Weekly
housing
inventory
data

Higher

mortgage
rates
with
duration
will
likely
lead
to
higher
inventory,
which
we
have
seen
repeatedly
for
the
past
10
years.
However,
2023
tested
my
model
as
the
inventory
growth
rate
on
a
week-to-week
basis
was
slow,
even
when
rates
headed
toward
8%.
It’s
a
simple
model:
inventory
should
grow
between

11,000-17,000
weekly
with
rates
over

7.25%.
After
failing
time
and
time
again,
we
finally
got
there
this
week
with

16,582.

• Weekly
  inventory
  change
  (April
  12-19):
  Inventory
  rose
  from 
  526,462
  to
  
  543,044
• The
  same
  week
  last
  year
  (April
  14-21),
  Inventory
  rose
  from
  
  406,600
  to
  
  414,701
• The
  all-time
  inventory
  bottom
  was
  in
  2022
  at
  
  240,194
• The
  inventory
  peak
  for
  2023
  was
  
  569,898
• For
  some
  context,
  active
  listings
  for
  this
  week
  in
  
  2015
  were
  
  1,060,669

New
listings
data

Now
that

inventory
is
growing
more
closely
with
what
I
am
looking
for,
new
listing
data
must
keep
its
year-over-year
growth
trend.
Last
year,
when

mortgage
rates
headed
toward
8%,
we
saw
no
negative
hit
to
the
latest
listings
data,
meaning
it
didn’t
take
a
new
leg
lower.
So,
with
higher
rates
now
and
some
growth
year
over
year,
I
hope
we
keep
the
momentum
going.
We
need
this
to
happen
to
get
balance
in
housing. 

Here’s
what
new
listings
look
like
for
last
week
over
the
last
several
years:

• 2024:
  
  68,769
• 2023:
  
  59,269
• 2022:
  
  59,803

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.
That
percentage
falls
when
rates
drop
and
demand
improves.

As
mortgage
rates
rise
with
inventory,
the
price-cut
percentage
should
increase
unless
demand
keeps
up
with
inventory
growth.
Last
week,
we
saw
a
slight
decline
in
the
price
cuts.

Here
is
the
price-cut
percentage
for
last
week
over
the
last
several
years:

• 
  2024:
  32%
• 
  2023:
  29.4%
• 
  2022:
  18.7%

10-year
yield
and
mortgage
rates

We
had
a
lot
of
headline
drama
last
week,
between
Powell
talking
about

taking
rate
cuts
off
the
table,

escalating
war
in
the
Middle
East,
and
economic
data
beating
estimates.
This
sent
the
10-year
yield
and
mortgage
rates
higher.
I
talked
about
this
on
the

HousingWire
Daily
podcast,
discussing
my
central
theme
that
for
the
Fed
to
pivot,
it’s
labor
over
Inflation.

When
the
labor
market
breaks,
the
Fed
will
pivot;
we
aren’t
there
just
yet.
As
the
chart
below
shows,
many
people
were
looking
at
the
growth
rate
of
inflation
falling
as
the
main
driver
for
the
Fed,
but
that
isn’t
working
in
this
cycle.

One
positive
story
about
mortgage
rates
in
2024
is
that
the
spreads
are
improving,
and
that
has
kept
a
lid
on
the
damage
from
higher
yields.
The
spreads
are
acting
a
bit
better
than
I
thought
they
would,
I
had
assumed
we
would
need
to
get
closer
to
rate
cuts
before
they
would
behave
this
way.
However,
this
bodes
well
for
the
future
because
if
the
spreads
get
back
to
normal
and
the
10-year
yield
falls
with
it,
we
can
easily
get
to
the
low
6s
range
for
mortgage
rates
and
potentially
below
6%.

Purchase
application
data

One
surprising
data
point
from
last
week
was
that
purchase
application
data
showed
positive
growth,
and
the
year-over-year
decline
was
much
less.

However,
the
only
reason
this
happened
is
that
the
week
before,
the
Easter
holiday
negatively
impacted
the
data,
which
made
this
week’s
growth
data
need
a
lot
of
context.
With
weekly
housing
data,
holiday
activity
can
move
negative
and
positive,
but
after
two
weeks,
it
gets
back
on
trend.
So,
take
last
week’s
growth
with
a
grain
of
salt. 

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

11
positive
prints
versus

seven
negative
prints
and

two
flat
prints
week-to-week.
Year
to
date,
we
have
had

five
positive
prints,

seven
negative
prints,
and

two
flat
prints.

The
week
ahead:
Housing
and
inflation 

We
have
new
home
sales
and
pending
home
sales
coming
up
this
week,
and
we
will
see
how
much
the
recent
rate
increase
has
impacted
the
data
line.
Also,
the
Fed’s
main
inflation
report,
the
PCE
inflation
data,
will
be
released
on
Friday,
so
it
should
be
a
wild
day.
Ever
since
the
10-year
yield
broke
it’s
critical
support
line,
the
bond
market
and
mortgage
rates
have
been
acting
up,
so
this
inflation
report
will
be
key
as
the
Fed
will
factor
in
how
much
we
need
mortgage
rates
to
stay
higher
for
longer
in
this
economic
expansion.