This is what weekly purchase application data looked like with rising rates starting from the latter part of January:
- 14 negative prints
- 2 flat prints
- 2 positive prints
Even though the purchase application data wasn’t showing much downside on volumes earlier in the year, the weekly data was very negative. Before late January, when rates started to rise, we had about eight weeks of positive trending purchase apps. Then what typically happens lately, mortgage rates head higher and demand fades.
This is what weekly purchase application data looks like since mortgage rates started to fall in mid-June:
- 12 positive prints
- 5 negative prints
- 6 straight weeks of positive gains
- 9% positive year-over-year growth last week
The volume down and up this year hasn’t been much, but we can see a difference in the data now. The 12 weeks of positive data both came with mortgage rates headed toward 6%. We’ll see what happens with the noticeable rise in rates over the last several weeks.
Weekly pending sales
Below is the Altos Research weekly pending 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 heading toward 8% a year ago, so we need to be mindful of the positive year-over-year data. The weekly data has firmed up with lower mortgage rates. However, the recent increase in mortgage rates should slow down the progress made.
- 2024: 354,816
- 2023: 326,593
- 2022: 358,740
Weekly housing inventory data
Three weeks ago was the best week of inventory growth in 2024, as we hit my model range without higher mortgage rates: I gave it the chef’s kiss. We couldn’t pull that off two weeks ago and last week, inventory growth slowed to 3,273. The seasonality factor is something we have to keep in mind here, but to me the best housing story of 2024 was that we got active inventory higher, something we couldn’t achieve from 2020-2023.
- Weekly inventory change (Sept. 27-Oct 4): Inventory rose from 731,017 to 734,290
- The same week last year (Sept. 28-Oct 5): Inventory rose from 534,746 to 537,032
- The all-time inventory bottom was in 2022 at 240,497
- The yearly inventory peak for 2024 is 734,290
- For some context, active listings for this week in 2015 were 1,169,733
New listings data
New listings data has been another positive story in 2024, as we needed more sellers! Now, I didn’t hit my minimum target of 80,000 during the seasonal peak months — I was off by 5,000 — but I see it as a win because even though 2024 was the second-lowest new listings data year ever, it did have a bounce from 2023, which was the lowest level ever.
- 2024: 60,655
- 2023: 58,103
- 2022: 58,083
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. When mortgage rates fell recently, the price-cut percentage cooled down. The Pending New Median Price Index of our data line has just taken off recently, something that Mike Simonsen will discuss on his Altos podcast Monday.
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. The price-cut percentage data is below 2022 levels and risks an earlier seasonal curve lower than 2022 and 2023. Now we need to see if higher mortgage rates change this data line before we see the seasonal downtrend in inventory.
Here are the price-cut percentages for last week over the previous few years:
- 2024: 39.5%
- 2023: 38%
- 2022: 42%
The week ahead: Fed speeches, bond auctions and inflation week
We will have a ton of Fed presidents talking this week and it gets more interesting to hear what they say, especially after the jobs report. Also, we have a few bond auctions and it’s CPI and PPI inflation week. However, as we can all see now, more than ever, it’s the labor market that is running the show. I also want to see how purchase application data reacts to the recent move in mortgage rates; traditionally, we will see a decline week to week after rates tick up higher.
