![]() ![]() The last three weeks didn’t show any weekly growth, but mortgage rates were rising for most of that period. Last week, we saw the weekly purchase application data decline by 1.2%, with a year-over-year decline of 44%. This looks normal to me considering how high the comps were from last year. ![]() Since October, the year-over-year declines have ranged between negative 36% to 46%. In fact, one of my big talking points for 2022 was that starting from October this index should be printing negative 35%-45% year-over-year declines until January. This explains the major year-over-year declines we have seen since October. This wasn’t the case last year, as it was an abnormal period for purchase application data which created very high year-over-year comps to deal with. However, volumes dry up yearly during the last and first weeks of the year, so reading the internals of the data is key even though volumes are historically low at this period. In the last 10 weeks since mortgage rates have fallen, the index showed some weekly growth and the year-over-year decline stopped at negative 46%. ![]() The level is now so low that even a small improvement in demand could stabilize it. One caution is that this data line took a waterfall dive, wiping out seven years of growth in 2022. We are now fresh into the critical seasonal volume period for purchase application data, as I always weigh this index from the second week of January to the first week of May. Before that, the data was showing constant weakness, so the lower mortgage rate move since November has changed the dynamics with purchase application data. The best way to look forward is the purchase application data, which has formed a bottom for now since seven of the last 10 reports have been positive in a non-seasonal time of growth. However, the next existing home sales report will be for December, which is backward-looking, and now it’s time to look forward. In general, it’s rare to have monthly sales below 4 million post 1996, but we have a shot of this happening on Friday. But after this week’s report, we should have a low-level base formed for housing to stabilize.Īs you can see below, the waterfall dive in existing home sales has taken us toward the level of 2007-2008 monthly home sales. We will get the next existing home sales report on Friday, and I expect to see demand keep falling. This is a problem for the existing home sales market since a traditional seller is usually also a buyer, so the lack of listing growth was a big hit to demand. One of my biggest concerns for housing started at the end of June 2022: once mortgage rates got above 6%, the new listing data began to decline faster and earlier than normal. With mortgage rates also falling, I am hopeful that more people will list their homes and buy another, so we can get back to a more functional housing market. The weekly data shows some good news for the housing market! The weekly inventory data, which had fallen faster than I had anticipated the last few weeks, has now seen a slight uptick. Mortgage rates fell along with bond yields, showing that mortgage rates peaked on Oct.This is a small number but could be the start of an important trend. Housing inventory increased by 1,339 homes nationwide. ![]() Purchase application data has stabilized - the bleeding stopped. ![]()
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