly Pending Contracts data (YoY) from Altos Research showing real-time demand. Demand has increased slightly this year as more sellers are buyers. There was little YoY growth this week, due in part to the holiday week. Pending contracts have increased slightly throughout the year. This data line could grow YoY if mortgage rates fall, but that has not happened in any meaningful way in 2024 so far in terms of term.
So far, pending contract data still shows growth.
2024: 381,057 2023: 381,036 2022: 420,816
10-year government bond yield and mortgage interest rates
Two weeks ago, the 10-year Treasury yield surged despite weak inflation data. Last week, it was back near its recent lows. Below is the movement of the 10-year Treasury yield during the employment week, again showing that the labor market is softening but has not yet collapsed.
Then Friday's jobs report came out and while the headline numbers looked good, the internal reports of the latest labor force data looked weak, which is what the Fed had been hoping for all along. I wrote about the recent weekly employment data here.
Following the release of the jobs report, bond yields fell and continued to trend lower throughout the day on Friday, July 5th. This can be seen in the graph below, and mortgage rates fell accordingly.
Mortgage Spread
The spread between 30-year mortgage rates and 10-year Treasury yields has been an issue since 2022, and the situation worsened after the banking crisis in March 2023. However, the spread has improved this year.
If we were to take the worst of the 2023 spreads today, mortgage rates would now be 0.56% higher. While spreads are far from average, it is positive to see such improvements this year.
Purchase requisition data
A three-week streak of increases in purchase applications data ended last week as interest rates rose the previous week, again showing that even week-to-week fluctuations can cause this data line to turn from positive to negative.
Since mortgage rates began to fall in November 2023, weekly data has shown 15 positive, 14 negative, and 2 flat applications. However, as mortgage rates began to rise earlier this year, we saw a decline in demand. Year-to-date data for 2024 shows 9 negative, 14 negative, and 2 flat applications. If mortgage rates continue to fall and remain low over time, we could see increased application data based solely on the fact that we are operating from record lows with an increased number of employees.
On the agenda this week: Inflation, Powell testimony, auctions, Fed speech
This is another inflation week. On Thursday and Friday, we see the release of the CPI Inflation and PPI Inflation reports. On Tuesday, Federal Reserve Chairman Jerome Powell will testify before Congress, and next week more Federal Reserve Governors will speak. The key will be whether the recent softening labor numbers will change their attitude.
There will also be some bond auctions. It will be hard for the 10-year yield to fall below 4.20%, so we will have to wait and see if that happens this week or if it stays in the 4.20% to 4.50% range.