Mortgage rates began declining in mid-June and have remained lower for over two months, coinciding with shifts in housing inventory dynamics. Weekly inventory, which historically peaks in October or November, unexpectedly decreased in August despite mortgage rates staying above 6.5%. Year-over-year inventory growth fell from recent highs of 33% to 22%. Weekly inventory change from Aug. 22–29 showed a fall from 861,238 to 860,728, compared with a rise from 698,161 to 704,654 the same week last year. New listings peaked the week of May 23 at 83,143 and have gradually declined since, failing to produce consecutive weeks above 80,000.
In recent years, our weekly inventory data typically reached its highest point in October or November, which is later than in the pre-COVID era. However, around mid-June, when mortgage rates began to decline, I observed a slight shift in the data. If you had asked me whether I expected inventory to decrease in August, given that mortgage rates were still at 6.50% and higher, I would have said no. Yet, that is exactly what occurred.
Currently, year-over-year inventory growth has dropped from recent highs of 33% to 22%, despite mortgage rates not yet approaching 6%. If mortgage rates had been trending toward 6% earlier in the year alongside the level of inventory growth we experienced, it wouldn't have surprised me. However, that didn't happen. I will continue to monitor this situation for the remainder of the year. Last week, inventory rose just a little: Weekly inventory change (Aug. 22-Aug. 29): Inventory fell from 861,238 to 860,728
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