Logan Mohtashami recaps the 2025 housing market

HousingWire

On today’s episode, Editor in Chief Sarah Wheeler talks with Lead Analyst Logan Mohtashami about the highs and lows of the 2025 housing market.   Related to this episode:   Logan Mohtashami  https://www.housingwire.com/author/logan-mohtashami/  HousingWire Youtube  https://www.youtube.com/channel/UCXDD_3y3LvU60vac7eki-6Q  More info about HousingWire  https://lnk.bio/housingwire   To learn more about Trust & Will, click ⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠here.⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠

Transcript

00:00Welcome, everyone. My guest today is lead analyst Logan Motoshami to give us the recap

00:10of housing in 2025. So excited for that. Before we dive in, I want to say thank you to our sponsor,

00:17Trust in Will, for making this episode possible. Logan, welcome back to the podcast.

00:22It is wonderful to be here and we are closing the books in 2025.

00:272025. We're getting close. I mean, we have a lot of podcasts between here and the end of the year,

00:33but as far as what we're going to talk about today, kind of looking back, doing what happened

00:37this year. So let's start. What is the most important thing from your perspective?

00:42So I thought the most positive story for 2025 was the inventory growth. We always talk about our

00:50slope of the curve economics and how we look at inventory. And as long as mortgage demand is

00:55like suppressed, inventory can grow and it gets to a certain level. This year, the inventory growth

01:00was really good. Like it started the year. I was like, you know, big smiles. I was like, this is

01:05really positive, but things started to slow down. And then just like all the other times when rates

01:11start to get below 6.64%, the demand picks up a little bit. And then we could see it in our tracker

01:17now. I mean, our total pending home sales is at a four-year high now for the calendar week. And we

01:24had harder comps last year too. We have a clear deviation from 2022 and 2023 versus 2024, still

01:32some growth. So the backdrop is good because to me, more inventory, more choices, less seller market,

01:40more buyers come in, right? No more multiple bids, anything. We don't have to worry about any of that,

01:47that you could have mortgage rates to just get down to near 6% and then have something of a

01:52functioning market. And that was the whole concept of team higher rates, right? That had to work for

01:57that to happen or else you don't get any benefits, no inventory growth, prices still stay too high in

02:04the sense that the growth rate is about 4.6%. Now, not the case. So that to me is the best and number

02:12one positive story for the housing market. It took a while to get there, but we're finally at a

02:17marketplace where buyers and sellers and choices and price, everything is now more in a balanced

02:23setting. Yeah. I feel like inventory was the story, 2021, 2022. It felt like when you have people

02:31lined up 25 people to buy a house, it felt like there was no inventory to buy.

02:36Well, here's the thing. We had 2 million more existing home sales with inventory at all-time

02:43lows. So a lot of people like, you know, quietly ask me, hey, wait a second, how do we have

02:48a lot more home sales with no inventory? Well, most sellers are home buyers, right? We do transactions a

02:54lot more faster now. So, you know, in the past decade when people used to say, sales can't grow,

02:58there's no homes. There's plenty of homes to buy. The problem with the inventory story was more about

03:03prices getting out of control. It was very unhealthy. You know, so many things were waived

03:10when people were buying. It was just, it was horrible, right? It was savagely unhealthy. But now

03:15you have choices. And because you have choices, you don't really have to worry about mortgage rates

03:19coming down to 6% and home prices. No. So that was the problem with that. We had 2 million more

03:25existing home sales with lowest inventory ever. But with more choices, price growth slows down.

03:32Days on markets grow. People, buyers now are part of the mix. That needed to happen. So it was more

03:38about the price growth story and the choices than, you know, there are no homes to buy. And just that's,

03:45it's a very confusing topic, but people always ask me, they're like, how did we have so many home sales

03:51when there was no as well? It's the buyer seller transaction models have changed from what we used

03:55to be, you know, 10, 15, 20, 30, 40 years ago. So interesting. Okay. I know who, what you would

04:02say is the hero of the housing market for 2025. Yes. Yes. Mortgage spreads they're due right now.

04:09You know, we, the weekend tracker showed spreads at 2.06%. That's 26 basis points away now. I think

04:18that to me is like, I think so many people were shocked, you know, because they, they hear mortgage

04:24spreads and they were always told that mortgage spreads could never go down unless the federal

04:28reserve buys mortgage backed securities. And they have so much to the upside. I mean, stories and

04:34countless times over the last three years, people said spreads are going to get to four or five,

04:37six, like they were in the early 1980s with inflation. I was like, that's kind of not how

04:42it works. But in any case, now that we're here, the 10 year yield really hasn't broken under 4%

04:50and had any kind of duration there for a very long period of time. But because the spreads are better,

04:55mortgage rates got near 6%. We would not have that duration of rates under 6.64 down towards six,

05:02if the spreads didn't get a better. And in fact, it's actually currently right now,

05:07better than even my peak improvement forecast. So that's why the spreads are, and you know,

05:13how we, we talk about it so much and we bring it up on the neuro tour and at our events,

05:17but now I think people could understand, you know, it's so much better for the housing market

05:22where we're near six and not above seven. And, you know, we've had, we've had two economic cycles

05:28where you spreads actually get lower going into a recession. A lot of people think it's when you're in

05:33a recession, spreads get back. But when you're working from an elevated level, working lower,

05:38the spreads look kind of normal going back to all these economic cycles since 1970.

05:43Okay. Let's talk about home prices and where we're ending up versus your forecast,

05:48your 2025 forecast.

05:49Yes. 2025 was the second year of real home prices being negative. That means the growth rate of

05:56prices are basically below the rate of inflation, right? So that's a very kind of, you know,

06:04that's a negative trend data line. But last year, you know, I had 2.33%, but I lost it when mortgage

06:14rates get down towards six. I could see it in our data that pricing firmed up in the second half.

06:19This year, I would say the surprising thing for me is that I assumed that our prices would be

06:24negative year over year with our data going, you know, until October, September, November,

06:29because last year we're so strong. That didn't happen, but we're still kind of in that one to

06:342% range. So that worked out. And I always tell people, I never revise my forecast because we have

06:40a live tracking model every weekend. So we know exactly where it's going. So I'm most likely most of

06:47the time going to be not correctly 100%, but this year we might get close enough. And then again,

06:53that's just the slope of the curve, right? Active inventory is up, price cut percentage is up,

06:58rates stayed elevated enough. We haven't had the sub 6% mortgage market here. So it looks about right

07:05to me. You rarely get one of those years and pricing firming up in the last few months in some

07:13of the reports that we've seen, it's just a function of rates getting a little bit lower

07:17and, you know, demand picking up just a little bit, but you can see the slope of the curve on

07:22inventory where at one point we were 33% year over year growth. Now it's down to 13.69%. We've had a

07:30bigger drop than normal in the last week, but still roughly double digit year over year growth

07:35inventory going into 2026. Still a very positive story in my mind.

07:40Okay. Related to inventory, obviously new listings.

07:42New listings. You know, it's funny. This is such the dichotomy of all this economic talk

07:49on the internet and everything. When you don't have working models, you don't really know what

07:56the new listings data is. So we were talking about, you know, there's a lot of people that

08:02are talking about. It's worse than housing 2008. It's not even housing. It's worse than housing

08:062008. And I'll say that if it's worse than housing 2008, the new listings data would be worse than

08:12housing 2008. And even now, even this last week, I think the new listings data was 42,499.

08:20And then it's, I'm going to compare this back to 2009, 10 and 11. It was like 380,000, 340,000.

08:27I mean, this is the seasonal decline period. And I think 2010 and 11 were over 300,000 new listings.

08:35So weekly, weekly. So think about it for a second that you could take like seven weeks of what

08:41happened with the new listings data. And it wouldn't even match one week back then, because

08:46again, forced credit sellers, stressed credit sellers, sellers that weren't going to be buyers,

08:53people that did not want to even be in that position, but they were. And this is why the

08:57credit cycles. We always talk about that. This was the 100 year test, right? For those that believe

09:03in credit markets and all this stuff, we had 2006, seven, and eight versus 2023, 2024, and 25.

09:10You could not have two different periods of times in the history of America that were so different.

09:15And that was the 2008 model. And we have people talking about worse than 2008. And it was just like,

09:21but when you show these people, it really shocks people. I've never seen it. What was happening

09:28back then to what was happening now. So the new listings data growth really started to slow down

09:33after May. Even I think this, this last week was negative year over year, but still nothing like

09:392023. We got up to 80,000. I'm always looking for a normal 80 to 100,000 during the seasonal peak

09:46months. We got up to 83,000 and then it stopped growing. So again, such a different marketplace

09:51when sellers get to decide when they want to sell and buy another home. So it is positive that we

09:57were able to get to the lower end of a normal level, but I wasn't too happy with the fact that

10:02we didn't get any growth during the seasonal period. And then again, everyone has to have their

10:07own models and things that they track. That was one of the reasons why in mid June, I said, boy,

10:12the housing market shifting, right? So I think it's going to be three to six months before people

10:17figure it out. And so it's just, again, everybody has to have their own live working model, but here

10:22you can visually see what has happened. So it's not shocking to us that there's a possible chance

10:28that the year over year inventory percentage might even go to single digits with a few weeks left.

10:35I think that new listing number is always so interesting. It's one of the things you track

10:39every single week in the housing market tracker. And you always compare it to 2008 levels or that

10:47time period, because it's such, it's like, listen, if you're calling for the housing market to crash,

10:52new listings would have to be one of the first indicators.

10:56It would go vertical. That's what I always say, because when it goes vert, when you're working

10:59from the lowest levels ever, it's like the irony is that the last three years were the lowest levels

11:03in history that you think about again, a hundred years of data now, and we put our models,

11:08our faces, everything out there for everyone to read. And it worked, right? And that's mostly

11:13because of the 2005 bankruptcy reform laws and the 2010 qualified mortgage laws. But when you see

11:19stress, inventory goes vertical, right? A lot of people don't even know what new listings data is.

11:24They're like, oh, what's happening? But it can explain all the aggregate data of inventory going back

11:29to 1980 to 2025 to where we are right now. And again, 2005 active inventory, NAR was two and a half

11:38million. 2006 to eight, it went to 4 million. It had a vertical move higher. Then all of a sudden,

11:44all these foreclosures and bankers, the tombstone chart that you're going to put on my grave,

11:51we're going to say, here it is. What happened? 2005, six, seven, eight, all these foreclosures,

11:56everything. And then new listings data, man, those homes, they didn't have sellers even in them.

12:01There were foreclosed on. So it's such a unique cycle because you have over a hundred years of

12:08data. These were two of the biggest different cycles in history. And that's normally the case.

12:12You don't usually typically have a bubble in the same sector back to back because whatever was driving

12:16that period is typically never happens again.

12:20Okay. So, you know, you've outlined some of the places where your forecast very close to what's

12:27happening or what we're going to see by the end of the year. What surprised you this year?

12:30Well, two things that surprised me. I'm really surprised that the median sales price

12:36didn't have a negative data year over year, October, November, and September as well. I just

12:43naturally assumed that would be the case because the comps were going to be. I was hoping we would

12:50get at least a few weeks over 80,000. You know, that's another thing that surprised me because,

12:55you know, rates, the housing data was acting a little bit better even with elevated rates,

13:00but, you know, people just kind of gave up on that. Sellers are stingy. Sarah, you always say this,

13:06you know, so the new listings data, not getting back to normal and not having negative year over

13:11year data in our data lines in September, October, November were the two most surprising things to me

13:18that I'll take back from 2025.

13:20I think what continues to surprise me is just the level of volatility in like the news cycle in

13:28some, you know, in policies, if you think about, you know, Godzilla tariffs, as you've called them.

13:34And yet here we are, and it's been a pretty, it's been a pretty good, you know, not stable year

13:41considering all the other things that are going on.

13:43You know, when we look back in 2025 and we say, what are three things that the White House really

13:50needed to make this work? Number one, lower oil prices. Check. Number two, he needs a lower dollar

13:57if he, while he wants to export stuff. Check. Number three, you know, he needs lower rates. You

14:03know, they did, they, they threw everything you could possibly, you go, no property taxes,

14:0750 year mortgage, portable mortgages, capital gains, million. Oh, they threw all this stuff at

14:13this for housing, but the mortgage rates started to head a little bit lower and demand picked up a

14:17little bit toward the end of the year. But when we think about what happened at the labor market,

14:21it's kind of what we thought in 2018 and 19, the, the economy kind of slowed down. Businesses

14:28weren't sure what to do. Right. And that's the problem when government comes in and starts,

14:33you know, picking winners and losers or, or dictating stuff. And, you know, people just

14:37can't make choices. That's one aspect. Of course, there's the rate sensitive aspect where the builders,

14:44right? The builders aren't going to be building homes in any big fashion with, with their completed

14:48units. But even with the builders, their builder confidence data came out today. It picked up a little

14:53bit. So this is now the third time when rates fall that the builder's confidence does pick up. So

14:58it's a crazy year, but you know, we're almost there. The economy was kind of in stack, but the labor

15:05market really deteriorated. And, uh, um, we don't have jobless claims or anything breaking, but it's

15:11one of these things to where if, if there's some clarity with the tariffs and businesses have a little

15:19backdrop with, you know, expensing on manufacturing equipment and some, uh, tax review, whatever it is

15:25for 2026, I come with the, with the budget. You have a better backdrop for maybe businesses deciding

15:31to, uh, uh, do some hiring again. You know, we've been, um, we're having the housing economic summit

15:37February 10th. It's going to be amazing. You're our, uh, keynote speaker. We have a lot of great

15:42speakers getting all these economists in one place on the same day, and they're starting to write their

15:46forecasts. We're publishing those. It, 2026 looks like a more positive year. So you're a positive guy.

15:52We've talked about what you, you saw in 2025. What did you not like about 2026?

15:57You know what? Out of all the years in COVID, I love 2025 the most. I mean, it's, it's weird to say

16:06that, but I, out of everything, you know, the 10 year yield channeled, still stuck spreads, got better

16:12inventories up price growth, slow down. The labor data got weaker that, you know, you, you never want

16:19to see the economy is still intact. So you're taking this huge, huge shock into the system called

16:25Godzilla tariffs, right? And we're still kind of still there, you know? So I, I love 2026. I mean,

16:33I'm literally even, even more than 2020. And we wrote the COVID-19 recovery model on April 7th,

16:382020. We were like games on and we had a lot of fun with that. But this year, I think about balance

16:44and for the housing market and it got it. And with all the drama with the economy and everything

16:50else, we still kind of intact. So we kind of control our own fate on this. So I think, you know,

16:57I don't really hate anything much on 20. Now, if prices grew above 4.6% and inventory didn't get the

17:06growth it did, I would be less, less happy about this year, but kind of everything, everything

17:12worked, you know, to, to, to the degree. And just for me, for somebody that just wanted to see balance

17:19back in 2021 and 2022, you know, how can you not be happy with this? You know, that's, that's the

17:24thing. I mean, the downside really is what we talked about one year ago, that the builders are going to

17:28have a supply and demand equilibrium problem and housing permits have been pretty low for all year.

17:34We're finally going to get some housing starts reports, but, you know, lower rates will help

17:38that out. And then hopefully we can get permits going again. So kind of everything stayed intact.

17:43Everything looks, look, look right. What it did, considering we had Godzilla tariffs, a huge shock.

17:48Nobody, nobody thought we'd have Godzilla tariffs. We thought we go back and forth, back and forth,

17:51back into smaller things, but we went just straight, you know, into destroying cities with Godzilla's

17:57fire breath, but now it's all right. It's all right. Okay. So I have been hounding you. I keep going,

18:03when are you going to write your 2026 forecast? This is our wrap up of 2025 and you have pushed

18:09that out. It will be at the very end of the year. And we are doing an end of the year podcast about

18:13it. I always wait till the end of the year. I mean, I just, I still, to this day, cannot

18:18understand how some people do their forecasts, like in October, November, like what so much could

18:24happen, especially we could get the tariffs removed, you know, uh, uh, any day now. So to me,

18:29it says, I work everything off the 10 year old channel and spreads and everything and how housing

18:33demand works. And we slope of the curves that I always wait till the end of the year. So I could

18:37forecast everything. And remember we do many variable assets going into the year, right? So

18:44we track them, right? This isn't one of these, hi, how are you doing? I'll see you next quarter.

18:4924 seven live. We have four podcasts. Now we have a weekend tracker for everybody. Anybody who follows

18:56me on Instagram now, by the way, for all the stranger fans things, you know, I think that's

19:00up to 12 million now, you know, um, crazy. Yeah. We, we, we, we, we bring it so we can teach this,

19:06right? I'm a teacher. My job is to teach economics and this is the way to do it. And, uh, uh, I love

19:12the forecast, right? You know, you know, when you're brave enough to put your name and face on

19:16something, and then you have a live tracking model that you show to everyone 24 seven, you never

19:21like, Oh boy, homie, you are ready to play ball, man. You are ready to play ball 24 seven. That's

19:26what I know who the real ball players are at. Well, and I will say, um, on the tracker, you always put,

19:32you know, on my 2025 forecast, this is what I said. And then, and then you, uh, you know, you,

19:37you tell where it is, where conditions are right then. So it's very obvious to people.

19:42One of my favorite movies, gangs in New York, right?

19:46You and gangs in New York, man. That movie, that's, that's too, too, uh, you like it too much.

19:51But there's a, there's a saying in that blood stays on the blade. We never look away,

19:55right? We never look away. Blood stays on the blade. We caught our forecast. We go in there,

19:59we fight every single day. We bring the models and everything, but we never look at, we never

20:02want to be that person that doesn't forecast. That doesn't show their face. That doesn't have

20:07a live working models. We'd never want to be that blood stays on the blade. We never look away.

20:11Well, we are the beneficiaries of that. So thank you so much, Logan. Thanks for being on today.

20:17Pleasure.

20:21Pleasure.

20:23Pleasure.

20:24Pleasure.

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