Why the housing market is still beating expectations

HousingWire

On today’s episode, Editor in Chief Sarah Wheeler talks with Lead Analyst Logan Mohtashami about housing demand holding steady even with higher mortgage rates.   Related to this episode:   The housing market defies expectations even with higher rates  https://www.housingwire.com/articles/the-housing-market-defies-expectations-even-with-higher-rates/  HousingWire | YouTube⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠  https://www.youtube.com/channel/UCXDD_3y3LvU60vac7eki-6Q  HousingWire AI Summit – August 11  https://events.housingwire.com/AI-summit-2026?utm_source=housingwire&utm_medium=website&utm_campaign=hwd_podcast_0728  HousingWire Mortgage Banking Summit – October 1  https://events.housingwire.com/mortgage-banking-summit-2026?utm_source=housingwire&utm_medium=website&utm_campaign=hwd_podcast_0727  More info about HousingWire  https://lnk.bio/housingwire   Top 5 Trending:   The housing market defies expectations even with higher rates  https://www.housingwire.com/articles/the-housing-market-defies-expectations-even-with-higher-rates/  Here’s where the housing market is headed on its way into 2027  https://www.housingwire.com/articles/heres-where-the-housing-market-is-headed-on-its-way-into-2027/  Introducing the 2026 HousingWire Insiders  https://www.housingwire.com/articles/introducing-the-2026-housingwire-insiders/  American Real Estate Association targets advocacy growth as membership climbs toward 100,000  https://www.housingwire.com/articles/ara-board-membership-growth/  Kelley Blue Book Homes rolls out consumer home valuations  https://www.housingwire.com/articles/kelley-blue-book-homes-valuation/   Want more from Sarah? Don’t forget to subscribe!  https://www.housingwire.com/subscribe/   The HousingWire Daily podcast brings the full picture of the most compelling stories in the housing market reported across HousingWire. Each morning, listen to editor in chief Sarah Wheeler talk to leading industry voices and get a deeper look behind the scenes of the top mortgage and real estate.

Transcript

00:11Welcome, everyone. I'm joined today by my podcast partner, lead analyst Logan Motoshami,

00:16to talk about the housing market defying expectations even with higher rates.

00:21First, here are the top five stories on HousingWire.com. At the top of the list is Logan's

00:26Tracker, the housing market defies expectations even with higher rates, followed by here's where

00:31the housing market is headed on its way into 2027. Then we have the story on HousingWire's

00:36Insider Award winners. And American Real Estate Association targets advocacy growth as membership

00:42climbs toward 100,000. Finally, we have Kelly Blue Book Homes rolls out consumer home valuations.

00:49Okay, Logan, welcome back to the podcast. It is wonderful to be here as your podcast

00:55partner. Finally, after what, four or five years?

00:59It's been a journey.

01:01Yes, it's been a journey. Very interesting weekend. Very interesting tracker report. Of course,

01:10this is 456 deal or no deal. Do you ever used to watch that show deal?

01:15Yeah. Okay. Yeah. So it just seems like we're running out of ideas to force them and we're

01:23running out of time. And you and I have talked about this. There's a time constraint here and

01:27there's an inventory issue here. And if you want to escalate this with Iran's ability to hit Egypt

01:34and the pirates in the South and everything, it gets very, very hectic. So in any case, 10-year yield

01:43went down. Of course, whenever there's positive news on the conflict, bond yields go down. Energy

01:47prices go down. Energy prices is underneath 82. 67 to 82 is the trading range. It's hard for me to

01:54think oil could go below 67, but perfectly acceptable, except the 10-year yield is still elevated.

02:01Sometimes on days where you have a little bit more normal move on bond yields to the downside,

02:08the spreads can actually not improve. We saw that in February. So not the typical response that we get,

02:16but it was very interesting how we are going into August now. And for now, all of the weekly data,

02:25I misspoke last week when I say purchase application data was down 3% year-over-year. It was up

02:303%.

02:31For the calendar week itself, purchase application data, positive year-over-year, multi-year highs.

02:40Our total pending home sales is more of an average multi-year highs for this calendar. Our weekly pending

02:45home sales, even though growth has slowed down, we can see it in our data, still positive growth,

02:51multi-year highs. New listings data, most home sellers or buyers, new listings data is up year-over-year.

02:56Right? Inventory, even though there's not much growth, 0.85% up year-over-year. But wages outstripping

03:04home price growth again this year. That was the second variable that we talked about,

03:09how housing is just holding up a little bit better in a time in the past few years because mortgage

03:16spreads weren't good yet and home prices were well above wage growth. Housing would have already seen

03:23a negative curve. Everything I just told you right now outside of maybe the new listings data would

03:28have been negative year-over-year and we would have seen it. So it's just very resilient in this part,

03:34number one, because mortgage spreads are better. And number two, housing got a little bit more

03:38affordable the last two years. I thought the wage growth part of the tracker was really interesting

03:44because again, you're talking about, I mean like this weekend, some of the headlines we saw were like

03:49the wars expanded into, you know, I mean, all of the Middle East and Europe and all, you know,

03:54I mean, we had a lot of crazy headlines. Then there was talk of maybe a deal, like you said,

03:59who knows? But I did think that even among all of that, we had some good news. And the good

04:04news is

04:04housing demand, it just, it does really defy expectations. And I love that you brought in

04:10the fact that it's, it is mortgage spreads, keeping rates down. They would be, they would be almost

04:14eight right, right now, if we didn't have that. And then the fact that people's wages have grown,

04:20not like a ton. It's not like we're talking a lot, but just enough, right?

04:25Just enough. And I think, I think if like, if some engineers follow my work and how we talk about

04:31the spreads and the 10 year yield channel and all that stuff, and you could understand why I can't

04:37get mortgage rates under 5.75%, even if there were no tariffs, no conflict where Fed policy is,

04:43we don't have a lot of history. You could have the bond market overreact to economic data, which

04:48we've had every year since 2022. And then the 10 year yield can go lower than what the Fed

04:55policy is. But where we are right now, you know, Fed policy is got more hawkish. The labor data got

05:03better, right? Labor data first, hawkish Fed, then the conflict. But we would have been over 7%

05:09for months now, if the spreads were 2025, 2024, and we'd be near 8% in 2023. So I'm trying

05:18to calculate

05:19how I think of how spreads should react in 2026 was the year where I don't have 7% mortgage

05:25rates in

05:25the forecast. But even with the conflict, even with a hawkish Fed, even with, you know, people talk

05:31about multiple rate hikes, and inflation above target, and the Middle East conflict going into the

05:38sixth month, sixth month with the pirates in the South, right? And you know, all this stuff,

05:45you know, mortgage rates never got above 7%. Now the growth rate of our data is slowing down

05:50purchase application, the year over year growth is slowing down our weekly pending home sales data

05:53is slowing down on a year, but it's just holding up. And I think part of that is, of course,

05:58spreads,

05:59but the affordability index on how wages are up, stripping home price growth positive.

06:04These are all forming a better base in sales to go very, very similar to the 1980s affordability was

06:14worse because prices grew faster back then, but mortgage rates got to 18%. That's a 10% increase

06:20from the mid, late 70s to the highs in early 1980. But even then, mortgage rates fell 2% housing

06:29demand

06:29with verticals. Just hypothetically think in your mind, let's just say mortgage rates are 5.375 to

06:345.625. Where sales and how the data has shown you right now for years, for those that read the

06:40tracker, for those that followed our podcast, what do you think we're doing? We're growing.

06:45We are growing home sales. So for me this year, I only had 237,000 more existing home sales.

06:52I had slightly negative year over year price declines, but if mortgage rates were under six

06:59and a quarter, I would have been wrong on both. We would have had a little bit more sales and

07:03prices would have been a little bit more firmer. And that's what I see in this data. And I'm trying

07:08to show that by multiple data fronts, like we always do with the tracker. The tracker is designed

07:12to give you what the market is telling you how housing data is going. So I thought it was one

07:17of

07:17these things because there's a lot of crazy things happening, right? Especially with the Fed,

07:23especially with wars, especially with the Fed, all these things. And yet spreads, man,

07:29mortgage spreads. I'm almost done with all the peanut butter that we got in Utah. Before I went on

07:36stage with Mitt Romney and Josh Romney, they gave me a peanut butter jar that said,

07:42tasty Fannie Mae spreads. It was great. And I have not had peanut butter in a long time. And I'm

07:48like,

07:48this is delicious. This is really good stuff. We ate them. We even took bread and made a video

07:54about those spreads. But hopefully now everyone can understand why I was trying to make this work.

07:59Because this has to be able to work with rates in the sixes, right? Low sixes is doable. But if

08:07low

08:07sixes demand didn't get better in the last few years, then it's a whole different story. But

08:12that was not the case. Not the case in 2023, 2024, 2025. And definitely not in 2026, because we would

08:18have had a little bit more home sales prices. It would have been a little bit more firmer. Maybe

08:22inventory would have been a little bit down if rates had stayed six and a quarter and under.

08:28I think the disappointing part of this year is that it started out with a much better outlook,

08:34right? At the beginning of the year, we just saw so many positive signs that this could be

08:38a great year. We had rates at the level where you do see that growth. And then the conflict happened.

08:43And from the very beginning, you've been like, it's the duration of this conflict that is going to

08:49be problematic or not. And I don't think you or I could have thought six months later,

08:53we're still in the middle of this. And just sort of at a, you know, when will it end?

08:58You know, we're at the middle of this. But one of the things I do with the Instagram family,

09:02love you all. We show oil charts, which is really fun for me. But if you guys notice

09:07with oil prices, every single rally that we've had, it's never broken above the previous highs.

09:12And this happened again. We didn't even attempt it really out there. Oil is now getting to a level

09:17that if you could just get something done, we're at it. That's one variable gone, right?

09:22The Federal Reserve looked at this conflict in a very, very negative way. This is not Kevin

09:26Warsh's Federal Reserve. This is Beth Hammock's Federal Reserve. She doesn't like it.

09:31Lori Logan doesn't like it. Neil Kashkari doesn't like it. So they can stay hawkish.

09:36But if you get one variable gone, and you get a couple months of the CPI and PC without the

09:42energy

09:42and all that stuff, that's one thing gone. Then you got to get the rollovers on tariffs. And remember,

09:46you're going into a political midterms year where tariffs are not popular in certain parts of the

09:51country. So, you know, there is something there. But you got to get this done first,

09:58get this over with so you can work on the second. And then maybe the Hawks, the Beth Hammocks,

10:04who's running the Federal Reserve right now, where the markets are running off of Beth Hammock,

10:08things could change a little bit because it doesn't take much. It doesn't take much now. You know,

10:12just even heading below six and a half to six and a quarter, you know, you get a little bit

10:17of

10:17growth like we saw earlier this year. You know, we've talked about the fact that we have a two-year

10:24election cycle and how that puts us at a disadvantage sometimes with, you know, the other

10:28countries that we're dealing with that they don't have that. They can just hold on. One of the things

10:33you and I talked about over the weekend was like, what if Iran is just like, yeah, we're just going

10:38to hold on until midterms, make sure Trump gets some pain on this. We have precedent for that. They

10:44made sure that Jimmy Carter, that they did not do, they didn't release the hostages or anything

10:49until Ronald Reagan was president. It was, it was a very specific payback to Jimmy Carter. And so

10:55there's precedent for like Iran being like, we're just going to inflict pain on Trump,

11:00even though I don't even know how they're, you know, I mean, you, you made the point that their

11:02economy has to be in terrible shape right now. Remember, Iran cannot win a battle in an open

11:11war with the U.S., but they do have the Strait of Hormuz. The Strait of Hormuz is their nuclear

11:17weapon,

11:17right? Their deterrent. Like North Korea, nobody messes with North Korea because they have a

11:22nuclear weapon. And North Korea is crazy. They don't shoot it, but nobody wants to go there and

11:27test that, right? So this is Iran's version of their nuclear deterrent out there. So it's,

11:37we're here. We're just hopefully that maybe the oil inventory in the midterms gets people to get a

11:45deal done and we can move on. But until then we were still dealing with this week to week stuff

11:50out there, even though oil prices last time I checked was 78, $79. That's perfectly, you know,

11:56we had that trading range a few years ago and, you know, we didn't have any of the federal reserve

12:02members make a big deal about oil prices then. So let's check in on some of the other parts of

12:08the tracker, right? Inventory is something that I'm always interested in. Where are we on inventory

12:13this time of year versus this time last year? It's, there's hardly any growth, but I would say

12:19this, what higher rates can do. I mean, one of the reasons why, um, remember the whole team higher

12:25rates thing in February of 2021, you want to see tomatoes being thrown at you. When I wrote,

12:31we needed higher rates. You were very unpopular with that. It was just, they're like, because

12:35there's, there's always the mortgage side of the equation and real estate side, but then there's

12:39the economic side where people have to realize like people, people don't know the COVID-19 recovery

12:44model was retired on December 9th, 2020. So I, I, the recovery happened. We're just moving on to

12:50the next stage. So for me, it was like, whoa, rates are really low and inventory is at all time

12:57lows. This is not a good thing for housing. This is a unhealthy housing market. This is why the whole

13:01Bloomberg circuit back then in January, February was like, do not worry about forbearance, worry about

13:07prices escalating out of control. So you can't convince people that that's going to happen

13:11because before COVID people thought home prices were at all time high, we're at a bubble and

13:15everything. They couldn't even comprehend the rationality of supply and demand equilibrium. So

13:20we went, but you know, one of the things with, with how we look at the 10 year yield and,

13:28and

13:28everything, um, inventory is able to grow. I'm not a mortgage rate lockdown person, right? We get these

13:35people who say inventory can't grow because nobody's going to sell their house. That's not

13:38true. Look at our data since the lows of 2022. Immature has grown every single year. Now we are

13:44not back to technical normal levels, uh, on the NAR data for our data. It's a little bit above a

13:51million during the seasonal peaks, but we are there year over year growth, only 0.85%, but we are

13:56basically, uh, uh, at multi-year highs as of this week, right? Prices aren't crashing anything,

14:02but they are slowing down, right? They slowed down last year. They slow, this is a healthier

14:08housing. That's why I love, I love, I love the inventory data last year, you know, and I love

14:15the inventory data this year because it's kept price growth below wages, right? There's no, and

14:20people are comfortable enough to list their house, sell it and buy another one. And that's the housing

14:25equilibrium. Now, of course, when affordability gets better, when rates go lower, you get more

14:29first time home buyers and that, you know, the transaction models, uh, uh, uh, pick up because

14:35they finance more than 90%. But I thought, again, the inventory data is very healthy, uh, this year.

14:41And we saw that again, and again, the new listings data year over year growth, right? Even with rates

14:46going up, people are getting a little bit more comfortable. I remember every year that goes by

14:50wages grew, right? Somebody was putting up that cost, like, uh, the mortgage payment right now,

14:5620% down, whatever. It's like almost a 2,300. It's almost at, uh, uh, uh, the cycle highs by

15:01how some people measure it, but your money has grown. Your wages have grown. Your household

15:07had grown, especially if you have a dual household income. So it's a little bit better. And a lot of

15:11that has to do with the inventory data being where we are right now, even though there's not much growth

15:16year over year, multi-year highs on our active listings. Remember our active listings is different

15:21than the NAR and everyone else's. We do not count contracts. This is the raw single family homes,

15:27uh, uh, uh, condos, no pendings, no nothing where it is available for sale. Uh, uh, and then there's

15:33places like Florida. You and I are going to go to Florida this week, uh, uh, inventories down

15:38noticeably year over year has been for some time now, but they were working from an elevated level.

15:43So where we used to say Texas and Florida were, you know, 40% of the inventory growth at one

15:48point

15:48in Florida, the whole state condos and single families down noticeably year over year. And we're

15:54going to have a very fun presentation there this week, but I think that that's another positive

15:58story. Health, healthy, inventory, healthy, new listings, data, healthy. We're not quite back to

16:03normal. And when we always say 80 to a hundred thousand per week during the seasonal peak period,

16:08that's where inventory basically, uh, is pretty normal. The housing bubble crash years, 250 to 400,000

16:16per week for years. That's crazy. I mean, I can take the highest new listings data in the last five

16:23years, which was 91,000 in 2022. And a lot of that was, you know, uh, those I buyers and

16:29you know

16:30that for, for a very short amount of time, Zillow was liquidating. So if I doubled that, double that

16:36new listings, it wouldn't even hit the bottom levels of the, you know, a new listings, very seasonal,

16:41like, you know, winter is always at the low point and spring, it picks up again. It wouldn't even get

16:45to the bottom levels of what was happening back then. So much different market back then. If you

16:50ever think that you're going to have this massive amount of surgery, let's, this is the chart daddy

16:54Friday night. We'll be the first person in America to know, right? We just don't see it in our data

17:00lines. If it was there, we'll show it to you, but pretty, pretty calm year again, 2026. That means

17:072020, 21, 22, three, four, five, all this rushing to sell your house. And then it never happened

17:13because homeowners are not middle-aged men podcast stock traders. Most of them. Thank goodness. You

17:20know, if you, if you didn't know what else was happening in like 2023 and you just saw what was

17:26happening in housing, mortgage rates, you know, the, the incredible acceleration we had, the crash in

17:31home, uh, sales, all that kind of stuff, you would be like, what is happening this year? If you just

17:37take out all the headlines, if you didn't know anything that was happening on the macro level

17:40and you just looked at the housing market, you'd be like, you know, it's, I mean, you know, it's,

17:43it's not, it's not setting any big records, but like, it doesn't seem like things are on fire

17:48compared to the way you see all the noise. It's a very, very boring year. If I take the aggregate

17:57data altogether and you didn't know anything about what's happening around the economy or the world

18:02out there, you'd be like, there's nothing going on with housing. You get a little bit of growth

18:06in home sales. Prices are a little bit inventories, a little bit, there's nothing, there's no big

18:10macro real theme there, but within the data lines, there is a story, right? And the story is very,

18:16very positive. This is why we do these podcasts. This is why we write the tracker. Uh, all anyone who

18:21gets housing wire intelligence, housing wire subscription, you can do it in your own, uh, city or state

18:27or zip code. There is a story with economics. Why Sarah Wheeler? Why are you going to say

18:34mother economics? Mother economics. She is a serial killer. She's not a serial killer. She's a dragon

18:43flying, burning everything up, but she wants to be caught. So she will leave dead sheeps and dead

18:49people to tell you where her layers is. So the housing story, there are leaving clues in there,

18:54right? This is why we created the tracker so everyone could read it. And so far housing's

18:59held up a little bit better than what people might've imagined. Um, the growth is slowed down,

19:04right? We used to have like seven to 12% year over year growth and purchase apps. Now they're like

19:08three

19:08to three to 7%, you know, our weekly pending sales data, which forwards our total pending home sales data

19:14is barely showing any year of year growth, but we haven't had that negative curve yet, which we would

19:18always see, which the negative curve is just basically weekly, uh, data down year over year

19:23purchase apps down year over year, something with some kind of duration. Like we saw in 2024,

19:28after when mortgage rates went from six to 8%, even though it went lower, never got toward near 6%

19:34out there. So you saw that in data, much different world because mortgage spreads number one and

19:39affordability number two, those two variables are here and you can't mess with the affordability

19:44because home prices aren't escalating out of control. Uh, uh, but the spreads are better

19:48and holding themselves that bay, which, which is the irony is that we had this discussion with a lot

19:53of, uh, bond traders and stock traders over the weekend, the spreads may be one of the reasons why,

19:59uh, Lori Logan is bearish or hawkish, excuse me, hawkish now where in 2024, she wasn't.

20:07That's crazy.

20:08You know, it's the reason I say this is that Lori Logan head of the Dallas fed,

20:14she wrote something in 2024 saying the term premium. I don't want to get too, too nerdy here.

20:19It's basically, uh, uh, uh, the 10 year yield is higher than the, than what it should be.

20:25And that's basically, uh, uh, investors want a little bit more compensation for holding

20:31bond yields in this environment. Well, Lori Logan in 2024 said, Hey, listen, if this continues,

20:37uh, we don't have to do any rate hikes or doing anything because this is, this is, uh, very restrictive.

20:42Uh, one of the more famous known bond traders in on X, uh, uh, talked about that, took that

20:48very statement and everything. Cause the term premium is higher now, but my argument was

20:54mortgage spreads are better now. So I don't know if Lori Logan or Beth hammock or Neil Kashkari

21:00will ever make that a public statement, but if mortgage spreads are better now than the 10 year

21:05yield being at four 74 right now, it's like four 68, four 69, but it's not as restrictive as it

21:13was

21:14in 2023 or 2024, right? Because mortgage rates will be near 8% or be seven and a half percent

21:19right

21:20there. So, uh, uh, if people are thinking this is over the really, really nerdy bond traders out

21:25there, if you're thinking, why is Lori Logan's hawkish where the term premium higher, I totally

21:29get it. But think about if they're looking at it, well, mortgage rates aren't seven and a half or

21:348%. So it's not as restrictive policy. This is a very geeky, geeky thing right now that I'm talking

21:39about, but I'm trying to figure out what the fed is, what the fed is really trying to do at

21:43this

21:43point. Uh, and it's not Kevin Warsh doing anything. It's the Beth hammocks and the Lori Logans are

21:48running the show. So you got to put a little bit more attention to their work now.

21:52We appreciate you trying to figure out what the fed is, uh, trying to is doing because that helps

21:56all of us. I do want to hear from, uh, our audience. So do you think that Logan should

22:01continue to use, uh, mother economics as a serial killer? He has so many great references, right?

22:07Pop culture. I don't think that one, it doesn't work. Like you, I, every time you say, I'm like,

22:11no, that doesn't work. So we need to let the audience weigh in. It works. It works.

22:16We want to be the detective, not the true. And mother economics is a serial killer. Do you remember

22:25the game Clue? Did you ever play Clue? Okay. Okay. Well, you and I are playing Clue. We're

22:31detectives. She's a killer. We know she is. We're trying to find ways to connect the dots so we

22:37could be. We're going to, we're going to let the audience decide. We have such a smart audience.

22:41They're going to, they're going to tell us that you want to go head to head with the chart daddy

22:45with our audience out there. How's that worked out for you in the last four years?

22:50Listen, I think they're going to side with me. You guys let us know. Um,

22:53Logan, we will check in again soon. Thank you so much. Pleasure.

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