Housing inventory drops significantly during election week

Seasonal peaks and troughs have occurred later than usual in the past few years. Last week we saw a marked decrease in both active inventory and new listings, which is not abnormal, but there may have been election volatility here. Over the past two years, starting in mid-November, mortgage rates have come down and we've seen positive, promising housing demand data. Will it happen again?

Weekly housing inventory data

If we have seen a peak for inventory, the best housing story in 2024 is that we have enough healthy inventory growth to handle demand if mortgage rates fall to 6% or lower. Also, my healthy normal inventory growth pattern – 11,000 to 17,000 per week – has remained consistent this year as we've seen no more than 17,000 prints in 2024, but a few between 11,000 and 17,000, which is something we've been able to do.” t last year at all.

• Weekly inventory change (November 1-November 8): Inventory has dropped 735,718 for 721,576
• Same week last year (November 3-November 10): Inventory rose 566,882 for 566,941
• The all-time inventory level was in 2022 240,497
• Inventory peak for 2024 so far 739,434
• For some context, active listings for this week in 2015 were 1,140,557.

New listing information

Another positive story for 2024 was the increase in new listing data. Yes, we didn't hit my goal this year – we missed 5,000 – but growth is growth. Remember all those years of writing by bogus housing experts, and we would see a flood of new listings due to stressed home sellers? 2024 will be the second lowest year for new listings. Last week we had the lowest new listings data in history.

New listing data can be very volatile from week to week, and this past week was a big dive. Some may have decided to wait until after the election to list their homes. However, it's almost Thanksgiving, and seasonal inventory drops are common at this point. Here's the new roster data for the past week over the last few years:

• 2024: 48,863
• 2023: 55,327
• 2022: 52,643

Price discount percentage

On average, one-third of all households buy a home per year – this is standard housing activity. When mortgage rates rise, the discount rate increases. When prices fall and demand increases, this data line may cool, as it has recently.

A few months ago, , I predicted that inflation data would cool in the second half of the year. I was wrong in this assessment, but our expected new price index finally experienced a seasonal dip last week.

I was 100% surprised that pricing remained as solid as it did in our weekly data with our inventory levels. The rate of price reduction was reduced earlier in 2024 than in the previous two years; low mortgage rates have done their job. But as you can see, with more inventory in 2024, it's a more modest move.

Here are the discount percentages for the past week over the last few years:

• 2024: 38.8%
• 2023: 39%
• 2022: 43%

Buy app data

Higher mortgage rates always weigh on purchase application data, so it's no surprise that the past four weeks have trended negatively. It takes about 30-90 days for purchase application data to reach sales data, so it will be soon when we see a hit.

When mortgage rates were higher at the beginning of the year (6.75-7.50%), purchase application data looked like this:

• 14 negative prints
• 2 flat print
• 2 positive prints

When mortgage rates start falling in mid-June, purchase applications look like this:

• 12 positive prints
• 5 negative prints
• 1 flat print
• 3 straight positive growth tracks year over year

As mortgage rates rise again, here we are:

• 3 negative prints
• 1 positive weekly print
• 4 straight weeks of positive annual data, but the bar for that is low.

Weekly expected sales

Below is weekly expected contract data to show real-time demand. As we can see in the chart below, this data line is very seasonal and we have to remember how high mortgage rates were at this time last year. We are now showing an increase in this data line over 2023 and 2022, but context is very important. 2022 sales saw the fastest crash in sales ever, and 2023 home sales were at record lows, so take the increase in context with these two facts.

Higher mortgage rates enter weekly data on pending contracts. I was surprised by the steady demand last week, but we may see a slowdown in new listing data here. Perhaps there was an election delay the previous week; If so, we'll see a small rebound in inventory next week.

Here are the expected weekly sales for the past week over the previous several years:

• 2024: 336,624
• 2023: 301,768
• 2022: 314,271

10-year income and mortgage interest

I include:

• It is for mortgage interest rates between 7.25%-5.75%
• 10-year yield range of 4.25%-3.21%

The key thing about last week is that the 10-year yield held at 4.40%. It's been a wild, confusing week with the election and the Fed meeting. However, the downward trend below 5% is still ongoing.

After the election, things calmed down and ended the week at 4.31%, mostly after the Fed meeting. .

There is some talk that President-elect Trump's economic policies will create 8% plus mortgage rates. I encourage everyone to listen to what we've been recording since the election to try to bring some reality to the mortgage rate debate over the next four years.

Mortgage spreads

The mortgage spread story was positive in 2024 and negative in 2023. This year we have already seen a great movement; Without the improvement in spreads, mortgage rates would be much higher today. Unfortunately, spreads have worsened with mortgage rates. Still, if I take the worst spreads from last year, mortgage rates today would be 0.65% higher. If mortgage spreads were to normalize, you would see mortgage rates fall by 0.78% to 0.88%.

Next week. Inflation week, retail sales and Fed speeches

It's inflation week again! We'll also have retail sales and several Fed presidents will give their thoughts on the economy. After all the drama we had last week, I want to see how the bond market reacts to inflation data and retail sales now that bond yields are much higher than they were when the Fed cut rates in September.

Also, we always want to watch the Fed president's speeches and their terminology for clues about the future. Again, as always, there is labor over inflation. Watch for jobless claims data every Thursday; that's their broad line of labor data, and it's one that the bond market will follow.

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