Change is constant, and so is MGIC. For nearly 70 years, MGIC has been the original choice for mortgage insurance. With tools, resources, and expertise to help you close more loans and manage risk. Market-tested, industry-trusted, authentically MGIC. Visit MGIC.com. Hello, everyone. My name is Logan Morshami, lead analyst for Housing Wire. And today's topic is going to be, is Kevin Warsh going to be better for the housing market more than Jerome Powell? We're also going to talk about pending home sales data and the recent purchase application data as well. However, before we dive into all that, I want to thank our sponsor, Total Expert, for making this podcast possible. Well, everyone, here we are. I am a solo act today. There is no Sarah Wheeler with her finger being pointed and telling me what to say, what not to say. So I get to be myself a little bit more. Sarah will return next week when the gathering starts. But today's topic, Kevin Walsh. We had the congressional hearings. For those who don't know, I was hashtag anyone but Walsh. So wasn't a fan of him being a pick. A lot of people, even conservatives, were somewhat confused because he tends to be very hawkish. But as soon as I started telling people, yeah, he's married to the Estee Lauder's granddaughter. They've been friends with Trump for a while. So, you know, Trump likes loyalty. So if you think about it just in that context, hopefully that makes more sense why Trump picked him. Trump likes loyalty people. But now the question is, if Trump wants him in, he could just drop the lawsuit against Powell and then whatever that criminal case is, I don't know what they call it these days. Wors is going to be the next Fed chair. So we're going to initially talk about, is he going to be better for housing? Because for me personally, after President Trump one in November of 2024. Sarah and I did a podcast talking about the Trinity impact. If Trump really kind of wants to do this kind of trade war thing, he's going to need a lower US dollar to export stuff. He's going to need lower energy prices, you know, because people, that's what they look at all the time. And he needs lower mortgage rates. Well, the dollar did go lower. We did have lower energy prices until recently. And mortgage rates have had their actually the lowest mortgage rate curve going into spring and midpoint of the year out of all the recent years. But what can Kevin Warsh do? So we're going to address it in this way. The Federal Reserve chairman cannot unilaterally cut rates. I know a lot of people still think that's going to be the case, that he's just going to go in there on day one and cut rates because Trump keeps on saying it, and that's just not the case. Kevin Warsh is somebody who criticizes the Federal Reserve a lot over the last eight years, and now he's got to work with some of these people. So there's going to be some animosity in that light. What Kevin Warsh can do, and I say this because we go back to 2023, early 2023, after the fastest crash in home sales ever, just a vertical downdraft, nothing had to do with COVID. It was just, you know, demand was just crashing. What occurred was rates got down to 6%. And Neil Kashkari, one of our favorites, the president of the Minneapolis Fed, he came out and said, hey, listen, oh my God, 6% mortgage rates. Oh my God, if housing shows life, how are we supposed to balance the economy. No. And Jerome Powell's own take has always been, well, the housing market's weak and no matter what we do, we're still going to have a shortage. So he kind of always wants to deflect from the housing market. Why? Because this is the one sector that the Federal Reserve can't have control on. But also they don't make policy around the existing home sales market or the new home sales market, not until the labor market breaks or inflation is taking its toll on the economy. So here we are, we have an incoming Fed chairman who's going to be very loyal to Trump, or as I call it, Trump's got his whip out, he's going to be his whipping boy. But he did say, well, the housing market needs help. That is something Jerome Powell has never said. In fact, that's something not a lot of Fed people have said that aren't loyal to kind of Trump. Michelle Bowman, who was part of labor over inflation, Team Logan camp, she did say something awkward, I thought last year where she said, oh, look, it looks like home prices are falling. I'm worried about housing. National home prices are not falling. They never were falling last year. Guys, we have 84 years of data on this. It's not that difficult to read. When home prices are falling nationally on a nominal basis it very easy You see it in all the multiple home price indexes that we have So try not to take one person line and think oh well the Fed has to cut rates No they don care They shouldn't care about that. Labor and inflation. Now, the context is you have two people who are loyal to maybe Trump's side talking about the housing market needs help. In that context, you're going to get a more dovish Fed chairman than what Jerome Powell has been over the last few years. So at press meetings and everything, I imagine Kevin Warsh is really going to hype up the AI disinflation. It's going to be one of the most magnanimous economic events that we've had in recent history. He's kind of going with the old 1990s playbook, which means that productivity gains are really going to take off. So that'll keep a lid on inflation and you get a few more rate cuts. But that should be the extent of what we think he's positive for, for housing. As long as President Trump's in the White House or as long as a Republican is in the White House, you'll get Kevin Walsh 2.0. There's a Democrat in the White House. You're going to get old Kevin Walsh back. Cross that bridge when we get there. I hope I'm wrong about that. But Kevin starts getting very critical on things when there's a Democrat in the White House. And he gets very kind of positive on things when there's a Republican in. We know those cast of characters. But in this light, you can have a Fed chairman who might want to get those last two to three rate cuts into the system. I don't see anybody else really, I know Stephen Meyer, who I still can't believe he's part of the Fed board, is still saying neutral policy should get us down to 2.5%. That's a bit of a stretch with inflation picking up as it has recently. In that context, I think maybe it's a much better Fed chairman for housing, but realistically, there's not too many rate cuts left in the system for this cycle. If the growth rate of inflation was running at 2% and the labor data was still soft, maybe the Fed can change their tune. If wage growth gets under 3%, I believe the Federal Reserve will change their tune. But none of that is happening right now. So just think about Kevin Warsh being maybe a better facilitator of those last two to three rate cuts and that's it. Of course, he's got to get other Fed governors to go on board. And there lies the problem because they look at Kevin and think, oh, Lord, he's just going to know. I don't like him. He's just doing this for Trump. And whatever it is, you can get a lot of conflict out there. And there are some operational things that, you know, it's a little bit too geeky for this kind of podcast to go into that Kevin might want to change. But in any case, Kevin Walsh, Scott Bacent, Trump, all of them kind of together want lower rates. Trump, of course, says crazy things about, you know, we need the Fed funds rate at 1%, whatever it is, the emergency. No, we're not going to get any of that. But just think of it as maybe get that two to three rate cuts left in the system. And then I never actually change any of my kind of forecasts with my bond market and mortgage rates because 380 to me on the 10-year yield and 5.75% with mortgage rates to me is like the bottom of neutral policy. So whenever we get the 10-year yield between 380 to 410, it's like, okay, we're pricing it in neutral policy. Maybe the economy is looking a little bit weaker. So that's as good as it gets. Now, the big difference now is mortgage spreads. Now, this is a wild card. I don't know if there's anything in the works. There's supposed to be an announcement, something that maybe improved mortgage spreads, but that story is mostly, you know, kind of taking its course too. So we should just think about Kevin Warsh going out as better for housing than Jerome Powell, who Jerome Powell just always says, oh, there still will be a shortage of homes when we're done. No, he doesn't want to deal with that. Kevin has actually gone on TV and talked about it. So you might get a little bit of kick there. And then we're just going to wait and see how the economic data plays up. So Brenna Nath leads events at Housing Wire. And just this week, she was talking to me about the Legends formula, a formula I wasn't really familiar with. But let me tell you about what Brenna taught me. So last year we had new American funding CEO, Patty Arviello on stage alongside Latasha Waddy, now the president of NFM Lending. Latasha came up through Patty's mentorship program and this year she's moderating the conversation. This is what makes the gathering different. Real operators asking the questions that matter Latasha and Patty will be talking about market share a strategy and exactly how leaders are charting the path forward in 2026 and beyond So if you would like to join us to experience the legends formula at The Gathering, join us in Austin, Texas, April 27th through 30th. Go to housingwirethegathering.com and use code podcast for 20% off. housingwirethegathering.com. With the conflict going on, you know, it's Wednesday morning and there's just more headlines that are on shooting ships and they better get a deal. In any case, the 10-year yield is not really acting too much and neither is oil. For those that follow us, we talked about the 10-year yield maybe having a double top around 448. It's kind of been in a downtrend. So a closure with this conflict will be a positive for rates. It doesn't necessarily mean the 10-year yield is going to go back down to 4% or we're going to get 5.75% mortgage rates. Where the 10-year yield is right now looks perfectly normal with a labor market that isn't breaking, right? We get these ADP weekly numbers, jobless claims. It's not getting worse with inflation above target still. We've seen this move lower on the 10-year yield and rates go lower, I think from 6.64 down to 6.29. It's okay. That looks normal out there. So I don't know if we're going to get like a very, very big move, let's just say, hypothetically, Let's just say there was a deal that everyone believed in. We're not going to have the 10-year yield go down like the 3.95 or 3.96 because some of the economic data has gotten a little bit better. Retail sales beat estimates. You know, jobless claims are still looking low. Some of the jobs reports data that people are tracking are stabilizing. But Kevin Warsh will be a positive in that sense, as long as there's a Republican president. But now, with that said, what's happened with the recent housing data? The NAR came out with their pending home sales. It did beat estimates. Just remember, we're working from extremely low bar, take all these moves with context. But the NAR's pending home sales to me always is a little bit too wild for my taste. But also this year, whenever we have a negative pending home sales the last few months, we have a positive existing home sales report. When we have a positive pending home sales report, the existing home sales been negative. In fact, some of the revisions with NAR's existing home sales data is a little bit more than what I'm accustomed to. And I don't know if that's just the tracking is a little bit different. I know we have all these new rules and everything that has happened in the real estate market, but either positive or negative, the revisions are a little bit more than what I'm accustomed. But for what it's worth, pending home sales did beat estimates, still down year over year. Nothing dramatic is happening in housing on that front. Purchase application data came out today, positive 10% week to week, double digit year over year growth, positive 12%. It was very visual on the charts here. Just remember the housing market sweet spot, 5.99, six and a quarter. We had that. Whenever we get near six, we just stay there. You can get some traction. Of course, we had Christmas and New Year's. We had the snowstorm and then we had the war. Kind of those things weren't part of the process. You know, we get a couple hundred thousand home sales growth. To me, if rates just stay under six and a quarter for the year, you get 237,000 more existing home sales. There's nothing going to be magnanimous or anything like that, but it's good enough to get the first year of growth. So we'll see if this could continue. I like to look at forward-looking housing data when our tracker data gets at least 12 to 14 weeks of positive weekly data. It's been very confusing with purchase application data post-COVID. It used to have a very boring, steady trend every single year and very easy to read, but things have gotten a little bit more hectic after COVID. 2024 is a good example. Not a lot of people thought sales were growing in the second half, but our forward-looking data was getting positive. However, purchase application data was negative for a lot of those weeks. So that wasn't the case. The demand picked up there in 2025. Everybody remembers the housing market shifted mid-June. Forward-looking data got better. We got a nine month high in sales. Always remember if that last month is your high month and you got Christmas and New Year's coming in, you're going to get a withdrawal of activity because everyone is not going to be working at full force. That should be common knowledge by now. The snowstorm impacted the snow states. We got out of that data lines and demand was picking up and then the war happened shot rates up. So we'll see if this is the start of another trend. Last year at this time, or in mid-June when the 10-year yield and mortgage rates got below 6.64, we saw a steady growth in sales in the second half of 2025 We see if that happens But again this is the lowest mortgage rate start of a year but it not under six and a quarter or near 6 For what it worth that has been the sweet spot. We don't usually get here and stay here long enough, but we have a lot of rate cuts in the system. Mortgage spreads right now, hopefully everyone can understand why I've highlighted mortgage spreads so much. I can't get to low sixes without mortgage spreads getting better or getting close to normal if the 10-year yield is going to be above 4%. Well, we finally got mortgage spreads close enough to normal. Again, they've gotten better, but such a difference from the last few years. The last few years, mortgage rates will already be above 7%. We don't have good positive data when rates shoot above 7%. Did not happen this year, even with the war, even with the 10-year yield getting up to 4.48. For those of you that read the tracker, I'd like to show people context, 2023 spreads, 2024, 2025, most of that is above 7%. In some cases in 2023, we'd be up at 7.75%. So hug a mortgage spreads, positive. A lot of rate cuts in the system, positive. Also remember that the Federal Reserve, if they really wanted to talk hawkish, they could. I mean, they have the backdrop too, right? PCE inflation is above 3%. PPI inflation is at 4%. Even the CPI data, which has the rental disinflation, is still elevated and the job data is firming up. They could be a little bit more hawkish if they wanted to. They're choosing not to. So in this case, the Fed is kind of just keeping things intact, waiting for the tariff disinflation to kind of run its course. And maybe when the war happens, a war gets done, you get lower oil prices and diesel prices. It's starting to filter into the food data that we saw this morning. So get ready for some food inflation highlights that'll probably pop up as well. But hopefully when the war gets finished and boats are finally sailing, we can get rid of that inflationary pressure. And then Kevin Warsh is there. So I think in that light for housing, he's going to be probably a lot more pro-housing. He's going to really push the AI disinflation, which is a funny part is Lisa Cook is the big AI disinflation person on the Fed and she's still there. So a lot of underlying possible positive of things, but kind of just remember, keep things simple with housing. Rates just get near 6%. Man picks up a little bit and we get a little bit of growth of home sales. Remember, affordability is still an issue. Affordability is the total cost of housing. It's not just a rate variable. It's home prices, taxes, insurance, everything. A housing tenure has doubled, in some cases, tripled right from 1985 to 2007. It was five to seven years from 2008 now to 2026, 11 to 13 years. some states, 15, 18. That is a really big deal. People just don't buy a house in 2021 and COVID and go, oh, I'm going to buy another house. If the housing tenure sticks with them, it might not be till 2030 till they start moving. So kind of think of that with the mortgage rate lockdown discussion. But some very interesting things that happened this week. I think the Kevin Walsh hearings, a lot of people have their own takes on it. I'm just going to say that for housing, he'll be a little bit better just because he'll talk about the need to get housing going again. And also, if the economy is getting weaker, you expect Kevin Warsh to be a little bit more dovish if the labor data starts to get better. And then he can get Christopher Waller and Michelle Bowman and some other people on his team, and then you could get maybe more dovish. But as is, you know, 380, 410, even if you get two or three more rate cuts, that's kind of the bottom we should look at. But if the labor data got weaker or the Fed started talking more dovish or wage growth slows down, we could have a different conversation. But for now, that's how we should look going out in the future. And thank you, everyone. This is a solo act. See, Sarah Wheeler, if you're watching this, I'm not crazy. I'm not totally out of control. You don't have to point your finger. You're probably ready to point your finger watching at this, but we're all good. And we have a great event coming up in Austin, Texas, The Gatherings, where the top mortgage executives, real estate executives, government officials, everybody in one place. We've got a lot to talk about, of course, with all the drama that's happening now. My presentation has changed a lot. For those who are going there. See you all in Austin. And thank you all for listening to Housing Wire Daily. Thanks for listening to Housing Wire Daily. If you haven't already, we'd love for you to take a minute to rate the show and leave a comment. And make sure to tune in tomorrow for more news and insight.
