Housing inventory went crazy | ET REALITY


What is happening with housing inventory? The last four weeks of new property data have been the most volatile since mortgage rates topped 6% in 2022. One week, we had the biggest drop in new property data of the entire year, which could indicate that the Americans are giving up putting their homes on the market. But the following week we had the biggest increase of the year, which could show that people are rushing to put their homes on the market.

In reality, the volatility in housing inventory is due to the Labor Day holiday, the start of school, and the fact that new listings are trending at all-time lows.

Weekly home inventory

Some of the volatility with new listings data has also affected active listings data. Two weeks ago, active listings grew 343; This week, active listings grew 9,470. The average of the two weeks is 4,906. As I’ve highlighted, weak demand can lead to inventory growth over time, it’s just that in 2023, the growth will be much slower than what we saw in 2022. My happy zone for active listing growth is between 11 000 and 17,000 per week, but this year Inventory growth has simply been too slow.

According Senior Research:

  • Weekly inventory change: (from September 1 to 8): Inventory increased from 509,156 to 518,626
  • Same week last year (September 2-9): inventory increased 547,222 to 552,042
  • The inventory fund for 2022 was 240,194
  • Peak inventory for 2023 so far is 518,626
  • For context, active listings for this week at 2015 were 1,201,196

One of the lines of data that I will be incorporating weekly in the future is the price reduction percentage. Historically, one-third of all homes have year-round price cuts. Over the past week, price cuts were lower than last year by 4%. However, the housing market still has affordability issues and we are seeing bigger price cuts than in 2015-2017. Back then, we were running in 33%; while in 2018 and 2019, it was 36%.

  • 2021 28%
  • 2022 41%
  • 2023 37%

New listings data should be calmer now

As we have mentioned, the data has been extreme lately; You can see it in the weekly data below. Now that we’re past Labor Day and the start of school, we can keep an eye out for a new trend up or down in new listings data. I had been anticipating some stable to positive year-over-year data in new listings this year in the second half of the year. However, we have not yet obtained that data.

  • August 18th: 60,295
  • August 25th: 55,291
  • September 1st: 60,004
  • September 8th: 50,212
  • September 15: 61,852

Mortgage rates and the bond market

Mortgage rates increased slightly since 7.22% to 7.29% last week, but we are fighting an epic battle over the 10-year yield. A few weeks ago, after the 10-year yield closed above my expected high 4.25%my only attention was on the 4.34% level, which was the intraday high in 2022.

So far since then, the 10-year yield has attempted to surpass this level several times and has been rejected each time. It is critical to stay below 4.34% because if that level is broken, we may see more selling in the bond market and higher mortgage rates. However, continuing with my 2023 forecast, we are at 2023 highs, so I think the upside from higher yields is limited unless the economy performs better.

Purchase request data

The purchase request data was 1 more last week, making the year to date count 16 positive, 18 negative impressions and a flat week. If we start from November 9, 2022, it has been 23 positive impressions versus 18 negative impressions and a flat week.

Higher rates have slowed demand and sent purchase applications back to 1995 levels. When mortgage rates fell from 7.37% to 5.99% late last year, we had three months of positive growth solid, but after that, rates were too high to promote growth in this data line. Since rates have been above 7%, data has slowed down. While home sales are not falling like they were last year, they are not growing either.

Next week: housing reports on the agenda

This week we will have builder confidence data, which has been falling lately, home construction starts and the existing home sales report. The Leading Economic Index will also be released this week and has been in a downward recessionary trend for a long time. On Monday’s HousingWire Daily podcast, I’ll outline how close we are to a recession and what to expect in the next 12 months.

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