These subtle shifts are useful to watch each week so that we\u2019re not surprised when some monthly number in the news comes in below expectations.<\/p>\n
Inventory<\/h2>\n![\"national-data-video-081423_Page_2\"](\"https:\/\/www.housingwire.com\/wp-content\/uploads\/2023\/08\/national-data-video-081423_Page_2.jpg?w=1024\")
<\/figure>\nAvailable inventory of unsold single-family homes ticked up again<\/a> by less than 1% again this week to 492,000. This is a seasonal inventory gain. There are 10% fewer homes on the market now than last year at this time. But the data appears to be showing one of the signals of slightly fewer buyers. In the first half of the year, inventory declined because demand was greater than the season would indicate. Now, that extra little boost of demand seems to be gone from the housing market<\/a>.\u00a0<\/p>\nAt Altos,<\/a> we\u2019ve been saying it looks like the available inventory of homes for sale will peak in two weeks \u2014 at the end of August \u2014 and start declining for the fall season. In the chart above you can see the dark red line for this year is right on a normal curve for inventory. See how the tan line of 2021 peaked right about on the same curve we\u2019re seeing this year? The data for normal seasonality balance says that we\u2019re almost at peak inventory.\u00a0<\/p>\nAssuming inventory peaks in two weeks also assumes mortgage rates don\u2019t spike from here. While the inflation data has been steadily improving each month, the economy has stayed strong for longer than nearly anyone anticipated. As a result, rates haven\u2019t gone down. If the economy reports surprising growth again this month and quarter, you could imagine a scenario where mortgage rates go up from here.<\/p>\n
When thinking about where housing inventory goes from here, it is important to remember this rule of thumb \u2014 call it the Altos Rule: higher mortgage rates equals higher inventory. Lower rates lead to lower inventory. Higher mortgage rates create greater holding costs for real estate therefore fewer people hold real estate, and there are more sales, more inventory. Lower mortgage rates spur demand and hoarding of homes so there is get less inventory.<\/p>\n
There are about 10% fewer homes on the market now than there were in 2022 at this time. In 2022, mortgage rates climbed rapidly and inventory climbed rapidly. That\u2019s the Altos Rule.\u00a0 When mortgage rates eased down in the beginning of the year, so did the available inventory of unsold homes. Now, rates are not falling. They\u2019re staying stubbornly higher around 7% so inventory<\/a> hasn\u2019t yet started its decline for the fall. Look for that decline to start in September with fewer sellers, unless rates jump like they did last September. At Altos<\/a>, we don\u2019t predict mortgage rates. We measure the housing market.<\/p>\n![\"national-data-video-081423_Page_3\"](\"https:\/\/www.housingwire.com\/wp-content\/uploads\/2023\/08\/national-data-video-081423_Page_3.jpg?w=1024\")
<\/figure>\nIf we look at the transaction rate each week \u2014 the total number of new contracts for homes \u2014\u00a0 you can see that in the first half of the year, the pace of sales was steadily returning to normal. The dark red line was approaching the light red line representing 2022. When mortgage rates jumped to 7% in June, there were fewer home sales each week. There were 63,000 new pending sales in the single-family category this week. That\u2019s 11% fewer than in 2022 at this time. For a few weeks there it looked like our sales rate<\/a> might finally eclipse the slowdown from last year. But these higher rates are putting just enough of a damper on supply and demand that the pace of sales seems to have slowed again.<\/p>\nPrice<\/h2>\n![\"national-data-video-081423_Page_4\"](\"https:\/\/www.housingwire.com\/wp-content\/uploads\/2023\/08\/national-data-video-081423_Page_4.jpg?w=1024\")
<\/figure>\nYou can see the nuance of a slowdown in the price reduction data too. 35.1% of the homes on the market <\/a>have taken price cuts. That\u2019s climbing by about 50 basis points per week. It\u2019s not a lot, this leading indicator does not show prices falling. But it\u2019s showing slightly more weakness than earlier in the year. In the chart below, notice the dark red line improved dramatically earlier in the year. It dropped from cold into the normal range. In 2022, the market was changing rapidly. The light red line represents how many price cuts were happening each week.\u00a0<\/p>\nThis summer slowdown is much more subtle. Consumers are sensitive to higher mortgage rates. There are slightly fewer offers each week, so there are slightly more price reductions. Price cuts don\u2019t typically peak until October, so it\u2019s the slope of the dark red line that we\u2019re paying attention to now. And, the year could end with more price cuts than any recent year except 2022. Stronger than last year, but cooler than the surprising first few months of 2023.<\/p>\n![\"national-data-video-081423_Page_5\"](\"https:\/\/www.housingwire.com\/wp-content\/uploads\/2023\/08\/national-data-video-081423_Page_5.jpg?w=1024\")
<\/figure>\nHome prices <\/a>are holding steady each week. The median price of single-family homes in the U.S. is just under $450,000. That\u2019s basically unchanged for four weeks in a row. And it\u2019s almost exactly the same as a year ago. Home prices are just a tiny sliver higher than they were in 2022 at this time.\u00a0<\/p>\nThe median price of the newly listed cohort ticked down a fraction for $399,000. That\u2019s also a tiny sliver higher than it was in 2022. See how the light red line has a steady decline in the second half of the year each year? Last year was a steeper-than-normal decline. So this home price measure should tick down over the next couple of months as is normal for the late summer and early fall. If you\u2019re listing your house late in the year, you tend to take a slight discount to make sure it moves before the end of the summer or before the holidays. So while I\u2019ve been pointing out slight buyer weakness it will be important to watch the price of the new listings each week to see if that price weakness accelerates like it did last year.<\/p>\n![\"national-data-video-081423_Page_6\"](\"https:\/\/www.housingwire.com\/wp-content\/uploads\/2023\/08\/national-data-video-081423_Page_6.jpg?w=1024\")
<\/figure>\nThe median price of all the homes that went into contract this week is $371,483. That\u2019s almost 2% lower than last week and a fraction lower than the data from 2022. In the last few weeks, the data has shown the price of the pending sales dropping as mortgage rates have stayed over 7%. This makes sense with the other data I\u2019ve shared here today. In this chart, notice the dark red line has been trading higher than the light red line for several months. <\/p>\n
This week, you can see that the latest home sales prices dipped below last year. Now, I don\u2019t see this as home prices falling dramatically and because they did fall dramatically in September of 2022, home prices will likely end the year up a few percentage points over 2022 data.\u00a0 But, consumers are very sensitive to mortgage rates and rates are inching up. The higher those rates go, the more at risk the annual home price appreciation is.\u00a0<\/p>\n
That\u2019s really something to keep our eyes on in the coming weeks. <\/p>\n
More next week.<\/p>\n
Mike Simonsen<\/a> is the president and founder of Altos Research. <\/em><\/p>\n
<\/figure>\nAvailable inventory of unsold single-family homes ticked up again<\/a> by less than 1% again this week to 492,000. This is a seasonal inventory gain. There are 10% fewer homes on the market now than last year at this time. But the data appears to be showing one of the signals of slightly fewer buyers. In the first half of the year, inventory declined because demand was greater than the season would indicate. Now, that extra little boost of demand seems to be gone from the housing market<\/a>.\u00a0<\/p>\n At Altos,<\/a> we\u2019ve been saying it looks like the available inventory of homes for sale will peak in two weeks \u2014 at the end of August \u2014 and start declining for the fall season. In the chart above you can see the dark red line for this year is right on a normal curve for inventory. See how the tan line of 2021 peaked right about on the same curve we\u2019re seeing this year? The data for normal seasonality balance says that we\u2019re almost at peak inventory.\u00a0<\/p>\n Assuming inventory peaks in two weeks also assumes mortgage rates don\u2019t spike from here. While the inflation data has been steadily improving each month, the economy has stayed strong for longer than nearly anyone anticipated. As a result, rates haven\u2019t gone down. If the economy reports surprising growth again this month and quarter, you could imagine a scenario where mortgage rates go up from here.<\/p>\n When thinking about where housing inventory goes from here, it is important to remember this rule of thumb \u2014 call it the Altos Rule: higher mortgage rates equals higher inventory. Lower rates lead to lower inventory. Higher mortgage rates create greater holding costs for real estate therefore fewer people hold real estate, and there are more sales, more inventory. Lower mortgage rates spur demand and hoarding of homes so there is get less inventory.<\/p>\n There are about 10% fewer homes on the market now than there were in 2022 at this time. In 2022, mortgage rates climbed rapidly and inventory climbed rapidly. That\u2019s the Altos Rule.\u00a0 When mortgage rates eased down in the beginning of the year, so did the available inventory of unsold homes. Now, rates are not falling. They\u2019re staying stubbornly higher around 7% so inventory<\/a> hasn\u2019t yet started its decline for the fall. Look for that decline to start in September with fewer sellers, unless rates jump like they did last September. At Altos<\/a>, we don\u2019t predict mortgage rates. We measure the housing market.<\/p>\n If we look at the transaction rate each week \u2014 the total number of new contracts for homes \u2014\u00a0 you can see that in the first half of the year, the pace of sales was steadily returning to normal. The dark red line was approaching the light red line representing 2022. When mortgage rates jumped to 7% in June, there were fewer home sales each week. There were 63,000 new pending sales in the single-family category this week. That\u2019s 11% fewer than in 2022 at this time. For a few weeks there it looked like our sales rate<\/a> might finally eclipse the slowdown from last year. But these higher rates are putting just enough of a damper on supply and demand that the pace of sales seems to have slowed again.<\/p>\n You can see the nuance of a slowdown in the price reduction data too. 35.1% of the homes on the market <\/a>have taken price cuts. That\u2019s climbing by about 50 basis points per week. It\u2019s not a lot, this leading indicator does not show prices falling. But it\u2019s showing slightly more weakness than earlier in the year. In the chart below, notice the dark red line improved dramatically earlier in the year. It dropped from cold into the normal range. In 2022, the market was changing rapidly. The light red line represents how many price cuts were happening each week.\u00a0<\/p>\n This summer slowdown is much more subtle. Consumers are sensitive to higher mortgage rates. There are slightly fewer offers each week, so there are slightly more price reductions. Price cuts don\u2019t typically peak until October, so it\u2019s the slope of the dark red line that we\u2019re paying attention to now. And, the year could end with more price cuts than any recent year except 2022. Stronger than last year, but cooler than the surprising first few months of 2023.<\/p>\n Home prices <\/a>are holding steady each week. The median price of single-family homes in the U.S. is just under $450,000. That\u2019s basically unchanged for four weeks in a row. And it\u2019s almost exactly the same as a year ago. Home prices are just a tiny sliver higher than they were in 2022 at this time.\u00a0<\/p>\n The median price of the newly listed cohort ticked down a fraction for $399,000. That\u2019s also a tiny sliver higher than it was in 2022. See how the light red line has a steady decline in the second half of the year each year? Last year was a steeper-than-normal decline. So this home price measure should tick down over the next couple of months as is normal for the late summer and early fall. If you\u2019re listing your house late in the year, you tend to take a slight discount to make sure it moves before the end of the summer or before the holidays. So while I\u2019ve been pointing out slight buyer weakness it will be important to watch the price of the new listings each week to see if that price weakness accelerates like it did last year.<\/p>\n The median price of all the homes that went into contract this week is $371,483. That\u2019s almost 2% lower than last week and a fraction lower than the data from 2022. In the last few weeks, the data has shown the price of the pending sales dropping as mortgage rates have stayed over 7%. This makes sense with the other data I\u2019ve shared here today. In this chart, notice the dark red line has been trading higher than the light red line for several months. <\/p>\n This week, you can see that the latest home sales prices dipped below last year. Now, I don\u2019t see this as home prices falling dramatically and because they did fall dramatically in September of 2022, home prices will likely end the year up a few percentage points over 2022 data.\u00a0 But, consumers are very sensitive to mortgage rates and rates are inching up. The higher those rates go, the more at risk the annual home price appreciation is.\u00a0<\/p>\n That\u2019s really something to keep our eyes on in the coming weeks. <\/p>\n More next week.<\/p>\n Mike Simonsen<\/a> is the president and founder of Altos Research. <\/em><\/p>\n<\/figure>\nPrice<\/h2>\n
<\/figure>\n<\/figure>\n<\/figure>\n