Last week mortgage rates rose as purchase applications and inventory fell, with a noticeable move lower in new listing data.
Another week down in 2023 and we’re seeing crazier action in the housing market as purchase application data fell, mortgage rates rose again, and weekly inventory took another dive with a noticeable move lower in new listing data. Here is a quick rundown from last week:
Housing demand has gotten better since Nov. 9, 2022. If purchase apps look out 30-90 days, and we have had three months of better data, then it makes sense inventory is falling, partially due to demand.
New listing data is still declining year over year. This, combined with the two reasons above, should help you connect the dots. Look at this new listing data for this week compared to other years: 2019 – 65,868 2020 – 62,447 2021 – 50,671 2022 – 49,159 2023 – 42,769 On Tuesday we’ll get NAR’s existing home sales report. Then, the report has the backdrop to have another inventory fall, getting us closer to the all-time lows in inventory we had last year, around 860,000. In the previous report, we had 970,000, and we will see what the month of January will bring. Here is a look at how the 2022 inventory monthly data looked from NAR. This will be an exciting week of inventory from the NAR side, but also on the weekly data to see whether 6.80% mortgage rates get fewer people to list their homes to sell and buy another one. 10-year yield and mortgage rates In my 2023 forecast, if the economy stayed firm, my 10-year yield range is between 3.21% and 4.25%, equating to mortgage rates staying in a range of 5.75% to 7.25%. For some time now, I have discussed how it would be hard to break under 3.42% with follow-through bond buying, meaning mortgage rates would fall further. The market made a few attempts to break that level, but bond yields have reversed higher. We have had a few more robust reports on the economic and inflation side of the equation to help push the 10-year yield to another critical level for 2023. We are in the middle of the range and the 10-year attempted to break higher Friday. At market close the 10-year yield looked calm, but the intraday action was pretty wild, like when we tried to break below 3.42%. As you can see, the 10-year yield pushed above 3.90% to end the day with little movement. This week, a case can be made that mortgage rates get better after an oversold bond market condition, but that’s the only reason rates would get better this week. One concern I have is that higher mortgage rates can force potential sellers to hold off on adding inventory this year. The week ahead This week we have some home sales data to look at. Those reports will most likely be positive since the forward-looking housing data started to get better on Nov. 9. Because that data looks out 30-90 days, we should be seeing it in the existing and new home sales data soon. We also have the Fed minutes coming up Wednesday, where we get to hear what they’re talking about when discussing the future of rate hikes. However, the big day this week would have to be Friday, when we have new home sales but also the Personal Consumption Expenditures report. The PCE is the inflation metric the Fed tracks when they talk about a 2% growth rate of inflation. The Fed has said they’re looking at three, six, and 12-month inflation rate gauges to determine rate hikes.Mostly, they have said they want the Fed funds rate to be roughly 5% or 5.25% and just let it stay there. They don’t want to get aggressive from here because if the labor market breaks on them, the bond market will lower bond yields, and mortgage rates will fall, forcing them to adjust their rate-hike stance.
They have repeatedly wanted to keep rates higher for a more extended period. In their mind, if they over-hike now, this will blow back on them quickly. It would be problematic if the labor market breaks while the growth rate of inflation cools down. For now, the Fed can manage this as jobless claims, which come out every Thursday morning, are still far from my critical level of 323,000 on the four-week moving average. We are still below 200,000 of total jobless claims. This week is another big week of housing market data to take in, with some key things to track that could impact inventory. I am looking at the purchase application data to see how much damage rates at 6.80% did first, and, of course, the Friday PCE report. Get ready for another wild ride in the economic wilderness. Related Housing market faces headwinds as mortgage rates move above 7% September 12, 2026 In “Housing Market” Mortgage rates have gone wild, so what’s next for housing? September 27, 2026 In “Housing Market” Housing year-over-year comps need context for the rest of 2026 September 5, 2026 In “Housing Market”
