The mortgage industry doesn't run on promises. It runs on ICE's proven AI-supported ecosystem that was built for every market cycle. Designed for what's next, powered by ICE. Visit icemortgagetech.com for more. Welcome everyone. I'm joined today by my podcast partner, lead analyst, Logan Motoshami, to talk about how the housing market is doing with higher rates. First, here are the top five trending articles from housingwire.com. First, this week's tracker, home sales are positive, but higher rates are slowing demand. Plus two by Logan, why home builders aren't building more homes and don't fall for a fake foreclosure crisis. Great trifecta there, Logan. Then we have NAR Homebuyer Commission Settlement Hearing Set and New York Outflows Reshape Housing Demand in Texas and Florida. Logan, welcome back to the podcast. It is wonderful to be here. Of course, it's Monday morning and weekends were for war, but not this weekend. This weekend we called off a ceasefire or back and forth. And oh, this is getting so old. It's one of these things, come on. And of course, oil prices fell like seven, 8%. And if we can get in a trading range between 67 and 82, I think that's perfectly acceptable for the Fed. But the 10-year yield only went down like four basis points. So it's Fed week this week, of course. But this is just getting tires, at this point, you know, just like, what are we going to do? Or we're going to attack again. And it's just like, figure something out. Or you can't operate a country with every week being, you know, what's going on in this manner. But we had a very interesting tracker. And today we're going to talk about how is housing handling high rates, because we are over 6.64. That's our kind of line in the sand for the last few years. And I thought it was a very interesting tracker that you really need to be like nerdy savvy to read it correctly. It's always interesting when you write the tracker and then I'm reading through it and we discuss it because as I'm editing, I might have questions and I can always tell when it's a more detailed look at things or when there's more nuance because I have more questions, right? And you're like, oh, let me rephrase this so it's more understandable. And this, I think the interesting thing right now is we have still, there's still demand. Like the growth of that demand is slowing, but it's pretty incredible that we still have the demand that we do have, I think. Well, here's one thing. If we take the purchase application side of the tracker article, we had 6% week-to-week growth. That's actually a pretty good week-to-week growth. However, we always caution that there's certain weeks within a calendar year that you'll see a decline regardless and you'll see an increase regardless. So that 6% week-to-week growth, I discount because that's just the seasonal factor of that week. Saw 0.2% year-over-year growth on purchase apps on a year-over-year basis. Now, majority of the year has been positive. We've only had three negatives. So this isn't a negative data line in terms of we're down 10% year over year or anything like that. But the growth rate is slowing down. However, now we're also going to be dealing with harder comps than we had because last year at this time, rates started to go lower. So I think on Friday, last year, we were at 6.81%. Last Friday, we were at 6.81%. So the year over year rates are just basically even now. And if rates don't go lower, then we're going to have the rest of the year be probably higher than what we had last year at this time. So you have to put the year-over-year comps into perspective. So not much growth in purchase apps. The week-to-week pending sales data grew. We saw a slight smidge year-over-year growth-wise. And to me, it's like we were running at 7% to 12% year-over-year purchase application data growth. That was pretty normal this year. our weekly pending sales data was showing noticeable growth where we saw a deviation. Now we're just slightly over. So to me, it's a smidge positive still, but the growth rate is slowing down. And this would make, you know, kind of the fourth year if this continues where when we get above 6.64 and we head higher, you know, the demand data tends to fade from a growth period. So we're going to get to really test this out for the rest of 2026, which can go a lot of different ways on the economic side, on the conflict side, on the Federal Reserve side. So we're going to need the chart daddy to be the chart daddy for the next five and a half months. Well, okay. So let's talk about the fact that we're seeing rates go up, right? And of course, we have the Fed meeting this week, and then we're running into that seasonality factor. So what do you think that looks like for demand when you combine those two things So the existing home sales report last year at this time was running up to a nine high in December So we tend to have our better existing home sales seasonally adjusted reports in the winter always for 15 years now. Our weekly demand, of course, housing is very seasonal. When you take the raw numbers, we're on our seasonal decline on our weeklies, our pendings, our new listings data. But when you adjust it to our full year outlook, it still matters because in the last few years, rates are typically going lower toward the end of the year and demand starts to pick up and then rates go up and we do this back and forth all the time. So it'll be a good tug of war. So right now it's just kind of a standoff, right? Even though rates are elevated, we're not like above 7%. You know, we show the spreads. Boy, if this was 2023, the worst levels of spreads, we are at 7.98%. We're having a whole different conversation with housing if mortgage rates were there. But here, It's a good tug of war. Again, I haven't seen the data show positive growth trends when we're above 6.64, but also we have to counter in that even though rates are roughly the same, housing's a little bit more affordable now because wages have outpaced home price growth. Last year, they were doing it again this year. Every year when a household is formed, dual household incomes, that gives you a potential buyer. So the backdrop is a little bit different if rates are on par with each other, but it becomes more interesting with rates are above here. When rates are 6.64 and head down towards 6, if we had just been under 6.25, no equivocation whatsoever. Existing home sales would have been positive, probably would have been a little bit higher than my forecast of 237,000 more home sales, but we're not there. A lot has changed this year. So we have to be really, really focused and nitty gritty on the data lines. And to me, it's slowing down and it's slowing down for the right reason. We got to a level that in the past few years, this occurs. So you mentioned the mortgage spreads again, the hero of the housing market, especially this year, is there any chance that mortgage spreads get even better for where they are? Or do you feel like, yeah, this is about as good as we're going to see? If there were no conflict and the Federal Reserve basically kind of said, hey, listen, we're going to let the tariffs do their one-time write-off, you could probably get spreads getting a little bit better before the end of the year because that's typically what's been the case over the last few years. But to me, so much of the spread story is over with in terms of its improvement, right? We're under 2%. Normal is 160 to 180. So we do have some potential to go lower, but not by much, right? You know, a lot of people thought the spreads would get worse because of the conflict. The conflict necessarily doesn't make the spreads worse. A credit market event or the Federal Reserve getting very aggressive, very hawkish can make the spreads get worse or a recession that comes very quickly. And why is that the case? Because early payoff risks start to happen if you think people aren't going to make their mortgage payments. Those things in the history of mortgage spreads get better. But here, we could still get a little bit of improvement, but that story is mostly done with in terms of making these, you know, we do these year-over-year comparisons to 2023, 2024, 20. So the spreads are doing their things being under 2% how we track the spreads. So you get a little bit more improvement on that side, but it's not going to be like the big thing, be a big driver toward the end of 2026. America's housing sector builds strong local communities, but getting it right is harder than you think. Homeowners, developers, and insurers need access to crucial tools and information to make the best decisions. That's where America's federal research institutions makes a difference. Federal research agencies provide monitoring data and models that our housing sector relies on. Keep America ahead of the curve. Fund federal science and research. Visit usacompetes.org to learn more. Well, let's talk about another really important aspect every week of the tracker, but maybe especially last week, and that is inventory and new listings. There's just really not much going on with inventory, actually. The new listings data is, of course, we're at the seasonal declines and there's no stress in the seller's data. But what we've always seen in the past is when rates get higher, demand slows down, inventory is allowed to grow. There's this kind of this misnomer that, oh my God, if rates go down lower, everyone's going to rush to sell their house. Guys, I'm telling you, we've not ever had that in the data line. And a great example, I'm always debating people on the mortgage rate lockdown. And we had another one this morning, which goes into this topic. 2021 was the best backdrop in the history of America for new listings dated a surge Why Because apparently nobody listed their house during COVID in 2020 Now the economy is reopening and people are listing their house and mortgage rates were at 3 or under So in that backdrop, new listings data would surge. That was a whole forbearance and new listings and everybody is... New listings data in 2021 is lower than what it is in 2026, 2025. It's lower than what we saw in 2013 to 2019. So lower rates does not necessarily mean you're going to get a surge of buyers. The only time in history that we saw a surge of new listings was when the credit markets were breaking and these are distressed sellers, right? And so new listing data looks pretty normal. Not much is really happening out there. And inventory growth picked up just a little bit. So we're 0.56% on a year over year basis. On the 2021, because you've made the point before that new listings, like it doesn't capture if something goes on the market and gets under contract right away, it may not get on the new listings. How do you factor that in when you think about 2021 and just the frenzy of people buying? Well, I mean, when you have more mortgage buyers, remember a mortgage rate lockdown, a person that doesn't own a house as a first time home buyer does not get locked down. But we always say 70 to 80% of sellers are buyers. So when that seller puts a house on the market, it's not another seller that he's waiting for per se, that seller and this seller needs somebody to buy their house first. And when a mortgage buyer, a first-time home buyer or an investor comes in, right, and acquires that, then that seller could sell the house and go buy another one. But you need that initial plug. So then you can get the sales transactions going. The new listings data doesn't look anything too drastically different than what we saw in the last decade. It's just that because housing tenure has doubled and tripled, we don't turn over homes as much as we used to. So people just live longer and longer in their homes. This why I'm not a mortgage rate lockdown person. I'll never be a mortgage or a lot. Because if we really had a mortgage rate lockdown, oh my God, sales would be so much lower. But these people are putting their homes on the market and when they sell, they buy another one. So the new listings data looks pretty normal. It's in the seasonal decline. Nothing crazy is happening and it's 2026. And I know that on this tracker, pretty much all year, the percentage of properties that undergo price reduction before they sell, it's been lower than last year. Is that correct? But it's still So slightly lower. Slightly lower. Yeah, slightly lower. It makes my forecast of negative 0.62% a little bit more difficult to occur. Your home price forecast. And again, when I forecast national prices, we always like to use our slope of the curve. So in 2024, I thought we'd get 2.33% nominal home price growth. It ended up being at four because mortgage rates went down to 6% toward the middle of the second half of the year, and that boosted up prices a little bit. So even though it's like 1.7% off, definitely rates change. Last year, the forecast was for 1.77%, slope of the curve, more inventory, rates are not under 6%. We ended up like 1.3%. So last year looked very normal to me. This year, I thought we get a little bit of a decline, a slight decline. So far, it's been 1% to 2%. But again, we started the year with rates lower. They went lower because a lot of people were worried about the labor market, the 10-year yield, but now they're higher. So now the price cut percentage becomes more interesting because now with elevated rates, if demand is not growing as the pace it was, inventory goes longer, days on markets grow, people have to cut prices to get the limited buyer. That's what the tracker was designed for. And with housing wire intelligence, you can do it for any city or zip code that you live in and state, and you can know everything that's going on and you don't have to listen to doomers out there. Which is good. Yes. The agents winning today aren't necessarily the ones spending the most on ads. They're the ones staying top of mind. 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But then I always say, you know we and I have to have it takes a little bit of duration And also rates are pretty much on par where they were last year So we going to go into the comp story and see is it going to just take a little bit longer for things to sell? You get a little bit of price. There's really like in the aggregate total, not much is going on. When rates were towards 6% or 6.25, the demand curve was positive and everything, but now rates are above 6.64. The slowdown is basically compressing the growth data, but the velocity of this data just isn't anything big. So you got to get really, really nitty gritty on trying to read the cues with the tracker. And to me, it's like if I had a junior analyst, I go, guys, what do you see here? And hopefully they go, I see the growth rate slowing down because these last few months, we were always positive on a certain percent. Now, not so much, but then we make some of the adjustments to a little bit harder comps and we take it from there. It's really, really nerdy. Speaking of nerdy, Gronk, people in the finance world were asking, Gronk. What political historical figure does my ex account remind you of all my posts? So all these stock traders and bond traders were doing it. Guess who I got, Sarah? Oh, gosh. I don't know. Who did you get? William Playfair, the original chart daddy, the man who created charts in the late 1700s. And he had like a chart daddy outfit. He just didn't have the chart daddy hair. And they said, yeah, you're the charty guy. And you'd push back all the doomers with that data and all that. I was like, perfect. There's no one else better to replicate. That had to make you so happy. Oh my God. I was like, that's golden. That is just pure gold right there. See how excited I get with nerdy stuff? I do. I do. And we're happy for it. It's just like, I'm such a loser. I'm such a loser. No, we are the lucky recipients of all that knowledge, all of those charts. Anything else you want to say about rates this week, given everything that's going on? Just kind of realized that, you know, the 10-year yield last time I checked was like 463, 464. So it's down just a little bit. Just remember, a lot has been priced in. You know, some people are questioning the movement of rates or the movement of 10-year yields. And I said, you know, considering everything that's happened, it looks fine. Considering we're going into a Fed meeting where we have a lot of hawks in there. We had a lot of hawks talk in the last two weeks before the blackout. We can get into the nerdy kind of term premium kind of, you know, investors. I don't want to get too involved into that yet. But until this officially ends, we are just kind of going to be here because the Federal Reserve made the conflict such a big thing. And of course, this morning, Trump made higher tariffs against China. So if you're wondering why rates are elevated, we did tariffs. The Federal Reserve was going to look past the tariffs if it was a one-time price off. But then we did the conflict and the conflict is still here, guys. So there are consequences to actions, right? And the Federal Reserve has made both tariffs and the conflict a talking point for their hawkish take. Why? Because the labor data isn't breaking, it improved. And based on their models, you might not agree with it, I might not agree with it, I don't agree with it. But to me, it looks like if they create 33,000 jobs per month plus, they're A-OK. And they have been A-OK with their language on that, including Christopher Waller, who was a dove last year because of the labor market. He flipped 100%. So there's a lot going on today. We ceasefire news, whatever. We deal with it all the time. There's no ceasefire until you actually see it go. We need ships flowing. We always say wheelers, ships flowing. New tariffs. Here we go again with that one. But we have a Fed meeting, so it can get wild. But I think so much has already been priced in before this. Tomorrow, we'll talk about the Fed preview. But a lot going on on this week. But I can't see a real, real major move to the upside or downside with all the things that are constant right now that aren't Fed related. Listen, given everything that's going on, that's, I think, the most hopeful we can be right now is just not to have too much volatility in the rates. Of course, we will be all over this Fed meeting coming up. So Logan, thank you so much for being on today and giving us your update. Thank you for calling me your podcast partner, finally. Every single day, I'm never going to be a guest ever again. Logan wins again, right? Okay, but not five days a week, just so you know, just so everyone knows. But yes. One day, one day, not yet, Sarah Willow, but one day. Podcast partner, we're good. All right, thanks. 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.
