Housing Market Sees Boost from Lower Mortgage Rates

The housing market is getting a boost from lower mortgage rates. This is shown by a positive week in the Housing Market Tracker data. Both pending home sales and purchase applications went up last week, compared to the same time last year.

Lower Mortgage Rates Drive Demand

When mortgage rates get close to 6%, housing demand usually goes up. This has happened before, but it's been a while since rates have stayed at this level for a long time. This year might be different.

The data on purchase applications is looking good. The goal is to see at least 12-14 weeks of growth, and so far, this year is on track. Last week, applications went up 5% from the week before and 18% from the same time last year.

Purchase Applications Lead Sales Data

These applications usually happen 30 to 90 days before sales data. This means that the growth in applications should lead to more sales in the coming months.

Weekly Pending Home Sales

Weekly pending home sales give a sense of what's happening in the market right now. Last week, pending sales went up, which is a good sign. These sales usually show up in the existing home sales report 30 to 60 days later.

Global Events Impact Mortgage Rates

Last week, big events like the global summit in Davos and problems in Japan's bond market affected financial markets. Despite this, mortgage rates didn't go up too much. They rose from 6.07% to 6.21%, and then went back down to 6.19%.

Mortgage Spreads Help Keep Rates Stable

Mortgage spreads have gotten better, especially at the start of this year. This has helped keep mortgage rates from going up too much. If spreads were as bad as they were last year, rates would be around 6.30% to 6.40%.

Housing Inventory Trends

The housing inventory is getting better as the market gets back to normal. However, the growth rate of inventory has slowed down since mid-June last year. It's unlikely that we'll see the same growth rate this year, but as long as inventory keeps growing, it's a good sign.

New Listings Data

The data on new listings is looking promising. The goal is to reach 80,000 new listings per week during peak times, and maybe even go above that. Last year, reaching 80,000 was the low end of what's normal, but growth stopped after that.

Looking Ahead

This week, the Federal Reserve will meet, but it's not expected to change interest rates. The question and answer session after the meeting will be closely watched, especially since Jerome Powell's term is ending and a new Fed chair will be announced. There are also several home price index reports and inflation data coming out this week.