Is the Housing Market Crashing? Sellers Abandon Ship!

As 2022 edges towards its climax, the real estate market is experiencing a tumultuous phase with soaring mortgage rates causing ripples across the industry. The dynamics of new listings data and housing inventory are shifting in response to these economic fluctuations. Let’s delve into the details of how recent developments are shaping the real estate landscape.

New Listings Data

1. The Pulse of the Market
   • New listings data is a key indicator of seller sentiment in the real estate market. A decline in new listings would signify reluctance among homeowners to list their properties, possibly due to the impact of rising mortgage rates.
   • Despite ongoing market uncertainties, there has been a slight growth in new listings, providing a glimmer of hope for the housing sector in 2024. The resilience of sellers in the face of adverse conditions is evident in the steady flow of new properties coming onto the market.
2. Recent Figures
   • Comparing new listings from recent years, 2024 has seen 60,158 new listings, a positive sign for the industry’s growth and stability.
   • In 2023, new listings stood at 56,634, while in 2022, numbers were slightly lower at 56,522, emphasizing the upward trend in new listings despite the challenging market conditions.

Weekly Housing Inventory Data

1. Flux in Inventory Numbers
   • Fluctuations in housing inventory data are closely monitored to gauge the market’s health and seller activity. While recent weeks saw a slight decline in active listings, it’s crucial to note that this could be attributable to seasonal variations rather than mortgage rate impacts.
   • The pace of inventory growth has slightly slowed down recently, with negative figures reported last week. However, this trend is in line with historical patterns of a seasonal decline in active listings.
   • Despite temporary setbacks, year-over-year comparisons reflect a positive trajectory in inventory growth when viewed in the broader context of the real estate market.
2. Noteworthy Figures
   • Over the past week (Oct. 18-Oct. 25), inventory decreased from 739,434 to 737,997, signaling a minor shift in real estate dynamics.
   • Comparing figures from the same time last year, inventory had risen from 554,350 to 562,556, showcasing the market’s resilience and capacity for growth.
   • It’s essential to recognize that while 2022 marked an all-time inventory low at 240,497, 2024 has already recorded a higher peak with 739,434 active listings.

Price-Cut Percentage

1. Changing Trends
   • Rising mortgage rates have translated into a higher percentage of price cuts in the real estate market, indicating a shift in seller strategies to attract buyers.
   • While price-cut percentages for 2024 stand at 39.5%, comparable figures for 2023 and 2022 were 39% and 43%, respectively, reflecting evolving market dynamics in response to economic conditions.

10-Year Yield and Mortgage Rates

1. Forecast and Realities
   • Projections for mortgage rates and 10-year yields have been instrumental in navigating the market’s uncertain terrain.
   • Recent spikes in mortgage rates have bewildered industry participants, leading to a surge in mortgage spreads and impacting interest rates.
   • Monitoring the 10-year yield closely is critical, with a threshold of 4.40% identified as a potential signal for higher mortgage rates in the near future.

Mortgage Spreads

1. Impact of Spreads
   • Mortgage spreads have played a pivotal role in shaping interest rates and affordability in the real estate market.
   • While current spreads reflect an improvement compared to last year, recent rate hikes have exerted downward pressure on mortgage rates, leading to increased borrowing costs for buyers. Reverting to normal spreads could result in lower mortgage rates and enhanced affordability for homebuyers.

Weekly Pending Sales

1. Demand Dynamics
   • Pending sales data serves as a real-time indicator of market demand and buyer interest.
   • Despite challenges posed by rising mortgage rates, pending sales have shown year-over-year growth in 2024, demonstrating resilience and underlying strength in the real estate market.

Purchase Application Data

1. Shifts in Applications
   • Fluctuations in purchase applications are closely linked to mortgage rate movements and buyer sentiment.
   • Recent spikes in mortgage rates have resulted in back-to-back negative weeks for purchase applications, underscoring the impact of interest rate dynamics on consumer behavior.

In the week ahead, a confluence of economic data, including jobs reports, inflation figures, and bond auctions, will shape market trends and bond yields. As industry stakeholders navigate these turbulent waters, maintaining a pulse on market indicators and policy shifts will be crucial in adapting to changing conditions and fostering sustainable growth in the real estate sector.