New listings data falls for third week in a row 

Weekly housing inventory data

For the third consecutive week, we haven’t quite reached my weekly target of inventory growth between 11,000 and 17,000 homes. However, we came close to our target with inventory growth of 9,726 and there’s a silver lining: mortgage rates have recently fallen. On another positive note, we have surpassed the total inventory levels of last year, indicating a gradual increase in listings in the marketplace.  

• Weekly inventory change (May 10-May 17): Inventory rose from 568,471 to 578,016
• The same week last year (May 12-May 19): Inventory rose from 421,101 to 424,907
• The all-time inventory bottom was in 2022 at 240,194
• This week is the inventory peak for 2024 at 578,016
• For some context, active listings for this week in 2015 were 1,124,747

New listings data

Growth in new listings this year is a positive development, but it’s been lighter than what I was hoping for. If we can get the seasonal peak data to run between 95,000 and 110,000, I will consider that a home run year for new listings data growth. Compare this level to 2008-2012 when this data line ran between 250,000 and 400,000 per week: clearly we aren’t seeing any considerable national-scale stress in this data line.

In my perfect world, I would have liked to see this year’s new listings data grow more than 2022 levels during the peak seasonal months but so far that hasn’t happened. Since 2023 was the lowest level of new listings ever, showing growth above last year isn’t saying much. Hopefully, we will get a pick-up over the next few weeks before seasonality kicks in and we see the natural decline in new listings data toward the end of the year. 

Here’s the new listings data for last week over the last several years:

• 2024: 67,530
• 2023: 59,072
• 2022: 83,812

Price-cut percentage

In an average year, one-third of all homes take a price cut — this is standard housing activity. When mortgage rates increase, demand falls and the price-cut percentage grows. When rates drop and demand improves, the percentage falls.

The price-cut percentage is growing yearly as inventory grows, but it’s not accelerating like it did in 2022. In 2022, we saw the biggest crash in home sales ever, and the price-cut percentage data slope was high-speed, especially toward the end of the year. We have a much more normal marketplace in 2023 and 2024.

• 2024: 34.%
• 2023: 30%
• 2022: 22%

10-year yield and mortgage rates

The 10-year yield has fallen recently but bounced off a critical technical level again currently at 4.42%. We need to crack this uptrend to see mortgage rates move lower and stay lower. In this recent HousingWire Daily podcast, I discussed how we need to focus on labor data more than inflation. We’ll be getting the jobs report soon so that will be instructive and bond yields went up on Friday.

Spread between 30-year mortgage rate and 10-year treasury securities yield

Last year, the mortgage spreads were the real negative mortgage rate story as the banking crisis sent the spreads to new cycle high levels, which pushed mortgage rates higher.  I had assumed the spreads would get better closer to the first-rate cut, but that rate cut didn’t happen and the spreads improved earlier than I thought. Mortgage rates are still 0.75%- 1.00% higher than we should be when the spreads are normal. However, it could be worse: If the spreads were at the worst levels we saw last year, mortgage rates would be 0.52% higher right now.

Purchase application data

The seasonality of purchase application data is ending, as I usually weigh this index from the second week of January until the first week of May. Traditionally, volumes always fall after May, so we only have a few more weeks left. We have seen mild week-to-week declines of 2% in the last three weeks. Mortgage rates have been falling recently, so we shall see what the next weeks look like. However, the one time we saw real growth for at least 12 weeks was in late 2022 and early 2023.

Since November 2023, when mortgage rates started to fall, we have had 12 positive prints versus 10 negative prints and two flat prints week-to-week. Once mortgage rates began to rise in 2024, some of the mortgage demand was removed. As we can see, the year-to-date data isn’t even positive for 2024. So far, in 2024, we have had six positive prints, ten negative prints, and two flat prints.

The week ahead: Fed speeches and home sales

This week we will have a few Fed presidents giving speeches, so look for the markets to digest specific sentences to get hints on future Fed policy. We also have both home sales reports coming up: existing home sales and new home sales.

On Wednesday I will be on Yahoo Finance to discuss the existing home sales report. Last week, I was on CNBC twice: once to talk about how overblown the underwater homes story is, and the other was to discuss rent inflation and how that influences the Fed. With the 10-year yield and mortgage rates, I want to see how the bond market reacts to Fed speeches and how it reacts to the next jobless claims data.