10-year yield and mortgage rates 

After the intense jobs week data, we ran straight into CPI and PPI inflation week, with a Fed meeting thrown in! I got one good crumb from the Fed meeting that made me smile: Powell finally admitted that the labor market isn’t tight anymore, which is a beneficial statement for rates down the line if the labor data gets weaker. I discuss this in this episode of the HousingWire Daily podcast.

Last week had softer inflation data, but I am much more focus needs to be put on the weekly jobless claims data and jobs week data.

The 10-year yield closed last week at 4.22%.

Mortgage spreads

The spread between the 30-year mortgage rate and the 10-year yield has been an issue since 2022 and things got worse after the March 2023 banking crisis. However, this year, spreads have improved despite being far from ordinary.

If we took the worst levels of the spreads from 2023 and incorporated those today, mortgage rates would be 0.52% higher. 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

Last week, we had the second-best week-to-week purchase application data percentage print as mortgage rates have fallen recently. Now, I caution everyone that we are working from a shallow bar, so moving the needle doesn’t take much. However, you have something if we can string out a few weeks like this.  

Since November 2023, when mortgage rates started to fall, we have had 13 positive prints versus 13 negative prints and two flat prints week-to-week. Once mortgage rates began rising in 2024, some demand was removed. As shown below, the year-to-date data isn’t even positive for 2024: we’ve had seven positive prints, 13 negative prints, and two flat prints. We aren’t getting any real mortgage demand growth with rates this high and the bounces we see in the data are coming from depressed levels.

Weekly housing inventory data

As we head into the summer, I still can’t express enough gratitude for the growth in inventory this year. If mortgage rates keep falling and demand picks up, we will have a much better buffer with active inventory than in 2022 and 2023.

My rule of thumb has been that inventory should have some weekly prints between 11,000 -17,000 as long as rates are above 7.25%. We have hit that three times this year; last year was a whopping zero. Even though the weekly inventory growth rate didn’t hit that level, rates fell on Friday and inventory grew at a healthy clip of 8,943.

• Weekly inventory change (June 7-June 14): Inventory rose from 611,596 to 620,539
• The same week last year (June 9-June 16): Inventory rose from 443,749 to 451,808
• The all-time inventory bottom was in 2022 at 240,194
• This week is the inventory peak for 2024 at 620,539
• For some context, active listings for this week in 2015 were 1,174 446

New listings data

Another positive story for 2024 has been that new listings data is growing from the record-low levels we saw in 2023. As most sellers are buyers, seeing more sellers listing their homes has been good. The only thing about 2024 was that I was 100% sure we would see a seasonal peak print at a minimum of 80,000 and it’s starting to look more and more like it won’t happen this year as the seasonal decline in new listings isn’t far away.

Here are the new listings for last week over the last several years:

• 2024  71,457
• 2023: 62,187
• 2022: 87,996

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 price-cut percentage can fall. This data line is seasonal, and we have seen consistent year-over-year price-cut percentage growth since the end of March. 

As the old stale data trickles in, we should see a cooling down in year-over-year price growth. I recently discussed this in the HousingWire Daily podcast and explained why I believe this is the case. Here are the price-cut percentages for last week over the previous few years:

• 2024: 36%
• 2023: 31%
• 2022: 27%

Pending sales

Below is our weekly pending contract data on a year-over-year basis to show demand in real time. With more sellers who are buyers, we have a tad more demand this year. If mortgage rates head lower and stay lower, this contract data will grow, but we don’t see that growth in mortgage demand yet. 

• 2024: 395,960
• 2023: 386,052
• 2022: 452,003

Week ahead: Existing home sales, housing starts, retail sales and Fed speeches

This week, we will get some economic data; retail sales will be the essential data line for the Fed. We will also get housing starts and it will be interesting to see if we continue the down trend in single-family and multifamily permits. Existing home sales will be out on Friday and should still trend near recent lows. However, this week, the Fed speeches will engage with all the data we have gathered recently, so we’ll keep an eye on that.