A modest increase in home inventory this year has made the existing home sales market seriously unhealthy again. But last week was good. Inventory growth was not as high as we had hoped, but better than the last few weeks. Mortgage rates rose again, and purchase apps showed a modest week-by-week decline.
- Increased number of weekly active listings 8,815
- Mortgage rates rose from 6.89% to 7% before the week ends 6.98%
- Purchased apps decreased 1% weekly
weekly housing inventory
Housing inventory in 2023 disappoints in spring and summer, with active listings turning negative year-on-year. However, there was some uptick in active listings last week, albeit less than I would have expected. Can this be sustained before the number of active listings declines seasonally?
- Weekly Inventory Transition (July 14th to July 21st): Inventory increase from 470,458 To 479,273
- Same week of the previous year (July 15th to July 22nd): Inventory 508,633 To 525,548
- 2022 stock bottom price 240,194
- So far, stock peaks for 2023 are: 479,273
- For context, see this week’s active list. 2015 it was 1,202,909
As you can see below, the slope of the housing inventory curve from the April 14 trough has been flat enough that active listings have turned negative year-over-year. But last year was very unusual. Based on the lowest active listings data for March 2022, it was his biggest one-year sales crash on record.
Given the course of the year, new listings had a strong week. This is a plus as this data line has been dropping for his fifth week in a row. It has been at the lowest level in U.S. history for 12 months and is now headed for a seasonal decline. One of the positives about the new listing data is that mortgage rates have been around or above 7% for two months and haven’t seen any notable declines recently.
New list by year:
- 2023: 63,313
- 2022: 81,053
- 2021: 82,774
10-Year Yield and Mortgage Interest Rates
Bond yields and mortgage rates rose again last week to 7% on solid jobs data. As I’ve stressed throughout the year, 2023 is all about filing for unemployment insurance. After the news broke on Thursday morning, bond yields and mortgage rates headed higher after looking good last week.
Our forecast for 2023 said that if the economy held up, the range of 10-year bond yields should be: 3.21% and 4.25%which corresponds to the mortgage interest rate between 5.75% and 7.25%. We believe the only way to reach 3.21% A rise in 10-year yields would be a labor market collapse, which would require unemployment claims to exceed the four-week moving average of 323,000, which has yet to happen.
So far this year, my 10-year yield channel has been 100% correct. Declining inflation growth is critical for housing and the U.S. economy, but for 2023, we will focus more on labor market data.
Of course, 10-year yields and mortgage spreads have worsened since the banking crisis hit this year. It’s gotten a little better lately, but it’s a shame because if it wasn’t for the banking crisis this year, mortgage rates would have been lower than they are now.
Purchase application data
Purchase requisition data is down 1% Each week counts year-to-date data 14 positive and 13 minus Print. Starting from November 9, 2022, 21 positive print vs 13 minus Print. The recent rise in mortgage rates has not caused this data line to drop like it did last year. However, demand growth is also modest, and 2023 is certain to be a dead end.
Last week, I received a used home sales report, so I wrote about it here. You can see that we haven’t been able to increase sales since we got the big existing home sales print in February.
The week ahead is going to be tough
There are many things happening this week. Of course, there will be a Fed meeting, the market expects the Fed to hike rates, and unless the data justifies it, the pipeline will look for hints of another rate hike.
Lots of housing related news. FHFAMore Home Price Index and S&P CoreLogic Case-Shiller Home Price Index. New home sales numbers and pending home sales numbers, which are not as strong as new home sales, will be released this week. With the PCE inflation report coming on Friday, it will be a big week for bond markets and mortgage rates as well. Everyone, please buckle up and wait for further coverage.