How did two hurricanes affect housing inventory? – HousingWire

Here are the new listings for the past week over the last few years:

• 2024: 62,876
• 2023: 57,229
• 2022: 59,458

Price discount percentage

On average, one-third of all households buy a home per year – this is standard housing activity. Rising mortgage interest rates last year and this year have fueled the decline in prices, in particular. When mortgage rates fell recently, the discount rate cooled somewhat; Now that mortgage rates are rising again, we'll see how that affects this data line. Seasonality will soon kick in for this data line, which traditionally falls at the end of the year. As you can see in the chart below, while our active inventory levels were at 240,000, the price cut % was historically low, not a healthy thing.

A few months ago, , I discussed that inflation data would cool in the second half of the year. However, I'm not sure if the cooling in price growth will match my forecast for 2024, which sees prices rise 2.33% for the year. Looks like I may be too low.

Interest rate cuts are lower than 2022 levels and carry the risk of an earlier seasonal curve than 2022 and 2023. However, mortgage rates have risen recently, so we'll see if that changes the data meaningfully in the final 10 weeks of the year.

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

• 2024: 39.62%
• 2023: 38%
• 2022: 42%

10-year income and mortgage interest

I include:

• A range for mortgage rates between 7.25%-5.75%
• 10-year return range 4.25%-3.21%

I forecast the channel ranges with mortgage rates and 10-year yields because together we can track important economic data and look for important inflection points in rates. It's a slow dance with 10-year yields and 30-year mortgage rates that I often discuss.

I have a solid line in the sand around 3.80% on the 10-year yield, and with a better mortgage spread for 2024, that equates to mortgage rates of about 6.25%. You need weaker economic data for mortgage rates to fall, stay below, or even lower than that. We recently had a number of economic and labor data that beat expectations. goes into it and explains what happened on the day the Fed cut rates and after business on Friday.

We monitor all data, but the key is always labor over inflation. If business data had come in as a major loss, we'd be having a different conversation today, but it didn't.

Mortgage spreads

The mortgage spread story was positive in 2024 and negative in 2023. This year we have already seen a huge movement; Mortgage rates would be higher today without the improvement in spreads. So, as rough as some people in the mortgage community feel, it could have been a lot worse. We're not back to normal with spreads, but it's a good sign that the spreads before the Fed cuts rates and over time allow it to come down.

Buy app data

Mortgage rates rose again last week. While this increase didn't affect last week's data much, the higher push happened two Fridays ago, so we should see some effects of rising rates in the data pool next week.

Let's take a look at what the data does when mortgage rates rise 6.75% – 7.50% at the beginning of the year. Starting in the second half of January, the weekly purchase application data with increasing prices looks like this:

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

While the purchase application data did not show much downside in volumes at the start of the year, the weekly data was very negative. Before late January, when rates started to rise, we had about eight weeks of positive trend buying programs. Then, as has been typical lately, mortgage rates rose and demand fell.

Here's what weekly purchase application data looks like since mortgage rates started falling in mid-June:

• 12 positive prints
• 5 negative prints
• 6 straight weeks of positive and last week's data was flat, easily making it the best 7 week period of the year.
• Last week came 3 straight weeks of positive annual data with a positive increase of 8% year over year

For the rest of the year, we'll be watching how higher rates affect the data. It's been minimal recently, but history says that won't last, especially if rates go higher.

Weekly expected sales

Below is weekly expected contract data to show real-time demand. Now, this data line is very seasonal, as we can see in the chart below, and we all know that mortgage rates were up a year ago, so we should look for positive data every year. The weekly data was solid when rates fell, but now we need to see how that data looks with rising rates. Despite a slight loss of steam, there's nothing too damaging about the data yet.

Here are the expected weekly sales for the past week over the last few years:

• 2024: 350,455
• 2023: 325,584
• 2022: 351,527

Next week: Fed speeches, retail and housing starts

Several of our Fed presidents will be speaking this week, including Kashkari and Waller; pay attention to this. We also have bond auctions and retail sales this week. The housing data will be interesting – the purchase applications data should have some impact on the rate increase. Builder's confidence won't show this nastiness yet, but we will be able to see their mentality at rates close to 6%. Finally, with some bond auctions in the mix, we'll have housing kicking off on Friday – a data line that beat expectations last month and is starting to send the 10-year yield higher.