10 year yield and mortgage interest rate
After a strong employment week of data, we quickly entered a week of CPI and PPI inflation, punctuated by a Fed meeting. There was one piece of good information at the Fed meeting that made me smile. Chairman Powell finally acknowledged that the labor market is no longer tight. This is a helpful statement for future interest rates if labor data weakens. We discuss this in this episode of the HousingWire Daily podcast.
Last week’s inflation numbers were soft, but I’ve been keeping an eye on the weekly jobless claims and employment data.
The 10-year bond yield ended last week at 4.22%.
mortgage spread
The spread between 30-year mortgage rates and 10-year yields has been an issue since 2022, and the situation worsened after the banking crisis in March 2023. But even though this year is far from normal, spreads have improved.
If we take the worst level of spread in 2023 and incorporate it into today, mortgage rates would rise by 0.52%. Although the spread is far from average, the fact that we have seen this improvement this year is a positive.
Purchase application data
With mortgage rates falling recently, we had our second best weekly purchase application data percentage last week. Now, just to remind everyone, we’re working with shallow bars, so it doesn’t take much to move the needle. But if you can continue like this for a few weeks, you’ll get something out of it.
Since November 2023, when mortgage rates started falling, there have been 13 positive prints, 13 negative prints, and 2 flat prints per week. When mortgage rates started rising in 2024, some of the demand was taken away. As you can see below, the year-to-date data is not positive heading into 2024 either. There were 7 positive prints, 13 negative prints, and 2 flat prints. With interest rates this high, there is no real growth in demand for mortgages, and the rebound seen in the data is coming from depressed levels.
Weekly housing inventory data
As we head into summer, we can’t thank you enough for this year’s increased inventory. If mortgage rates continue to fall and demand recovers, we will have a much better inventory buffer than in 2022 and 2023.
My rule of thumb is that as long as the rate is above 7.25%, you should have 11,000 to 17,000 print copies in stock each week. We achieved this three times this year. Last year it was zero. Although the weekly inventory growth rate did not reach that level, interest rates fell on Friday and inventory increased steadily to 8,943 items.
Weekly inventory trends (June 7th to June 14th): Inventory increased from 611,596 items to 620,539 items Same week of the previous year (June 9th to June 16th): Inventory increased from 443,749 items to 451,808 items Historical inventory The lowest price for this week was 240,194 items in 2022 The peak inventory for this week in 2024 was 620,539 items For context, the number of active listings this week in 2015 was 1,174,446 items
New listing data
Another positive news for 2024 is that new property data is increasing from record lows in 2023. Most sellers are buyers, so it’s good to see more sellers putting their homes on the market. The only thing about 2024 is that we were 100% confident that the seasonal peak print would be at least 80,000, but with the seasonal decline in new listings not continuing, that may not happen this year. This means that it is increasing. Far away.
Here are last week’s newly listed stocks over the past few years:
2024 71,457 people 2023: 62,187 people 2022: 87,996 people
price reduction rate
In a typical year, one-third of all homes receive price reductions. This is a standard housing activity. When mortgage rates rise, demand decreases and discount rates increase. As interest rates fall and demand improves, discount rates may decline. This data line is seasonal, with consistent year-over-year price reduction growth since the end of March.
As older data trickles in, year-over-year price increases should slow. I recently discussed this on the HousingWire Daily podcast and explained why I believe this to be the case. Last week’s price declines over the past few years are as follows:
2024: 36% 2023: 31% 2022: 27%
pending sale
Below is weekly open contract data on a year-over-year basis to show demand in real time. There will be a little more demand this year because there are more sellers who are also buyers. If mortgage rates start to fall and stay there, this contract data will increase, but we have yet to see an increase in mortgage demand.
2024: 395,960 2023: 386,052 2022: 452,003
One week ahead: Used home sales, housing starts, retail sales, Fed speech
Several economic indicators are expected to be released this week. Retail sales are an essential data line for the Fed. The number of housing starts will likely increase, and it will be interesting to see whether the declining trend in the number of permits for single-family and multi-family housing continues. Existing home sales numbers will be released on Friday and should remain near recent lows. However, this week’s Fed talk will feature all of the recently collected data, so we’ll be keeping an eye on it.
