- 2 months ago
On today’s episode, Editor in Chief Sarah Wheeler talks with Lead Anlayst Logan Mohtashami about housing inventory, purchase apps and wild statements from Fed members.
Related to this episode:
Where do mortgage rates go from here? | HousingWire
https://www.housingwire.com/articles/mortgage-rates-forecast-2025-fed-meeting-impact/
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 Studio.
Related to this episode:
Where do mortgage rates go from here? | HousingWire
https://www.housingwire.com/articles/mortgage-rates-forecast-2025-fed-meeting-impact/
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 Studio.
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NewsTranscript
00:00Welcome everyone. My guest today for this podcast is lead analyst Logan Motoshami. We are filming
00:11this in person at the ACUMA event here in Denver, Colorado. So it's pretty special. And boy, do we
00:17have a lot to talk about, especially because we've had a whole lot of Fed presidents talking about
00:23interest rates, cutting rates, all that. We're going to get into that. But first, Logan, you
00:28wanted to talk about inventory. Yes. A gentleman asked me a very good question. I've been talking
00:34about since early August that I did not believe inventory peaked with our data yet, even though
00:40August was a rare decline for us. And the gentleman asked me, why do I keep on saying this in the
00:46tracker article? Now, last year we had, you know, 18 week trend of positive data. Sales started to grow,
00:55but inventory still grew. Remember the chef kiss where I said, my perfect world is sales growing
01:03and inventory growing. We saw that briefly last year toward the end of the year. And that's why
01:09I'm still saying now I'm still wrong and I'm running out of time, you know, so, but that's why I keep on
01:15saying, I don't believe inventory has peaked. Now inventory grew a little bit, uh, uh, this last
01:19week where we, we, we didn't recapture the highs, but that's why I believe we still might have maybe
01:26two or three weeks at most before inventory starts to have the seasonal decline. But, uh, that's the
01:33reason that I, uh, I I'm using is that I saw this last year where even though rates went lower, uh, rates,
01:39uh, as of today was actually lower last year than it is this morning and sales started to pick up.
01:45But, uh, uh, back then last year inventory actually picked up a little bit toward October and rates
01:52did rise in the first, uh, eight days in October last year. I think one of the things too, that,
01:59that people might be confused on because you and I have talked about this at length, but like,
02:03what is it that happens to inventory when rates drop? So just in general, uh, after qualified
02:10and Morgan, when rates fall and demand picks up, we don't typically have inventory grow. Inventory
02:16slowly has moved all the way down since, uh, the, the recent highs. Let's take the NAR data,
02:21for an example, 2014 inventory was near 2.4 million. We go to all the way down to like 860,000.
02:28And during this period of time, even when rates rose a little bit, inventory was basically kind
02:33of flat for the year. But when rates went lower and demand picked up 70 to 80% of home sellers or buyers,
02:3920 to 30% of inventory left, if a mortgage buyer buys that 20 to 30% inventory off, you know,
02:45it's just hard for inventory to grow. Hence the team higher rates early in 2021, higher rates,
02:52softness in demand, softness in mortgage demand, inventory can grow in the, the market is allowed
02:57to breathe up higher. So I'm really nitpicking this, you know, I don't believe inventory's peak.
03:02I'm running out of time. Obviously I've been wrong so far. Uh, but, uh, we'll talk about the
03:08tracker a little bit after the real news today. Okay. Let's get into what the fed presidents are.
03:14Are they fed presidents? They fed governors? I have a different kind of name for some of these
03:18people today, but we talked about last week, we said there are going to be fed presidents.
03:23When rates get down here, they're going to go, Oh, you know what? No rate cuts, no rate cuts.
03:29And we had a host of them this morning. And of course everybody tags me because, uh, for example,
03:34Beth hammock, our favorite home girl actually said the labor market is robust. She didn't even go
03:41with Powell solid labor. She went robust labor market. There's no firings out here. Jobless
03:48claims has a broken. That's her last line of defense. No rate cuts. Knowing her, she'd probably
03:53want to hike rates. Uh, but people were a little bit shocked with her statement. And I said, I retweeted
03:58her. I said, look, ladies and gentlemen, boys and girls, here it is. And when we show the manufacturing
04:03jobs being lost, construction jobs being lost, but she wasn't the only one, uh, the St. Louis,
04:08uh, uh, uh, uh, uh, president and the Atlanta fed president, uh, Bostic, uh, both, both were saying,
04:14Hey, listen, uh, labor market. I need to, I need to see more weakness in the labor market before I
04:21want to cut rates where literally Powell said zero to 50,000 K growth possibly. And they need more.
04:30They need more weakness. I think this is so shocking because we all saw the July and August
04:36jobs reports. I mean, yes. So I think, uh, Beth hammock is the one that on July 1st said something
04:41about the labor market and how it was, it was fine. It was great. Oh, labor market is great.
04:44Nothing's wrong. What are you going to wait? No, no, no. She's not only that. She's like,
04:47it's just one report. And I'm like, home girl, come on. And we got 12 month revisions going lower.
04:53What are you talking about? And she just lawlessly stayed true to herself today and said robust labor
05:00market. But is that because she is now taking, um, Jerome Powell's
05:05definition of like, if we have zero growth and that's fine.
05:10When you say robust labor market, you know what I think? I think 133 to 180,000 jobs being created.
05:18Okay. A month. Right. That's that with the population growth on adjustments that I make
05:23every single year, that that's what I call robust. We literally had a negative report two months ago.
05:29And, but we picked on Beth hammock for a few months now. We kind of picked this up on her
05:33that she's not in this cap, but a whole bunch of fed presence. And they do this whenever mortgage
05:39rates get near 6%. They are petrified of people buying homes, having sex, having kids, because then
05:45they'll buy more stuff and it makes their life more difficult. So if the labor market broke,
05:50then they go, Oh, okay. Jobless claims and Beth hammock. Thank you so much for saying that today.
05:56Cause it was just flawless. Uh, the St. Louis federal president said, I need to see more labor weakness.
06:01So there was a lot going on this morning, which was a lot of fun. Well, and I, I think the interesting
06:06thing is obviously everybody in housing has, you know, it's been a weak market. I mean, we've been
06:11in a recession in housing since 2022, you know, the exact June 2022, 5 0 1 PM. Yes. 5 0 1 PM. June 16th,
06:225 0 1 PM. Yeah. That's right. And so it's always shocking, but I think, you know, looking at the
06:27manufacturing data report that I don't know where you, you come up with that. I mean, honestly,
06:32we listed all the charts out there. I mean, it's just like, it's like, I didn't realize this. Of course,
06:36I I'm, I'm, I'm the dumb nerd here. I just assume everybody knew manufacturing jobs were being lost.
06:41And when I keep on showing the charts, like this has been going on since 2022, people are like, what?
06:46Why isn't anyone talking about, oh, they know the data. The fed presidents know this is happening,
06:51right? Cause they always say the capital investment, uh, parts of the economy,
06:54construction and manufacturing, when rates are lower, you could get a little bit more growth.
06:59They don't care guys. They need the labor market to break, break, break.
07:03They do. So I think the, the interesting thing about this is it, it gives me flashbacks to last
07:10week when Jerome Powell spoke and in his written remarks and in his prepared remarks, it actually
07:15didn't sound too bad. He did talk a lot about how he, you know, obviously they have a dual mandate
07:20and inflation. They had to think about inflation in, you know, in connection with rates. And that,
07:26that's what they're talking about, right? It's like if they, if you don't have, if you have a robust
07:30job market, then you're going to have inflation and that's, that's what they're looking at.
07:34Then of course he went into his not prepared remarks when he was answering questions and
07:38that's when it was, it was, it went off the rails from a housing perspective. If you were,
07:42if you were hoping to see, um, you know, labor take the 10 year yield today. I mean,
07:47even with three fed presidents, uh, saying all this stuff, not much, not much movement today.
07:52Um, the spreads are so much better this year than last year that it's keeping a lid on, uh, rates last
07:59year, as we talked about, uh, the, uh, mortgage rates went from, I think 620 to 670 in the first
08:04eight days of October. Cause we had that reversal in September, the economic data started to get
08:09better. The 10 year yield was down to three 63 and it shot up like it should have, uh, cause it was
08:14well ahead of fed policy, but here I flawless. Thank you, fed presidents for making my labor over
08:20inflation case even better out there. Cause we're just getting tagged. It's like, man,
08:24they're just like flat out saying it live in public. Okay. So what reports do we get, uh, this
08:30week? This week, uh, uh, we get the, uh, existing, uh, existing home sales and new home sales. I don't
08:36think much is going to happen with the existing home sales report. We're still, our data lines only
08:40showing slight year over year growth. So not much. The question for me is that is, is this going to be
08:45the peak for the NAR is total inventory data, uh, coming out this week. So not, I don't expect much.
08:51The new home sales market is going to probably start to get more interesting now because their
08:56purchase application data has picked up a little bit the last three months. So we'll see if that
09:01has helped a little bit early. There's all this debate now that, you know, uh, some people are
09:06saying that the fed needs to get mortgage rates below 6% to, uh, to get housing starts in the housing
09:11market back. I always say that we have to, we have to live in a world of reality with the
09:15fed and they do not make policy around the existing home sales marketplace, but the new
09:20home sales terms of construction labor, I would say just getting down to 6% and holding it actually
09:27has helped the builders, uh, the last few years. Uh, so there's enough completed units for sale that
09:33they can, they can sell these homes if they find the buyers and 6% can work here. Uh, I know,
09:38I know the case that people say sub 6%. We just, we just don't have that marketplace yet until
09:42spreads get better, spreads get selfish or the labor market breaks. Great points. Okay. Well,
09:47let's talk about the, the tracker. So the housing market tracker, which you can find at housingwire.com
09:52slash housing market tracker. We've made it super easy now and you actually split it out into two
09:57reports this week. Why did you do that? Yeah, this, this week, I just wanted to, uh, focus, uh,
10:02on two different things. The mortgage rate story, uh, uh, separate, but the tracker just wanted to
10:07highlight basically this shifted mid June. Okay. So visually everyone can see that starting mid June,
10:15the inventory growth started to slow down, right? The price cut percentage now declined the last
10:22three weeks. It is a little bit lower. This looks somewhat like what we saw early, uh, when rates
10:28started to fall last year. And then if we get about 12 to 14 weeks of positive purchase application data,
10:34you could get a couple hundred thousand more home sales price cut percentages falls a little bit.
10:38The new listings data is holding up as, as, as much as it can right now. Uh, inventory picked up
10:44slightly. I still haven't got my, uh, 2025 high in inventory, uh, yet, but, uh, once people can see
10:50how the tracker operates, that's why I wanted to keep it separate from the rate story. Cause then the rate
10:55story is something else. Uh, you could see a dynamic shift. Imagine if mortgage rates were 5.75 to six and a
11:02quarter for 12 months, not reaching back up to 7%, right? I know Beth hammock would be happy. Oh my
11:08God. If people buy less homes, I don't have to worry about inflation. But in this case, uh, you could,
11:13you could see it early because nobody else is talking about this. Cause I don't, not a lot of
11:17people have the access to the data like we do, but I just wanted people to glare this because last year
11:22when we were showing this data line, people were like, Oh my God, there's nothing going on housing.
11:26Cause there's no year over year growth in purchase apps. That wasn't the right way to look at it.
11:3112 to 14 weeks of positive weeklies. We have six. If we get another six to eight weeks,
11:36then you've got something going there. But we already saw a little bit shift in the data line
11:40mid June. I can say I've never seen anyone get more excited about purchase apps than you do.
11:46Really? Yep. You know, 49ers, Nick Bosa is out for the year, but still that was a hell of a game.
11:54Mac Jones. And you know, Mac Jones likes to talk a lot of trash when he's out there too,
11:58but still 49er games. You'll, you'll, if you really want to see me excited,
12:03it's a Niners football game. Okay. Well, yes. But as far as like housing data,
12:07I feel like how many other people are that excited about purchase?
12:10I used to get up at like 3 55 early in the morning in the last decade and just wait for
12:16purchase apps to come out and see it out there. Cause we wouldn't, you know, have access to the
12:20data early. And as soon as it comes out, I sit there and I write my stuff down. Right. I still,
12:25I have this full book of written down purchase applications every week, everything, just so I
12:30can embed it in my head and remember how the data lines looked. And it's a very, very tricky survey.
12:34It's a survey data that's really tricky. And I was in a veil this morning at a KW event and I was
12:40teaching people why is purchase application data up 33 straight weeks in a row, year over year growth,
12:4620 weeks of double digit year growth. People would be like, oh my God, that's something big.
12:50Those are sellers that filled out the application, went, put their house on the market and they're
12:55waiting for that mortgage buyer to come in. That mortgage buyer buys, that seller sells, buys.
13:00That's how the transaction models go. So we could explain the year over year growth.
13:04You just need the week to week data out there to make it happen.
13:07We just need that. So we talked about the Fed. We know that President Trump really wants lower
13:13mortgage rates. There's been so much pressure on the Fed chair, Jerome Powell, on Fed governors. We've
13:18seen all sorts of drama there. What do you think he's thinking now? I mean, so we had a rate cut,
13:23you know, we didn't have dramatically lower mortgage rates. Of course, he would like emergency rate cuts.
13:28What do you think?
13:30So we brought this process up late last year that Donald Trump, President Donald Trump is going to
13:37do something with the Federal Reserve that we have never seen before. And then we brought the compounded
13:41theory of a shadow Fed president. But I've always said this, I thought October, maybe November will
13:49be the time that, you know, we might see an announcement then. I think Trump likes Powell as
13:55a punchy bag, you know, and he gets a lot of bonus points for that. And as long as Powell is still
14:01talking modestly restrictive policy, he could keep on punching until he picks his next Fed chairman.
14:09Now, this gets into an interesting question. Who's the next Fed chairman now? Because now they expanded
14:15that list to like 11 people. And they just, I think they like the fact that you had all these
14:19people coming out there. We need lower rates, we need lower rates, we need lower rates. But as the
14:25process goes on, it seems to me Powell probably wants somebody more loyal to him. I mean, excuse me,
14:32President Trump wants somebody more loyal to him. And these Fed governors, you know, the whole Lisa
14:38Cook situation, the Colgar resigning early. Remember, it's the votes that count, you know,
14:44so if you could get anything on voting members, you get it out there. But Lisa Cook was going to be
14:49dovish anyway. Colgar was kind of in the middle. But when you announce a shadow, because everybody
14:55say, why doesn't he just announce a shadow Fed president? Why doesn't he? I think he likes the
14:59punching bag. But soon, I think soon they're going to come and bring that out. And when that happens,
15:05the days of Jerome Powell, the days of worshiping Jerome Powell, your highness will soon come to an
15:11end, right? And then the next Fed chairman, whoever Trump picks, probably has a little bit more of his
15:19mindset about getting down to neutral policy, or maybe talk about a comment of one of the questions
15:25I got in the KW event today is, will Powell ever take in a talk about an accommodative stance? No,
15:33we won't. You need massive unemployment for Powell to turn. But the next Fed chair might. And it's all
15:40about trying to get as many Fed members on board with that plan. But again, to me, it's like,
15:45we can't talk about a commative until we get to neutral. And they're still modestly restrictive. So
15:51there's a lot of frustration that people want Powell gone. But I think we're getting closer to
15:56the time where they might announce a new shadow Fed president. And then we'll take it from there.
16:01Yeah. I mean, I'm sure it reminds other people. It reminds me as well. It's like the apprentice,
16:06you know, Fed governor edition. You know, you have 11 people out there and you're kind of like,
16:09okay, show me what you got. How loyal are you going to be? How much can you talk about lower rates?
16:14Well, I mean, it's still a voting process. I just think Christopher
16:18Waller has the most credibility with Wall Street and bond traders and everything. And just remember,
16:24the 10-year yield got to 4% this year. We had $10 trillion of debt that we had to refinance. There's
16:31no way bond yields could ever go down. Mortgage rates had to go up, up to 7%, 8%. And none of that
16:37happened. The labor market got softer and rates fell. Third year now. But the question is, if the labor
16:44market rebounds in this environment, yields should go back up, right? Because they are
16:49modestly restricted. Now, the spreads are going to prevent any kind of escalation pickup in rates
16:55if yields go up. But I like Christopher Waller because I trust him now and for the next 5, 10,
17:0315 years. Myron, don't trust. Kevin Warsh, don't trust. Kevin Hassett, oh, Lord, have mercy. No,
17:11no, no, no. I mean, those are just Trump yes people, right? So the market will feel much better with a
17:17Waller who can coherently talk about monetary policy in the short, medium, and long run. And he was
17:23concerned about the labor market way early. My God, Beth Hammock still says robust. I cannot believe
17:29homegirl said robust still. And Waller could actually get the other group members to kind of
17:34follow along. Wow. I agree with all of that. That's amazing. Although I don't have the same
17:41opinions that you have as far as Fed governors. I just don't know them that well, nor would I have
17:45that opinion. Because you're a normal person and you have a life, okay? Like nobody can know the
17:50Fed governors, my God. Like 90% of the population would even recognize Jay Powell. Now you start getting
17:56the Fed governors and you're just like, what? They just look like a bunch of stiffs, right?
17:59So, you know. I do think it's awesome. I think it's interesting that you're like,
18:03you know, when you talk about Waller and like the future, I think that, you know,
18:06when you want to talk, the thing about monetary policy, the thing about the Fed,
18:10the Fed governors is the whole system was designed in some ways to be inefficient so that you don't have
18:17big shocks to the system, right? So that things, it takes all of these people voting so that it's,
18:21it's, there's nothing that you can do really fast. You know, I think part of the confusion
18:27is that the Fed became trying to be as transparent as possible. And when doing that, things can get
18:35muddled. You know, Neil Kashkari, who we used to pick on all the time, kind of, he gave a premise
18:40that, you know, we'll highlight the labor market a little bit over inflation because, you know,
18:45when the labor market breaks, it just doesn't slowly break. History has taught us it breaks pretty hard.
18:49You have so many different views that people just with the dot plots, they're just not sure yet.
18:56And of course, things change. I mean, just five, six weeks ago, Jerome Powell was like,
19:02labor market's solid. There's nothing wrong with the labor market. And all of a sudden,
19:06these revisions and everything comes again. And then they're like, you know, but you still have
19:09some Fed governors who just literally need the labor market to break. You people have to lose your
19:15jobs if you want rate cuts. Come on. So sometimes too much transparency can, you know, muddle some
19:26of the messages. But if you look at, if you believe like I do, that 65 to 75% of where the 10-year yield
19:33and 30 mortgage rates can range is still Fed policy. Bond yields and everything look right,
19:39right? We have all these other crazy talking points. Like people said, there's no way mortgage
19:43rates could ever go below 7% because we have so much debt that we have to refinance.
19:47What happened? Where are you all at? Where are you all at now? Nowhere. I don't even hear that
19:53story anymore. This was like a whole thing about, we need to create a recession because we can't
19:57refinance this debt. Remember that lie that they killed? The Republicans are really good. They have
20:02this summer camp with all their kind of social media influence people. And they all say, let's tell
20:07everybody if we have a recession, it's good for us because we need to refinance today. There we are,
20:12we're here. So there's global bond yields, what happens in Germany, Japan, all these things matter.
20:17But for right now, the 10-year yield Fed funds ball looks right if you believe modestly restrictive.
20:24And we keep that, keep on going until the labor market breaks.
20:29Well, we are going to be keeping very close track of this. You always do. Our newsroom is always
20:34reporting on it. I would tell people, go see the housing market tracker and come see Logan
20:39in person October 7th at the housing, at the Mortgage Banking Summit. I got to get it right.
20:44The Mortgage Banking Summit. It'll be great. Thank you, Logan.
20:47To all my Niner fans, I know Nick Bosa's out, right? Next man up. But my God,
20:51it's so great to be 3-0. Thank you, Logan.
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