Summer is here and housing inventory is finally growing. Active inventory grew 8,886 last week.
Summer is here, and housing inventory is finally growing! The spring housing inventory was like a zombie rising from the grave, very slow, but the summer is showing some promise and let’s hope it continues. Purchase apps had a small week-to-week gain. Mortgage rates were again in a small range, hanging near 7%.
Nothing good is happening in housing when days on market are so low. Also, NAR updated its inventory report showing a year-over-year decline in inventory.
NAR total Inventory levels: Historically inventory is between 2-2.5 million The peak in 2007 was a bit over 4 million Currently we’re at 1.08 million Last year at this time it was 1.15 million People often ask me why there is such a difference between the NAR data versus the Altos Research inventory data. This link explains the difference and is worth a read. The 10-year yield and mortgage rates The bond and mortgage rate world has been calm the last two weeks. Considering all the data and Federal Reserve talk we have had recently, it’s surprising how stable rates have been. The 10-year yield had a small range last week, and mortgage rates stayed in a range between 6.875%-6.95%. In my 2023 forecast, I wrote that if the economy stays firm, the 10-year yield range should be between 3.21% and 4.25%, equating to mortgage rates between 5.75% and 7.25%. As long as jobless claims trend below 323,000 on the four-week moving average, the labor market stays firm, which means the economy remains healthy. Jobless claims have stayed below this range all year so far and job openings are still at 10 million. I have also stressed that the 10-year level between 3.37% and 3.42% would be hard to break lower. I call it the Gandalf line in the sand: “You shall not pass.” As you can see in the chart below, we have tested this line many times, and yet the 10-year yield could not pass. The setup for the 10-year yield to stay in the range is intact. Unless the U.S. dollar explodes higher or we get some market stress overseas, we should remain in the forecast range. The counter to my 10-year yield range would be if the economy here or around the world starts to accelerate higher; that would be a valid premise to get the 10-year yield above 4.25%. The issue in 2023 is more than the 10-year yield; since the banking crisis started, the spreads between the 10-year yields and 30-year mortgage rates have gotten worse, and until the Fed cries uncle, it doesn’t look like we will see any more improvement. Another aspect of my 2023 forecast is that if jobless claims break over 323,000 on the four-week moving average, the 10-year yield could break under 3.21% and head toward 2.73%. Last week we didn’t have much movement here with jobless claims, but we have seen the labor market get looser since the lows in 2022. From the St. Louis Fed: Initial claims for unemployment insurance benefits were little changed in the week ended June 17, at 264,000. The four-week moving average increased to 255,750 Purchase application data Purchase application data has surprised people with back-to-back positive prints in the last two weeks of 8% and 2%, which means year to date, we have had 12 positive prints versus 11 negative prints. There is no clear direction on demand on the week-to-week data. However, the fact that this is happening is a huge deal, as you can see in the chart below.If this hadn’t happened, all of us would be having a different conversation today about the housing market and inventory.
Since Nov. 9, 2022, we have had 19 positive and 11 negative prints, which shows that demand has stabilized. Now that we are almost to July 4, you can clearly see it in the existing home sales data, as purchase apps are a forward-looking indicator. Home sales can still trend below 4 million this year if we see more weakness in purchase application data, but the sales decline is much slower this year. This is significant because the market is acting normally again with these low sales levels. This gives everyone a better perspective of where demand is going, as last year’s waterfall collapse was a historic event. The week ahead: Housing data and PCE inflation We will have a big week ahead in data. The S&P CoreLogic Case Shiller home price index and the FHFA home price index will come out this week and they will show the firming up the month-to-month price data compared to what we had in the second half of 2022. Also, the new home sales report is coming up, and we will see how much progress we have made. Pending home sales will be out next week. I don’t expect much to happen there; in fact, we could have a negative report as we did have four straight weeks of negative purchase application data recently. Also, the PCE inflation data will be released Friday — this is where the Fed wants the inflation growth rate to go back down to 2%. I know people love to focus on CPI inflation data, but the PCE data matters more. Below is a look a Core PCE data, which the Fed wants to see go much lower. So, we have a busy week of data, and of course, we always keep an eye out on jobless claims data every Thursday. However, four housing reports and inflation data with some Fed talk make for an exciting week for bond yields and mortgage rates. Also, we never know what we will get from Russia, with love or without. Related Housing market faces headwinds as mortgage rates move above 7% September 12, 2026 In “Housing Market” Housing year-over-year comps need context for the rest of 2026 September 5, 2026 In “Housing Market” Mortgage rates have gone wild, so what’s next for housing? September 27, 2026 In “Housing Market”
