Last week’s housing market data provided mixed news, but the year-over-year purchase app numbers were the big story.
Here’s the housing market rundown for the last week:
Weekly housing inventory
The downside of the past week is that weekly housing inventory declined slightly. However, I will look at the bright side and say that the past two weeks have seen a stabilizing of inventory. The Altos Research weekly housing inventory data shows that two weeks ago, inventory grew by 1,339 units and then declined by 566 units last week. Hopefully, we will see the traditional rise in inventory for the spring faster than we saw last year. Weekly inventory change (Jan. 13 – Jan. 20, 2023): Fell From 472,688 to 472,122 Same week last year (Jan. 14 – Jan. 21, 2022): Fell from 283,656 to 276,865 In June, I predicted that as long as mortgage rates stayed high, weakness in demand over time could create more inventory, and we could get back to 2019 levels of inventory in 2023, meaning inventory breaks over 1.52 million. One week after that prediction, the new listing data declined faster and earlier than usual. By December, this led to total inventory levels breaking under 1 million. Even getting inventory back to 2019 levels would still mean total housing inventory was historically low. As days on market grow, more houses will naturally stay on the market longer, which can increase total inventory levels, similar to what we saw last year. However, it’s going to be tough getting above 1.52 million active listings if new listing data declines in 2023. As you can see below in the NAR total inventory data for 2022, inventory grows each year during the spring and summer, then traditionally declines in the fall and winter. Given the seasonality factor, it’s very important that we get traditional new listing growth every year to keep the housing market working as normal. In 2020, due to COVID-19, and then again in 2022, due to much higher mortgage rates, new listing data fell noticeably, which is a sign of an unhealthy housing market. In 2020, new listing data came back fast as people grew comfortable listing their homes during COVID-19. Now, it’s about mortgage rates and affordability, not a global pandemic. 10-year yield and mortgage rates Last week, mortgage rates headed lower to a short-term low of 6.04%. However, the bond market guy in me just saw a test of a critical level fail, and the yield reversed higher by Friday. Mortgage rates ended the week at 6.15%. Part of my 2023 forecast for the 10-year yield is that if the economy stays firm, the 10-year yield range should be between 3.21%-4.25%, meaning mortgage rates between 5.75%-7.25%. With economic weakness, bond yields could quickly get down to 2.72%, which could take mortgage rates near 5%. Right now the economic data is still firm, and jobless claims are still low, even though January isn’t the best month to take jobless claims data too seriously. All in all, the first few weeks of the year look about right to me for the housing market. The marketplace believes the Federal Reserve rate hikes are almost done, and they should be cutting rates toward the end of the year.The Fed wants to do two or three more 0.25% rate hikes and call it quits. I think the Fed should just call it quits — this way, you have a better shot at keeping short-term rates higher for longer.
The week ahead Today, the Conference Board released its leading economic index, a key tracker for all market participants, and it hasn’t been showing bullish economic trends for a while now. In July, I presented my six recession red flag model to the Conference Board right before I raised my sixth recession red flag based on the index. Other important housing market reports this week will be durable good orders, new home sales and pending home sales. Pending home sales will be interesting since a lot of recent housing data has been positive. This might be the last pending home sales report that doesn’t account for the better purchase application data — it might be one month too early. However, we could see a tiny bounce off the bottom. We’ll know on Friday. As always, keep an eye out on jobless claims Thursday morning. The last few weeks have been good in this data line as it’s been trending down. Last week, the headline jobless claims data broke under 200,000 again, down to 190,000, showing how solid the labor market is. Just remember, when you see a lot of layoff announcements, this doesn’t necessarily mean people file for unemployment claims right away. Especially when it comes to layoffs in tech companies, those might need more time to filter into the system. My Fed pivot model needs jobless claims to break over 323,000 on a four-week moving average. As you can see below, we are nowhere close to that, but the bond market should get ahead of the Fed before the turn. Overall, last week’s data was good, but not great, for the housing market. I would like to have seen the inventory grow, not decline, but I will take a slight decline as a small victory. The 10-year yield not breaking that critical level isn’t too shocking, but seeing that level get a good test was exciting. Purchase apps had a significant week-to-week gain, but remember, context is critical with this data line; we want to take this one week at a time and read the data line correctly and not overhype anything too much. 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”
