- 1 year ago
On today’s episode, Editor in Chief Sarah Wheeler talks with Lead Analyst Logan Mohtashami about housing inventory and home prices for the rest of 2025.
Related to this episode:
Mortgage spreads cushion mortgage rates against warm inflation data | HousingWire
https://www.housingwire.com/articles/mortgage-spreads-cushion-mortgage-rates-against-warm-inflation-data/
HousingWire | YouTube
https://www.youtube.com/channel/UCXDD_3y3LvU60vac7eki-6Q
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 Stud
Related to this episode:
Mortgage spreads cushion mortgage rates against warm inflation data | HousingWire
https://www.housingwire.com/articles/mortgage-spreads-cushion-mortgage-rates-against-warm-inflation-data/
HousingWire | YouTube
https://www.youtube.com/channel/UCXDD_3y3LvU60vac7eki-6Q
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 Stud
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NewsTranscript
00:00Welcome, everyone. My guest today is lead analyst Logan Motoshami to talk about what we should
00:12expect for housing inventory and home prices for the rest of the year. First, I want to thank our
00:17sponsor Optimal Blue for making this episode possible. Logan, welcome back to the podcast.
00:22Look at you in that background you got going on there, huh?
00:25I love this. This is our new podcast studio, Shiny New, part of our new office
00:31in downtown Dallas, and they have it all set up for us. So amazing. Love it.
00:36So you're going to beat my Jack Nicholson portrait behind me. But speaking of which,
00:43for everybody who's listening, we're going to have our first time I'll be doing the
00:48Altos webinar. That'll come out on Wednesday. You can still register for it,
00:54where we talk about how to use our data line for your local area, your city, state, zip code,
01:02anything in terms of home pricing. Of course, I always believe everyone has to have their own
01:06model and show everything. That's what we strive to do every single week here. And it's been very
01:12interesting with the tracker data lately. So I think it's such fortuitous timing to have our
01:17webinar on Wednesday in Dallas for this event.
01:24This is going to be amazing. Yes. And you will be in this studio. And then we're going to be doing,
01:28because you're here, we're going to be doing this podcast with both of us in the studio. That'll be
01:32really fun.
01:33Oh, good. So I could, I could like make fun of you face to face. People, people, everywhere I go,
01:38people say, you need to be nicer to Sarah. I was like, you don't realize what she does,
01:41you know, when I can, I can boss you face to face. It works both ways. So, well, we have a lot to talk
01:48about today. My gosh. Of course, let's, let's start with home prices. Let's talk inventory and home
01:54prices. What do we see?
01:56So it's been very interesting with our tracker data going back to mid June. And again, we always,
02:04we always say that we want to be current and we want to look forward on, on housing data. And
02:09when mortgage rates started to creep a little bit lower, nowhere near 6%, where 6% pricing is,
02:17or 6% rates have changed the pricing curve twice now since late 2022. But I noticed that things were
02:24stabilizing. And then July, the fourth weekend came in that two weeks, you have to just discount it.
02:29And then two weeks ago, inventory fell in August and the price, price cut percentage started to
02:36stabilize. And it's a little bit early for that to occur. Usually in the last few years,
02:43inventory would peak in October and November. So I was anticipating a little bit of a kickback
02:52of inventory this last week. And we barely got anything, barely grew on the active inventory side
03:00on our weekly data and our new listings data. Like I could, I could understand why new listings data
03:06was down year over year, two weeks ago, but it's still down again year over year. And this is something
03:15that we want to, we're going to show this on Wednesday, but to think about going out in the
03:18future for the last few months of the year, if, if mortgage rates do go down to 6%, is this the third
03:26time now since 2022 that the pricing model changes? Because for me personally, it's like my price
03:32forecast was very low compared to everyone else's. And I need more weakness in pricing for my forecast
03:39to be right. Last year, I needed the same thing. I didn't get it because here comes September and
03:44October. It's September, October. Our data is going to show negative year over year home prices,
03:49because last year we had a firm pickup and that ruined my forecast last year. But now we're going
03:54into this. So it becomes a little bit more interesting because supply is up. Our rates
03:59are still elevated. They're not down to six. And it's a good tug of war now for the rest of the year.
04:05You know, I remember for like 18 months, every time we got on, we would talk about inventory and it was
04:10just the, the worst story in housing because we just did not have enough. I mean, all the way back
04:15to 2022 when it was 240,000, you know, houses for sale for the entire country. That was crazy. But I feel
04:24like we've worked so hard to get back to where we are. And then 2020, starting in 2024, and now this
04:30year has been so much better. So put it in context, historically, the new listings, the inventory, where
04:36we are.
04:37There's two ways to look at active inventory on historical context. The NAR provides their
04:42historical data lines going back decades, and their active inventory is about two to two and a half
04:48million. Those are homes, though, that are in contract as well and condos and everything. So
04:53their data line is going to be different than ours. The way we track it is we can track single
05:00family and condos, but for the tracker purposes, we do single family only. Single family active
05:06listings in March of 2022 were 240,000. The active inventory for the NAR was under a million.
05:13Here we are after the third calendar year of the lowest home sales ever, right? We had that
05:19waterfall crash in 2022, and basically sales have been flat really roughly since that time frame.
05:26But active inventory of the existing homes is 1.53. That, you know, is, for me, it's a little bit
05:33meaningful because I always say that I can, like, talk no more about low inventory if we could get
05:39inventory between 1.52 to 1.93 million. So I'm not generally a low inventory person, but we broke
05:46to levels that were very unhealthy. For our own data line, we're around 860,000. Normal would be
05:53like a million for us. And remember, ours is raw, active inventory, no contracts. These are the homes
05:59available for sale. So we've made unbelievable progress that I can just, I'm pretty much done.
06:05And now the thing is the seasonal inventory is starting to kick in. The NAR typically has their
06:11seasonal peak right about this time, June, July, or August. And then total active inventory falls
06:16until, you know, winter is over and then you start to spring rise. For us, though, it's the last few
06:23years have been October, November. So having back-to-back weeks now, the cumulative would be negative. It's
06:29it's the first time. So these are things we keep an eye on because the new listings data is really
06:35starting to slow down so much that we've had back-to-back negative year-over-year percent. Remember, 2024 is
06:41the second lowest year ever in history. So here we are, we're going, we're going to finish 2025
06:48and the new listings data ranged between 30 to 90,000 on a five-year period, right? Seasonality
06:56speaking, when we get to the peak months, it's usually 80 to 100,000. That would be normal. We
07:01were only able to achieve that really kind of one year in 2022. We were able to break 80,000 this year
07:09during the seasonal peaks, but it was all, it was very brief. Well, like one week we have one and then
07:13it declines and we had another one, it declines. So the new listings data noticeably started to slow
07:19down after May. Again, and this is the difference between this housing cycle and 2008, because in 2008,
07:26the peer, our new listings data was kicking 250 to 400,000 per week for years, right? When Mike
07:33Simonson, the legend, Mike Simonson went to Lehman Brothers and told him, Hey homies, we have a way of
07:40tracking housing data. That's a little bit different. And Lehman said, no, I don't know who you are. I have
07:4485 analysts. Mike goes to Goldman Sachs, talks to Goldman Sachs. Goldman Sachs goes, uh-oh. They take the
07:51data. They short the housing market. They made 10 billion dollars. Lehman Brothers went out of
07:56business. So, uh, we, we pride ourselves in fresh data. Uh, and, uh, it is a noticeable shift now
08:03since mid-June, uh, with our tracker. So one of the things, um, I've been hearing on social media
08:09from people that, you know, some, from some mortgage lenders that I think are, you know, tuned in this
08:14thing. One thing they're saying is like, yes, mortgage rates, you know, in the last couple of weeks,
08:18we've been talking about the fact that they're at, um, lows for the year, but maybe it's just too
08:24late in the season to make a huge difference. And especially if you're a home seller and you see
08:29things kind of sell, uh, sitting on the market and you feel like, Oh, interest rates are still too high.
08:33I'm not going to get what I want because people will have to factor that in and they're just pulling
08:38their listings or not listing them. What do you think about that? I disagree with that assessment for
08:42this one reason. Okay. New listings data is very seasonal. It always has its seasonal
08:48decline right about now. Now, of course, 2022, we saw an aggressive decline in the second half
08:56of new listings, but our biggest monthly existing home sales prints have all come in the winter.
09:03If you go back the last 15 years, not a lot of people know this, but if you go back,
09:08our biggest sales print last year was a really good example. Last year, new listings data was declining.
09:14Um, mortgage rates were just getting towards 6%. We had no year over year growth in purchase
09:21applications, but the week to week data was really positive. So everyone kind of said the same
09:27thing that, well, it's late in the year and nothing. And I said, no, no, the week to week is
09:31showing duration. Like you need 12 weeks, 12 to like 12 to 14 weeks of like positive for data to have a
09:39material change. Well, last year we had a couple of hundred thousand more home sales, you know,
09:44came out of nowhere. They said, but no, the week to week showed it 2022 starting from November 9th,
09:50all the way to January or toward the end of January, early February, the forward looking data got better
09:5512 weeks. It had one of the biggest month to month sales prints ever recorded in the history of
10:00America. We had almost half a million. Uh, uh, so we can grow sales and have new listings data
10:06decline as that's been the case for over 15 years. The rate variable is, is the, is the, is the key.
10:13If it, if the forward looking data starts to get better. And we've only seen that really from
10:18a period of time where rates go from 6.64 down to six and that long duration, we get at least 12 to
10:2414 weeks of positive data. Last year we had out of the 18 weeks we were tracking 12 or positive five
10:30or negative one flat, you know, this year, the year over year growth, it was been solid all year,
10:35but the week to week, not so much. And so now that we're below 6.64 back to back weeks,
10:39we're positive. We'll see how it goes for the rest of the year. But it, it is fascinating to see that,
10:44you know, every single year we have something that happens with the, with the tracker.
10:48And it typically happens when rates get down to kind of this level question is, can we get that last
10:55wave? And by the way, today's another day mortgage spreads do their thing. Bond yields are up. We got back to
11:01the 435 level. That's where we kind of were right before jobs Friday and, you know, mortgage rate
11:08pricing, it's like six basis points higher from the, from the year to date lows, not too much
11:15on a, on a day-to-day basis. So mortgage spreads are doing their thing and people are starting to
11:20understand and learn about it. So I feel vindicated about, you know, forcing the mortgage spreads down
11:27to everyone. He's, you know, you know, his brain all the time, even some well-known bond traders.
11:31Like, why do you talk about spreads all the time? It's like, homie, I've got to teach people about
11:36mortgage spreads and the slow dance and the 10 year yield and 30 year and, you know, and the two year
11:40and everything. And, you know, volatility compresses. So I'm very excited for the last few months of the
11:46year. No. And I mean, so you highlighted that in a, in an article last week, and then you highlighted
11:52it for the tracker because it was so striking. Like even no matter what's happening in the bond
11:58market, no matter what's going on, the spreads have saved us. Otherwise we'd be much worse off
12:02today for mortgage rates. Yeah. And I think one of the things that when, when people were telling me
12:07mortgage rates are going to go to seven and a half to 8%, I said, A, you are super bullish on the
12:11economy. Good for you. I'd love to hear that even though they weren't. And it's number two. It's always
12:17funny, like higher yields and rates are a function of the economy outperforming. And yet people just,
12:22you know, we, we always have a joke in, in, in, in, in, in, in twit that if bond yields are going
12:27down, it's deflation and recession. If bond yields are going up, it's inflation and we're going to
12:32crash. There's just a group of people in this world that were just born into some doomsday parade
12:37and you just can't get out of it. But in any case, um, uh, bond yields, you know, 10 year yields
12:43getting above 5% or anything like that, or the whole, you know, we're broke, no one's going to buy our
12:47debt and all that Mickey mouse stuff that doesn't happen. But if you're, if you're in the seven and a
12:51half to 8% rate camp, you're probably not in the spreads are getting better camp either. And, uh,
12:58the answers that I got, I was like, wow, you've never studied the spreads in your life. Have you?
13:03And they just go, Oh, the fed, that's the fed, the fed bought mortgage-backed securities. And that's
13:08the only reason that the spreads, the spreads never get back. I said, Hey, you've never looked at a
13:12long-term chart of the mortgage spreads. Have you? Uh, no, I can tell not a very educated,
13:17not a very talented man. And you know, you've got a bad hair to go with it, man. You should
13:20probably move along. Go ahead. You know, out here. Oh, the bad hair. Oh, Sarah Wheeler. We had
13:26another cloud on X talking trash out there. We always go 30 minutes, homie. Let's go face to
13:31face right in front of everybody. Get your forecast and models head to head with me. Y'all can go to
13:35the YouTube comment section and look at me challenge all those people out there, right? Name, face,
13:40model forecast every single day, 24 seven. We are here. We hold everyone's hand. We never sleep.
13:46And we love talking about the spreads and the 10 year yields and all that stuff. So
13:49yeah, it's a, it's a very positive story and it looks very normal, right? And I think that was
13:55the confusion because people were told if the fed does not get involved, mortgage spreads will never
14:00get better. In fact, they could get worst. That was the, you know, the, the friction fight going into
14:062024, that mortgage spreads can get a lot worse, especially if there's a recession happening.
14:11It's a recession does not mean spreads get worse all the time. There's been plenty of times in
14:15history that that's not the case because you're working from an elevated level. So it's really
14:19geeky nerdy things, but I think we were getting people to see what spreads being good. It's for
14:25a lot of people. It's their first time they're seeing spreads get better, even with the 10 year
14:30yield. So it's shocking to them. It's like, Oh my God, it's like seeing a child who couldn't hear for
14:35the first five years of their life. You put a magical ear thing and all of a sudden they could hear
14:39and their face lights up and they're like, Oh God spreads. I get a little bit dramatic about this stuff.
14:44You do, you do, but we all appreciate it. I'm glad that you love the nerdy stuff so you can
14:49dig in on mortgage spreads and tell us what we should expect there. Okay. So the other news that
14:53came out today, because we are recording this on Monday was the builder's confidence would love to
14:58know what you thought about that. So by the time this comes out, housing starts will come out. I'm
15:04going to be on CNBC early in the morning too, to talk about this. And the builder's headline data fell,
15:12you know, mortgage rates just got to the year to date lows this month. So we're probably one month
15:17behind in terms of it, maybe getting into the data lines, but the buyer's perspective picked up just
15:24a little bit, right? And you know, the next six month outlook is just a little bit better.
15:30What we've seen about the existing home sales market, we can say the similar things about
15:36the new home sales market. When mortgage rates get down towards 6%, it's easier, not only just for big
15:42or small or medium side builders, but I mean, everyone in the housing ecosystem has an easier
15:48time selling and buying homes. So the next month, it should pick up just a little bit.
15:56The builder stocks have done really well. Even today, some of them were doing well. So for some
16:01people, it's confusing and they see this, but remember a lot has changed. The mortgage rates
16:06aren't at 7% anymore, but they're slowly moving down towards, if you could get just 6% rates,
16:12what happened in late 2022 and other times the builders, you know, it's funny because the new
16:17home sales purchase application data hit a post COVID high this year. And before the, some of the
16:23sales adjustment, it was a, it was a, it was a, if you take after 2022 was a multi-year high
16:29in sales, but it's very volatile. It's a very volatile census data line. But if you look at it,
16:35it's just basically been in a range since really 2018. And where rates go up, it falls down. Where
16:40rates go down, it goes up and it just basically hovers in this area. So not shocking about the
16:46builder's confidence. You know, if housing starts comes out, you know, bad again, it's not shocking
16:50as well. But what I'm going to highlight on CNBC is that for the first time, really, since 2010,
16:57the completed units for the builders are at, you know, multi-decade heights to where they stop
17:01building. But we also have jobs being lost and residential construction workers and specialty
17:06trade. You put those two together with manufacturing jobs being lost. It is not shocking that we just
17:12had the worst three months job creation average, you know, really in the 21st century, if you X out,
17:19if you have no negative reports, that average was really low. So again, we, we, we, people are
17:24talking about, well, it's just population growth. There's not enough people working
17:27that's not this data line, right? We're continuing claims is at three years highs,
17:32manufacturing jobs are being lost, residential. There are, there are weaknesses in, in the labor
17:37market. And it's very apparent to people that track this on a monthly, weekly basis.
17:43What else from the tracker stood out to you? I feel like it was a really interesting week.
17:47What, what were the other things? I mean, to me, to me, I really anticipated a little bit of a snapback
17:52work. And not only, I mean, not only did we didn't get in an active inventory,
17:59we didn't get it in new listings. And that, that's the thing. Again, why do we want new listings back
18:06to normal? Because 70 to 80% of home sellers are buyers, right? And, and if you're not listing your
18:13home, supply is a function of demand and housing, right? This is why, you know, we, it was really
18:19good. We saw this year over year growth in purchase application because those are sellers. So, so I
18:24was, I thought the easy call would have been new listings data would have been positive year over
18:29year. And for that to happen, I was like, whoa, really the it's slowing down. The weekly pending
18:37sales picked up just a little bit. The total pending sales data is a little bit higher, but we
18:43always have to remember we are working from such depressed levels. If existing home sales, it really
18:48doesn't take much to move the needle, but if you take the aggregate total of all homes, we're still
18:53going to be roughly near, not, not at 5 million, but near 5 million total home sales. And if you go
18:58back in the previous decade, a total home sales, roughly the peak, the peak, we're not talking about
19:03just an average, the peak was near 6 million. So we're missing roughly a million mortgage buyers,
19:10but if you got 5.4 to 5.7 million total home sales, that to me is more of a normal demand curve out
19:16there. So yeah, the new listings data was really the shocker because I thought that was the easy
19:22layup to show some year over year growth and that didn't happen. Of course, we are recording this on
19:27Monday, but on Friday, we are going to have Fed Chair Powell speak at the Jackson Hole, Wyoming
19:33summit thing that that's going to, that's going to be really interesting. Does he come out and does he
19:39have a hawkish tone? Is he dovish? Everyone's going to be looking to see what he says and that's going to,
19:45you know, drive rates to some point, drive the bond market. You know, we've had some really wild days
19:51after Powell talks and pricing on the 10-year yield has adjusted to the inflation data.
20:00And it's basically, it's kind of like we're out, we're right at the 435 level right before I got on
20:06this podcast. And that's the level that I, you know, so here it's not because the labor data is
20:11booming or anything. The growth rate of inflation has picked up. So we're just, we're kind of in no
20:17man's land right now. So what, what does Powell say? But I always say follow the economic data
20:23matters more than Powell. You know, the Fed will make their decisions and then they roll with economic
20:30cycles. But if the jobs data was booming, if it was just 133,000 per month, you know, we're not having
20:38this rate cut discussion anymore. But that's not the case. So it'll be, it'll be a very fascinating
20:44Jackson Hole. He could have an easy layup and say, Hey, listen, labor data is getting softer. We just,
20:50you know, we're going to be more mindful of that. Or he could just do what Powell does sometime,
20:55kind of be hawkishly dovish. I hate that terms, but some people like to use it. And we'll take it
21:03from there. That's, I think that's, that'll, that'll be a good, good, good event on Friday to
21:06see how the market reacts to what he says. And just remember his days are numbered, you know,
21:12eventually they're going to name a new Fed chairman out there. And at that point, you know, what Powell
21:18says, you know, you know, we'll have less value. The next Fed chairman will carry a little bit more
21:24weight. So Christopher Waller is going to be speaking this week as well. He's one of the head people.
21:29So it'll be interesting what the bond market says with him. We will be paying attention,
21:34Logan, as always. Thanks for being on. Thanks for giving us your insight. And we will talk to you
21:38again soon. Yes. Next time I'll see you in studio. Yes.
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