Unbelievable! Is there any limit to how low mortgage rates can go?

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If we took the worst levels of the spreads from 2023 and incorporated those today, mortgage rates would be 0.59% higher right now. While we are far from being average with the spreads, the fact that we have seen this improvement is a plus this year.

Keeping with my 2024 forecast, I never target mortgage rates in my projections; I only work off the 10-year yield. Also, the spreads were elevated in 2023, so they have had room to go lower, which they have. However, a big move has already happened without any rate cuts, which means you’ll need more help to get mortgage rates lower than 5.75%.

Purchase application data

Since mortgage rates have fallen more than 1% recentlywe will draw a line in the sand at that point and track purchase application data for the rest of the year. In the last 13 weeks, purchase application data has had eight positive and five negative prints. Last week, weekly purchase apps grew 3%. Yes, purchase apps have had a positive move with low rates, folks. Now, the year-over-year decline came in at 4%, which is the lowest decline since 2022; this is primarily due to the lowest bar ever.

Since mortgage rates started to fall in November 2023, the week-to-week purchase application data shows 20 positive prints, 18 negative prints, and two flat prints. As we can see from the data, not much is happening. However, if mortgage rates can get below 6% and stay there, we should see growth similar to the builders’ purchase application data,, which has acted much better than the existing home sales market.

Weekly housing inventory data

As mortgage rates have decreased, inventory growth has slowed, and seasonality will kick in soon. Last week, we had the Labor Day holiday, so take the decline in inventory within that context. For me, the best story for 2024 has been the total inventory growth in America, and there was no housing bubble crash.

Weekly inventory change (Aug. 30-Sept. 6): Inventory fell from 704,335 to 703,646

The same week last year (Sept. 1-Sept. 7): Inventory rose from 509,562 to 509,892

The all-time inventory bottom was in 2022 at 240,497

The yearly inventory peak for 2024 was at 704,744

For some context, active listings for this week in 2015 were 1,195,353

New listings data

One of the positive data lines this year is that we have gotten growth in new listings data, as 2023 was the lowest level ever. Even though 2024 will be the second lowest year ever, it’s still a positive that we had growth this year. I didn’t get my minimum estimate for peak weekly new listings during the annual seasonal peak of 80,000. I was off by roughly 5,000, but still, 2024 is a positive year in my book for new listings.

2024: 61,599

2023: 49,661

2022: 58,004

Price-cut percentage

In an average year, one-third of all homes take a price cut — this is standard housing activity. Rising mortgage rates last year and this year have created a growing level of price cuts, especially with inventory rising. This data line has recently slowed down with falling rates. Also, seasonality and withdrawals are kicking into gear now.

A few months ago, on the HousingWire Daily podcastI discussed that the price-growth data would cool down in the year’s second half. Here are the price-cut percentages for last week over the previous few years:

2024: 39.8%

2023: 36%

2022: 40%

Weekly pending sales

Below is the Altos Research weekly pending contract data to show real-time demand. We are seeing the seasonal decline in the data line but have some year-over-year growth. Just remember, last year at this time, mortgage rates started to move toward 8% so let’s all take the better year-over-year data with some context.

2024: 358,670

2023: 348,317

2022: 390,543

The week ahead: Inflation week

Inflation week doesn’t have the same value as it once had, but it’s always something we need to keep track of, especially when some Fed presidents talk about inflation rising in the last few months of the year.

Just remember, the year-over-year data is capped due to the base effects of last year’s low reading, so the Fed is focusing on the month-to-month numbers now. We also have some bond auctions, jobless claims data, and the used car price index coming out this week. However, I want to see how the bond market reacts after last week’s jobs data have been digested.