The
mortgage
rate
lockdown
premise
holds
that
very
few
people
will
list
their
homes
when

mortgage
rates
are
this
high,
thus
suppressing
inventory.
But
2024
has
proven
that
theory
wrong. 2024
has
had
healthy
inventory
growth
despite
mortgage
rates
above
7%.
Also,
for
the
third
time
this
year,
I
have
hit
my
target
of
weekly
inventory
growth
between
11,000
-17,000,
thus
leading
to
more
inventory
than
we
saw
in
2023.

Weekly
housing
inventory
data

My
big
goal
this
year
was
to
get
some
weeks
with
inventory
growth
between

11,000
and
17,000
homes
as
long
as
mortgage
rates
were
over
7.25%.
Excluding
the
one
holiday
rebound
week,
which
I
don’t
count,
we
have
hit
the
mark
three
times
this
year.
Each
time,
inventory
has
squared
right
into
the
model
as
long
as
rates
stay
elevated.
This
week,
we
saw
inventory
growth
of

16,532.
All
smiles
here
—
last
year,
we
didn’t
have
this
type
of
positive
growth,
something
I
talked
about
on

Yahoo
Finance
a
few
days
ago. 

• Weekly
  inventory
  change
  (May
  17-May
  24):
  Inventory
  rose
  from
  
  578,016
  to
  
  594,548
• The
  same
  week
  last
  year
  (May
  19-May
  26),
  Inventory
  rose
  from
  
  424,907
  to
  
  433,838
• The
  all-time
  inventory
  bottom
  was
  in
  2022
  at
  
  240,194
• This
  week
  is
  the
  inventory
  peak
  for
  2024
  at
  
  594,548
• For
  some
  context,
  active
  listings
  for
  this
  week
  in
  
  2015
  were
  
  1,130,873

New
listings
data

One
of
the
more
positive
stories
for
2024
outside
of
inventory
growth
has
been
the
growth
of
new
listing
data.
I
have
been
slightly
disappointed
in
the
new
listing
data
only
because
I
was
sure
we
would
get
a
print
above
80,000
this
year
and
was
hoping
for
a
range
of
95,000-110,000
in
the
peak
seasonal
period.
It
doesn’t
look
like
that
will
happen,
as
seasonality
will
kick
in
soon.
Remember,
for
next
week,
new
listings
data
will
take
a
Memorial
Day
hit
lower
as
it
does
each
year,
and
then
it
rebounds. 

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

• 2024
  
  72,329
• 2023:
  
  62,150
• 2022:
  
  82,725

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.

This
is
one
of
the
reasons
I
believe
months
down
the
road,
we
will
see
a
cooling
in
home
prices,
as
I
talked
about

here
with
the
latest
existing
home
sales
report.
Below
is
the
price-cut
percentage
for
last
week
over
the
last
few
years.

• 
  2024:
  35%
• 
  2023:
  30%
• 
  2022:
  23%

10-year
yield
and
mortgage
rates

Last
week
with
the
10-year
yield,
we
had
only
one
event
that
moved
the
bond
market:
the
stronger-than-expected
PMI
service
sector
report
that
shot
yields
higher,
but
we
ended
the
week
just
a
few
basis
points
higher
at
4.47%.
Mortgage
rates
didn’t
moved
too
much
last
week.

Spreads

The
spread
between
the
30-year
fixed
mortgage
and
the
10-year
yield
has
been
awful
since
2022.
However,
it
worsened
last
year
after
the

banking
crisis,
which
was
a
big
negative
for
rates.
The
good
news
this
year
is
that
the
spreads
are
acting
much
better.
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
they
should
be
when
the
spreads
are
average.
However,
it
could
be
worse:
If
the
spreads
were
at
the
worst
levels
we
saw
last
year,
mortgage
rates
would
be

0.60%
higher.

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
fall
after
May,
so
we
are
at
the
end
of
the
road
here.
As
we
can
see
in
the
chart
below,
only
a
little
has
been
happening
with
purchase
application
data
all
year
long.
Last
week,

purchase
apps
fell
1%
week
to
week
and
down
11%
year
over
year

Since
November
2023,
when
mortgage
rates
started
to
fall,
we
have
had

12
positive
prints
versus

11
negative
prints
and

two
flat
prints
week-to-week.
Once
mortgage
rates
began
rising
in
2024,
some
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,

11

negative
prints,
and

two
flat
prints.

A
big
week
ahead

We
are
packing
a
lot
of
stuff
into
a
short
holiday
week.
We’ve
got
the
critical
Fed
PCE
inflation
report,
which
might
give
the
bond
market
more
clarity.
We
also
have
S&P
CoreLogic
Case-Shiller
and
FHFA
home
price
growth
reports.
Remember
that
the
price-growth
data
will

cool
down
in
the
second
half
of
2024.

We
also
have
pending
home
sales
coming
up
and
more
Fed
speeches,
which
will
tell
us
the
same
story:
we
need
the
labor
market
to
break
before
the
Fed
finds
the
confidence
to
discuss
cutting
rates
in
any
meaningful
way.

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