Have
we
seen
the
peak
in

housing
inventory
for
2024?
The
best
part
about
2024
has
been
that
higher

mortgage
rates
have
created
an
inventory
buffer,
so
if
the
economy
gets
softer
and
rates
fall,
we
have
many
more
homes
to
work
with
than
we
had
in
2020-2023.

I
have
consistently
written
that
with
mortgage
rates
above
7%,
inventory
should
grow
between

11,000-17,000
and
this
year
it
has
happened
six
times
perfectly
in
the
channel.
However,
as
mortgage
rates
have

fallen
recently,
I
haven’t
been
able
to
hit
my
targets,
which
isn’t
a
surprise.
And
last
week,
just
before
this
holiday
weekend,
we
saw
the
first
tiny
decline
in
inventory
week
to
week.

Weekly
housing
inventory
data

Despite
what
has
happened
with
inventory
in
the
last
few
months,
2024
has
been
a
positive
story
because
we
got
off
historically
depressed
active
inventory
levels.
As
part
of
“team
higher
rates”
in
2021
and
2022,
this
is
precisely
what
I
wanted
to
see
happen
because
we
can’t
assume
mortgage
rates
will
stay
elevated
in
the
7%-8%
range.

Many
months
ago,
I
talked
about
the
softer
labor
market
and
how
that
should
make
mortgage
rates
fall,
which
it
has.
And
I
feel
much
better
about
the
housing
market
now
with
more
inventory,
which
I
talked
about
on


CNBC
recently.

• Weekly
  inventory
  change
  (Aug.
  23-Aug.
  30):
  Inventory
  fell
  from
  
  704,744
  to
  
  704,335
• The
  same
  week
  last
  year
  (Aug.
  25
  -Sept
  1):
  Inventory
  rose
  from
  
  503,924
  to
  
  509,562
• The
  all-time
  inventory
  bottom
  was
  in
  2022
  at
  
  240,497
• The
  yearly
  inventory
  peak
  for
  2024
  was
  last
  week
  at
  
  704,744
• For
  some
  context,
  active
  listings
  for
  this
  week
  in
  2015
  were
  
  1,204,810 

New
listings
data

New
listing
data
is
experiencing
its
traditional
seasonal
decline.
2024
is
the
second-lowest
new
listing
year
recorded
in
history.
Here
are
the
number
of
new
listings
for
last
week
over
the
previous
several
years: 

• 2024:
  
  59,195
• 2023:
  
  59,081
• 2022:
  
  62,775

Price-cut
percentage

In
an
average
year,
one-third
of
all
homes
take
a

price
cut
—
this
is
standard
housing
activity.
Rising
mortgage
rates
last
year
and
this
year
have
created
a
growing
level
of
price
cuts,
especially
with
inventory
rising.
This
data
line
has
recently
slowed
down
with
falling
rates.

A
few
months
ago,
on

the
HousingWire
Daily
podcast,
I
discussed
that
the
price-growth
data
would
cool
down
in
the
year’s
second
half.
Here
are
the
price-cut
percentages
for
last
week
over
the
previous
few
years:

• 
  2024:
  39.3%
• 
  2023:
  36%
• 
  2022:
  39%

Weekly
pending
sales

Below
is
the


Altos
Research
weekly
pending
contract
data
to
show
real-time
demand.
There
is
no
growth
in
the
week-to-week
data
and
we
are
starting
to
create
a
more
significant
gap
in
the
year-over-year
data.
I’m
writing
to
caution
everyone
that
starting
in
August
last
year,
mortgage
rates
began
to
head

toward
8%,
so
we
will
have
some
super
easy
comps
to
show
growth
in
some
of
the
data
lines
year
over
year
going
out. 

• 
  2024:
  368,076
• 
  2023:
  358,408
• 
  2022:
  404,076

10-year
yield
and
mortgage
rates

My

2024
forecast
included:

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

Even
with
a

negative
job
revision
print
and
a

baby
pivot
by
Jerome
Powell
recently,
the
famous
3.80%
level
has
again
held.
Unlike
the
Gandalf
line
in
the
sand
in
2023
at
3.37%,
this
is
more
like
Game
of
Thrones
—
with
Hodor
holding
up
the
door
as
the
whitewalker
creatures
push
to
break
it
open.
In
time,
with
more
economic
and
labor
data
weakness,
this
will
break.
There
was
not
much
movement
in
the
30-year
mortgage
last
week,
but
the
spreads
were
good.

Mortgage
spreads

Mortgage
spreads
were
a
negative
storyline
in
2023,
as
the
collapse
of

Silicon
Valley
Bank
and
the
resulting

banking
crisis
pushed
them
to
new
cycle
highs.
We
haven’t
had
any
banking
crisis
events
this
year
and
the


Federal
Reserve
is
starting
its
rate-cut
cycle.
The
closer
we
get
to
those
rate-cuts,
the
more
the
spreads
should
improve.
They
improved
a
bit
earlier
than
I
thought,
but
we
can
see
the
difference
in
2023
in
the
chart
below. 

If
we
took
the
worst
levels
of
the
spreads
from
2023
and
incorporated
those
today,
mortgage
rates
would
be

0.58%
higher
right
now.
While
we
are
far
from
being
average
with
the
spreads,
the
fact
that
we
have
seen
this
improvement
is
a
plus
this
year.

Purchase
application
data

Before
I
give
the
weekly
update
on
purchase
apps,
I
would
say
I
don’t
think
people
are
reading
the
data
correctly
because
they
are
saying
we
haven’t
had
a
positive
move
here.
Let
me
explain.

1.
Purchase
apps
are
very
seasonal.
The
heat
months
are
the
second
week
of
January
to
the
first
week
of
May;
after
May,
volumes
always
fall.

2.
The
last
12
weeks
have
been
the
best
12
weeks
for
purchase
apps
for
the
year,
primarily
due
to
the
year
being
negative
on
the
weekly
data.
So,
this
is
a
positive
12-week
curve.

3.
The
last
two
times
rates
fell
in
2022
and
2023
—
around
the
middle
of
November,
closer
to
the
seasonal
volume
push
—
the
positive
growth
in
purchase
apps
was
stopped
when
rates
went
higher.

4.
Typically,
purchase
apps
look
forward
30-90
days.
I
have discussed
before
that
I
don’t
see
how
existing
home
sales
can
have
sustained
growth
unless
rates
get
below
6%.
That’s
how
the
builders
have
been
able
to
grow
sales
since
the
lows
in
2022.

This
recent
HousingWire
Daily
podcast
goes
into
this
storyline,
explaining
why
this
is
the
price
we
pay
with
home
prices
escalating
out
of
control
and
at
record
highs.

Since
mortgage
rates
have
fallen

more
than
1%
recently,
we
will
draw
a
line
in
the
sand
at
that
point
and
track
purchase
application
data
for
the
rest
of
the
year.
In
the
last
12
weeks,
purchase
application
data
has
had

seven
positives
versus

five
negative
prints.
Last
week
saw
weekly
purchase
apps
grow
1%.

Since
mortgage
rates
started
to
fall
in
November
2023,
the
week-to-week
data
shows

19
positive
prints,

18
negative

prints
and

two
flat
prints.
As
we
can
see
from
the
data,
not
much
is
happening.
The
question
now
is
whether
rates
can
stay
lower
and
go
lower
for
the
first
time
now
that
people
are
more
concerned
with
the
economy.

The
week
ahead:
Jobs
week
alert!

So
after
Powell’s
baby
pivot
in
his

Jackson
Hole
speech,
which
I
talked
about
in

this
HousingWire
Daily
podcast,
this
jobs
week
is
enormously
important
because
it’s
the
last
one
before
the
September
Fed
meeting.
We
also
have
manufacturing
data,
bond
auctions
and
the
Fed’s
beige
book
this
week.
So,
if
you’re
looking
for
mortgage
rates
to
go
lower
and
that
3.80%
level
to
break,
we
will
need
weaker
economic
data,
a
more
dovish
Fed
and
the
spreads
to
get
better.

The
lowest
mortgage
range
I
had
forecasted
in
2024
was
between
5.75%-6.25%
so
we
are
getting
closer
to
that
level.
For
now,
the
economic
data
matters
more
than
lower
rates
after
the
big
move
lower
from
the
highs
in
2023.

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