- 5 months ago
On today’s episode, Editor in Chief Sarah Wheeler talks to Lead Analyst Logan Mohtashami about the purchase application data, which showed 25% year over year growth this week, and 9% week to week growth.
Related to this episode:
Why mortgage purchase apps are on a 22-week growth streak
https://www.housingwire.com/articles/why-mortgage-purchase-apps-are-on-a-22-week-growth-streak/
HousingWire | YouTube
https://www.youtube.com/channel/UCXDD_3y3LvU60vac7eki-6Q
More info about HousingWire
https://lnk.bio/housingwire
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 stories. Hosted and produced by the HousingWire Content Studio.
Related to this episode:
Why mortgage purchase apps are on a 22-week growth streak
https://www.housingwire.com/articles/why-mortgage-purchase-apps-are-on-a-22-week-growth-streak/
HousingWire | YouTube
https://www.youtube.com/channel/UCXDD_3y3LvU60vac7eki-6Q
More info about HousingWire
https://lnk.bio/housingwire
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 stories. Hosted and produced by the HousingWire Content Studio.
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NewsTranscript
00:00Welcome, everyone. My guest today is lead analyst Logan Motoshami to talk about the
00:10purchase application data, which showed 25% year-over-year growth this week and 9% week-to-week
00:16growth. We're going to dig into what is going on. Logan, welcome back to the podcast.
00:22Wow, wow, wow, wow. Boy, yesterday was drama. You wake up in the morning and purchase application
00:33data shows 25% year-over-year growth, coming off of a 16% year-over-year growth the previous week,
00:41which means, Sarah Wheeler, the nerd in me knows this, the only time in recent history where we had
00:48an average two-week growth of over 20% was actually March and May of 2021. That's because
00:56we were working off the COVID-19 lows. You know, that's when it started to crash back then. So we
01:02had well over 20% of year-over-year growth, and it was like in the 30s, 40s, and 50s. But
01:07this has confused everyone. Everyone, because the week before, some people are saying, okay,
01:14purchase apps are up 16%. That's not going to continue. Everyone was anticipating a really,
01:20really withdrawal in the data. And not only was the year-over-year growth at a year-to-date high,
01:27the week-to-week was at 9%. So everyone kind of gave up. And those people that never really talked
01:33about purchase apps this year had to like say something about it because it's a very glaring
01:39data line now. But for us, it's part of the weekly tracker. We talk about it all the time.
01:45We've been writing about it all the time. And we said, nobody talks about this, you know, because I
01:50think half of the people can't doom porn by talking about people thought, like, remember people said,
01:56who's going to apply for a mortgage? Americans are poor. They're uneducated. They're on buy now,
02:01pay me later. You know, stock market's down, tariffs. And yet, it's been the best growth
02:09in years. But we have to explain what this really means.
02:14Right. No, I think, you know, the title of your talk at the gathering was that the worst of the
02:22housing, you know, crisis is over. The worst of the unhealthy market is over. And purchase apps were
02:28one of the reasons you were looking at. It's the data line that you were looking at that you're like,
02:31nobody pays attention to this. But if they were paying attention, they would see that it's been a
02:36tipping point. You look at the history of housing economics going back decades. What do we always
02:41say here? This cycle is not 2008, but it kind of reminds me of the 1980s. And in the 1980s,
02:49affordability was worse. Home sales had a really huge crash. And then all of a sudden, rates fell.
02:57And when rates fell, demand picked up. Twice, actually. You know, there was two recessions
03:02back in the early 1980s, both times when rates fell and demand picked up. But the second time
03:07around, existing home sales hit such a low level. And after a few years, it doesn't go lower anymore.
03:14And that's kind of what's happened recently. We've run the three-year gambit of home sales being at the
03:20lowest levels ever. But this is happening with elevated rates, with mortgage rates not below the
03:27trend that what we've seen in the past few years that grows purchase apps on a week-to-week basis.
03:32But this has been confusing this year because we've never really had year-over-year growth in
03:39purchase application data for a while now. We had a few weeks last year in October. But whenever the
03:47weekly data improves, people tend to ignore it because they don't see the year-over-year growth.
03:52Now, the weeklies are slightly positive, not very strong. But the year-over-year data is glaring,
04:00and I think everyone's just stuck. I think everyone is stuck, and nobody knows what to make out of it.
04:06Even some of the most bearish people are just not even touching this thing because it ruins their
04:11narrative. So my job today is to try to explain what this all means because there's a story here that
04:16that's... It really gets to the nitty-gritty, nerdy work of purchase apps, but it can be explained
04:23because we usually see the seasonality of apps peak around May. Like after May, the total volumes fall.
04:30We don't see a vertical 25% move higher year-to-dates in July. That hasn't happened. So it just,
04:39on the charts that we show on the tracker, it's just so glaring. Like, you know, what do you say?
04:44So we shorten the duration of purchase apps to just show the year-over-year data. And it's just
04:50like, almost like an alligator opening a jaw. You know, the high-end, low-end. And we're going to
04:55have... The year-over-year comps are actually going to get easier over the next few weeks. So just
05:01always remember that. But that was a shocker to a lot of people. Even people that I would consider to
05:07be authentic housing analysts are kind of like, well, this is so... Again, we need to explain this because
05:13there's a story here. Well, let's talk about that story. So from your perspective, does this show
05:18like, wow, mortgage demand is just so strong that it's overwhelming even when rates are higher than
05:26people would like? They're like, I got to have a house? Like, what is it? No. I think what's
05:31happened this year is the week-to-week data with purchase application data. So let's go back all the
05:38way to 2022. We've had three different times where rates have fallen and purchase application
05:43data gets better. The end of 2022 going to early part of 2023. The end of 2023 when mortgage rates
05:49were at 8% went all the way down to 6.3%. Purchase apps got better. And then also last year. Last year
05:55when mortgage rates peaked around April and then started to head lower, we went from 7.5% to 6% rates.
06:02That's not happening here. But what has occurred is we have such a low bar because of last year. Last
06:12year was a very, very negative year that it's created such an authentic, like the lowest bar
06:19ever in history. And then new listings data is positive this year. So because most sellers are
06:26buyers, there you go with the year-over-year growth. But the weekly data, you know, I think we
06:32have 11 positive weeks, 9 negative weeks, and 5 flat weeks. So the week-to-week data isn't really like
06:40blowing it out of the water, but the year-over-year data is. And it's gotten back up to, you know, 2014,
06:482015 levels, which people are saying like, wait a purchase apps are back in the 1990s. I said,
06:54yes, we went from House of Pain to Kate Perry within weeks. Like, how did that happen? And
07:00I'd show them the chart. They're like, what just happened? So everyone's just shocked because we
07:05moved up an entire decade, moved up actually two decades or a few decades in a very short amount
07:11of time. So I just believe that because we're working from the lowest levels ever recorded in
07:17the history of America, the new listings data is pushing this on a year-over-year side where the
07:24weekly data is fine, but nothing spectacular. So I don't see this, like the next existing home
07:30sales report is not going to have a blowout number or anything. But just remember, purchase apps look
07:35out 30 to 90 days. Before July the 4th weekend ruined our weekly tracker like it does every year,
07:43the data was actually stabilizing with rates near seven. Not seen that. That usually takes rates
07:52below 6.64. If this continues in the second half of the year and the forward-looking data stabilizes or
08:00gets better, and you all are waiting six to nine months to get the data on this, that's on you.
08:06We provide the freshest weekly data. So back in 2022, late 2022, it said, oh, the data is getting
08:12better. Nobody's going to care for six to nine months. And all of a sudden, here's June 2023.
08:16Home prices didn't crash. Everyone's like, what happened? Right at the end of 2023,
08:21the forward-looking data got better. Nothing spectacular. It was eight weeks. We had a couple
08:25hundred thousand. Nothing great. Last year, I would say that the forward-looking data got
08:31noticeably better. The supply and demand equilibrium got so much better that my price forecast was wrong.
08:37So we, you as a human being, cannot make this mistake four times if it happens. And this is why
08:42the tracker was created for these specific times. Because if you looked at the headline,
08:47Sarah Wheeler, if somebody told you we had 23 straight weeks of year-over-year growth,
08:5210 straight weeks of double-digit year-over-year growth, 25% year-over-year growth, you're thinking,
08:57oh my God, housing's doing great. Housing's doing fine. But it's a very, very, very tricky year
09:03because the bar is so low. And just like how we talk about foreclosures, foreclosures, somebody was
09:08going, oh my God, foreclosures are up 700%. Homie, it was like one foreclosure and now it's like seven.
09:14All right. You have to put context into it. And I just think that the purchase apps
09:19are working from the lowest bar ever, that the percentage of the year-over-year growth gets
09:24tainted a little bit to that. Okay. So if I'm out there and I'm in mortgage,
09:29if I'm in real estate, whatever, like, so do you feel like this is just a quirk of data? And it
09:35doesn't, it doesn't, it doesn't come, you know, it doesn't translate into actually like,
09:39if you're out there, you can feel that this is, this is changing and that things are better.
09:44Or is it just a quirk of the data since it was so bad last year?
09:47I think that when you have people selling their homes and the new listings data is gross,
09:53they have to fill out an application and that can explain the year-over-year growth. So that's
09:58legit. Why do we, what do we always say? Supply is a function of demand and housing because that
10:04seller, that 70 to 80% of that seller is a buyer. Now that 20 to 30% that isn't sells that house,
10:11never fills out an application, doesn't need to. Okay. So that's a different story. An investor,
10:16somebody's dead, whatever it is, that does not fall into the purchase application demand.
10:21Cash buyers as a percentage of sales are falling, right? So I don't even think existing home sales,
10:27what we've talked about existing home sales should show year-over-year growth for the next five
10:31months, but it could stay flat at 4 million, just around there and show year-over-year growth.
10:37That's where the difference is. But this is all happening with elevated rates.
10:41If mortgage rates head down to 60%, we're playing ball. If the Godzilla tariffs did not happen and we
10:48had those three weeks of negative data straight, if we didn't get that, the year would look a lot
10:54different on the weekly side, but we had those Godzilla tariffs, which, which if you see our tracker,
11:00you could see it. We just had three straight weeks, even though we had no negative year-over-year data,
11:04we had three noticeable week-to-week declines, and then it just came back up. So we're, we're almost
11:10there. We're almost there to the point to where as, as a country, if you just get down to 6%, it'd stay
11:18there. We could push this forward. Not only that housing permits could act better. The whole,
11:23the whole country would be in a better spot. This is the frustrating aspect about just 75 basis points
11:31on mortgage rates is holding this back. Of course, if I say sub 6% mortgage rates were growing sales,
11:39nobody's disputing that just because the new home sales sector is at 2019 levels. But here,
11:45when we talk about the worst is over, that was the whole theme of the NURT tour this year.
11:50Now everybody's going, Oh my God, Logan was right. We're not declining 20 to 25% or anything like
11:58that. So just imagine if rates went a little bit lower, demand picks up a little bit, and we start
12:04that process that we've seen in other cycles, but so far rates have stayed elevated, but it is
12:11encouraging to me. It's so encouraging to me to see, this is why I love 2025. Inventory is growing.
12:17We got back to the low level of 2019. Purchase apps are growing. Americans do not act like middle-aged
12:23men, podcast stock traders, or people who push doom porn, right? They have lives. They go to work.
12:29They have sex. They eat great food. They live their lives like Americans do. But if you're one of the
12:36other group, you're thinking like, why are people filing out applications? Why aren't people as miserable
12:40as I am? Why are children playing out there in the parks? Why can't everybody just be as horrific
12:46as I am? Life finds a way. And even with elevated taxes, insurance, prices, rates, it just shows that
12:59we've kind of bottomed. We just need that next move, lowered rates. And then the curve could look a
13:05little bit better. Like if the weekly data was stronger, I can push this a little bit more
13:11aggressive like I've done the last few times. The weekly data isn't as strong as the year over year.
13:16The year over year, I could explain. But wow, that was a shocker. Because if other media outlets are
13:21coming to me and they're like, what the hell is going on here? And I have to keep on updating this
13:26for CBS News. I guess what happened this week? They're like, what's this? It has completely shocked
13:31everyone. But the fact that purchase apps are back from the 1990s to 2014, 2015 does not mean
13:38existing home sales are back there. But just remember, 30 to 90 days out, that's what we're
13:43looking at. It eventually hits sales. So we'll keep an eye on the tracker. The tracker will confirm
13:49it through the weekly pendings like it did last year. Last year, we saw the weekly pendings picked
13:53up. We're like, oh, here it is. This is where apps got better. Now it hits the pendings. Now existing
13:59home sales are going to be the last. And what happened to existing home sales went up a couple
14:02hundred thousand. Demand picked up a little bit. The supply and equilibrium. See, the supply and
14:07demand equilibriums of the weekly data matters more than everything else because that's the final
14:11confirmation. So it's just interesting that I saw two weeks of stabilization in housing. Then July the
14:184th came. We have one more week left before that data line gets that July the 4th two-week period out.
14:23And then we could go back to it. And if just rates can fall, man, it just gets down. Half a basis
14:30points to 75 basis points. You got something you can work with because we've modeled this out before.
14:35And this is why we believe in showing people models and how to teach this. But I totally get why
14:40everyone is confused. Like everyone is just like looking, this is not normal. This can't be happening.
14:47You know, I understand too. So, okay, let's talk about those rates. Let's talk about those rates.
14:54Okay. Trump wants rates like he wants a huge cut, but we don't see that happening. Correct? Like tell
15:00us where we are with rates. So one of our things for Trump's presidency is that the dollar needs to
15:08go lower. Okay. He wants the U.S. dollar to go lower. I don't care what some of his people in
15:15the White House are saying. We're shocked that the dollars are. No, the general policies are. So why
15:21would you want emergency rate cuts now? Because you want to crash the dollar even more. So why does Trump
15:28want a lower dollar? If you build a lot of stuff in America and the dollar is strong, it doesn't make
15:36that stuff cheaper to sell out and about. So you need to, if you want to export stuff, which I still
15:44to this day, I still can't comprehend why we want to do that. But if you want to do it, you need the
15:51dollar to go much lower than what it is right now. And you need other currencies to get better. So they
15:58have a little bit more buying power for the stuff. Because listen, we're the wealthy country out there.
16:02It's not like those penguins could be buying stuff from us. Or in Vietnam, they could buy these big
16:09trucks that we make. So it's one of these things where I have to keep convincing people, this is a
16:15dollar story. This is a deficit story as well. If Trump collects, hypothetically, let's just say he
16:22collects $2.2 to $3 trillion over the next 10 years through tariffs. Just go with me on this one.
16:31And then the Fed funds rate is lower. So you get more revenue. And then the interest payment of the
16:37deficit gets better. So we talked about this before, that one of the reasons why Trump wants
16:42lower rates is because the budget looks a lot better. So that can be a legitimate claim. But
16:48to this morning, he's like, we need 3%. That's emergency rate cuts. That's like what you do when COVID
16:55happened or something like that. So that's not going to happen. But then you and I joked about what
17:00Besson said. Trump's like Bobby Knight. Bobby Knight, the former Indiana college basketball coach,
17:08he's got to work the refs. You got to work the refs. So we brought this up because I used to be a high
17:11school basketball coach. You got to work the refs. Even though you don't get the calls you want all
17:16the time, if you get the Fed funds just a little bit lower, it makes your job a little bit easier. So a lot's
17:23going on with that out there. But one of the Fed presidents today made a statement that we believe
17:32that the tariff inflation will start in June, which means game on, baby. That's next week.
17:40So when we talk about the second half of 2025 is going to be one hell of a period. The Fed has now
17:49staked its claim on inflation picking up for the next six months. Inflation has to pick up for them
17:56to warrant all this. Now that's the fight that people are having between Trump's team
18:01and the Federal Reserve. I on the other hand says it didn't matter if tariffs were here or not.
18:07They weren't going to cut more than two times anyway, because in the Fed minutes that just came
18:13out this week, they said, well, we don't believe we're that far from neutral policy. So even if
18:18inflation goes down, maybe we don't cut that much anyway. Of course, because this is about the
18:23labor market, not inflation. So you would have got two rate cuts with tariffs. You got to would
18:28have got two rate cuts without tariffs. Don't let the Fed trick you. I mean, they don't want to go
18:33there until they see the labor market break. This is what's confusing to me, because we've talked
18:38about labor over inflation for a couple of years, labor over inflation, labor over inflation.
18:43So why are they bringing up inflation now? Cover. For what? They don't want to cut. They don't want
18:51to cut more than two times. So so what are the things that we wrote a few years back? We said
18:57the Federal Reserve, Jerome Powell, that eggnog must have had some really good spike in it, man.
19:04They will stay as. Maybe story there before Christmas in 2020, before Christmas, before
19:13Christmas, Jerome Powell came on TV and he said, we would like the Fed funds rate to match three,
19:19six, 12 month core PCE. And I'm like, whoa, that's actually really good. I'm down with that plan.
19:26And then that means the Fed funds rate is two and a half, 3% right now.
19:30Then I caught a whiff of, oh, they changed the entire game plan. Something happened in some
19:37meeting. They spiked his drink and he's like, no, we are going to go labor over inflation and we're
19:43not going to do anything until the labor market breaks. So naturally, a lot of people were told
19:48that the growth rate of inflation will fall, mortgage rates didn't happen. But Fed policy
19:53didn't change. The only time they started cuttings were like, oh man, the labor market's getting
19:58softer. Okay. Okay. Let's, let's start doing it here. They're literally telling you this in
20:03interviews. They said, well, we'll play catch up. We'll wait to see the data and we'll play catch up
20:08because the whole game plan changed in 2022. So they're waiting to see. And now they're like,
20:14oh, tariffs. Yeah. Tariffs. Tariffs are inflationary for six months. Okay. Well,
20:19it's going to come in a second. Okay. So they're using this as cover, but they would have cut only twice
20:26without tariffs anyway. And they told you that in the Fed minutes, even though there's a little
20:31civil war between a few of the conservative Fed presidents versus the other ones. I still say they
20:38only would have cut twice. They are going to slowly get to neutral policy until the labor and
20:44when the labor market breaks, okay, then we'll start cutting and we'll change it up. Housing
20:49outperforms in that environment. But this was going to be a drag. This is why we brought this up at
20:53the end of 2022. And here we are in July, 2025. It's like, oh, pulling teeth out, you know,
20:59just get the neutral policy. And you're like using ancient teeth stuff back in the 1700s to pull your
21:06teeth out. Just like crack it out. No, it's labor over inflation. Okay. I don't even want to think
21:12about that. I hate tea stuff. Okay. Everybody does. I'm sure nobody likes going to do this.
21:16We are out of time. I can't even believe it. I'm so glad you got to celebrate the,
21:22what is going on with the purchase apps. You've been so consistent about like, it was one of the
21:27first things that you put in the tracker because you're like, this is important to track every
21:32single week. And many people are like, what, why would we do that? It's not the sexiest data line,
21:37but I'm so glad that you got to explain what's going on. And because it's all of a sudden
21:43becoming very relevant. Yeah. I mean, I think some of the takes that aren't correct is people are
21:51saying this is a booming sales curve. And again, our weekly pending home sales data doesn't show
21:57that. Now, maybe two months down the line, things change. Last year, purchase apps out of the 18
22:05weeks, we had 12 positives, five negatives, one flat. That weekly was very positive. That's a much
22:10more positive curve than we have this year on the weekly data. And we said it'll eventually get to
22:16sales. And it eventually did. End of 2022, we had 12 straight weeks of positive purchase
22:21applications. The home sales were still falling. And everyone's like, no, purchase apps are not
22:25showing anything. All of a sudden we had half a million home sales in one month. It was like all
22:30fell in one month. I was like, what? And then even at the end of 2023, we only had eight weeks of
22:35positive. That's not big enough for me. You need at least 12 weeks, but it gave us a couple of
22:39hundred thousand more home sales, but we need that weekly data to confirm it. Then if you have the
22:44positive weeklies, positive year over years, then positive weekly pending sums, oh my God,
22:49the tracker, the tracker tracks all that stuff. And just remember, we are months ahead of the NAR.
22:55It's an unfair advantage we have, but at least this way, everyone gets a heads up.
23:00And then on the rate situation, again, labor overinflation, jobless claims came out today.
23:05Initial jobless claims fell, but the continuing claims are at a three-year high. That just means
23:10the labor market's getting softer, but not breaking yet. And the Fed tracks jobless claims,
23:15initial claims is their kind of the bread and butter on this when they feel like they need to
23:21start acting aggressively. So nothing, they don't feel that right now.
23:26A softer labor market, wage growth is slowing down for them. This is what they wanted, always
23:33softer, but not breaking. They can take us to neutral faster. They choose not to because that
23:38was their game plan at the end of 2022. Logan, thank you so much. Great to talk to you multiple
23:45times this week. We will talk again soon. Have a great night. Thanks.
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