Positive housing demand and what to expect from Fed week

HousingWire

On today’s episode, Editor in Chief Sarah Wheeler talks with Lead Analyst Logan Mohtashami about housing demand and what to expect for Fed week.   Related to this episode:   Lower mortgage rates boosting demand early in 2026  https://www.housingwire.com/articles/mortgage-rates-housing-demand-2026/  HousingWire | YouTube⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠  https://www.youtube.com/channel/UCXDD_3y3LvU60vac7eki-6Q  More info about HousingWire  https://lnk.bio/housingwire   To learn more about Trust & Will visit trustandwill.com   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.

Transcript

00:00Welcome, everyone. My guest today is lead analyst Logan Motoshami to talk about housing demand as

00:15we gear up for the spring housing market and what to expect for this Fed Week. First, I want to

00:21thank our sponsor, Trust & Will, for making this episode possible. Logan, welcome back to the

00:26podcast. It is wonderful to be here after another crazy weekend of headlines and drama and it's Fed

00:34Week. On top of everything else, the 24 theme of 2026 still continues. I agree. Okay, well, let's

00:44start with the tracker because the data we got this weekend, I feel like, presents us with a

00:49continuing picture of maybe a better, more stable spring home buying market. So what was your

00:55takeaway? What's the biggest takeaway from the tracker this weekend? This is the best start of

01:03the year that we've had in many years. In fact, the last time we started this good early in the year

01:10was, you know, 2023 had mortgage rates getting down to 5.99%, but active inventory was not

01:19that high back then and affordability was still stretched. Here, it's a much different backdrop.

01:28Now that we've passed what we saw in the last two weeks of Christmas, the first week of January,

01:35so the January existing home sales report is going to get hit by that a little bit. But going out

01:40to March and April for the February-March data, pending weekly sales or at multi-year highs,

01:48purchase application data is at multi-year highs back to levels to where we somewhat in the lower

01:54end range of the previous decade. We had 18% year-over-year growth in that data line and we're

02:00not, we no longer have very low comps, but we're seeing positive weeklies and year-over-year data

02:07if that just continues. Purchase application data can have these waves in their years that were

02:17increased similar to what we saw last year, but the weekly pending home sales data looks promising.

02:22And again, we had a lot of drama last week, Japan, Federal Reserve, statements,

02:31Davos, all these things, but the volatility in mortgage rates wasn't much. It's like 6.07% to 6.21%.

02:39We ended it off at 6.19%. So much different than, let's say, a year ago or two years ago or three

02:47years ago, where rates are already above 7% and housing data doesn't grow when we're that high

02:57at rates. But now it's toward the end of January and mortgage spreads got as close to as normal as

03:06you're going to see in the data the last few years. And it's just a healthier backdrop there. So again,

03:13duration is what matters with the data line. So a good start. Of course, we're going to get hit with

03:19a lot of weather stuff. There's a lot of parts of the country that just aren't, can't even get out of

03:23their house. So things just, things don't work in those environments. We might have another storm,

03:29of course, coming up soon. So when you adjust, when you take all the adjustments out eventually

03:35when, you know, weather gets better, pretty good considering everything that's, that's, that we've

03:42dealt with that this is as, as good as a start as you could possibly hope for with, of course,

03:48the affordability strains that, that everyone is aware of, but pretty good two-week tracker there

03:55to start the year off. I love it. And I, I'm glad that you said that, like, you know, okay, we're

04:01going to starting on Friday, um, different parts of the country got hit and it was such a wide swath.

04:06I mean, like you said, lots of people, even on our team, we're distributed all over the country.

04:11Lots of people, lots of different States, you know, struggling, you know, they don't have power

04:14or they have power, but they can't get out or they don't have internet or whatever. And, you know,

04:19that's just a microcosm of what's happening, uh, across the board. So we would expect our weekly data

04:25to, to, to be impacted pretty heavily, um, this week, you know, starting on Friday.

04:31Yeah. I mean, generally speaking, if you can't get out of your house, you're probably not listing

04:36a home to sell. So, um, and this happens from time to time. This is why I always say we're always

04:43mindful of holidays, but holidays and then a huge, uh, storm, you know, where hundreds of thousands of

04:51planes are canceled and, you know, people are staying in. So things just don't work out,

04:56but eventually when weather gets better, it all works itself out in the end, but so far it's a

05:03good start. You know, um, the new listings data looks healthy this year. I'm hoping we get above

05:0880,000 and then have some growth on that. Again, most sellers are home buyers. That's what you want

05:13to see. Um, the price cut percentages are coming down to where we, it might be flat soon on a year

05:21over year basis, uh, uh, out there, uh, active inventory, a single digit growth. Now again,

05:27when did the housing market shift, Sarah Wheeler? Mid June of 2025. Mid June. And from mid June,

05:34the sales curve grew of 420,000. And then we got Christmas, New Year's. And then once that's done,

05:42it's still continued because rates are near 6%. So, uh, uh, pause, positive tracker on, on,

05:49on that light, uh, probably not the most sexiest doom porn store you could probably find out there.

05:55But I think now when, when people visually see the tracker too, they could kind of see,

06:00you know, uh, what, what, what's it showing out there. So, uh, a good start on that front.

06:06A good start. And I think, uh, makes everyone in our, uh, profession much happier than any doom porn

06:12site could do. I wanted to ask you about those price cut percentages. So you always make the point

06:17in the tracker that at all the time, continually, traditionally about one third of homes, they take

06:24a price cut before they sell. And that's mostly because sellers, you know, they're just trying to

06:29see like, what can they get? And, uh, so at some point they're going to, they're going to cut. So

06:33that's like 33%, right. Are going to take a price, uh, a price cut last year, it rose above 40%,

06:40I believe. And now like right now, uh, the last tracker, I think it was 33.6 or something like

06:46that. Very, very normal. Is there a seasonality in the price cut percentage data?

06:52Yes. Yes. You usually see this, uh, seasonality of the price cut percentage fall toward the end of

06:58the year and get all the way down to a low level. And then our slope of the curve, you start to see

07:04active inventory rise and then the price cut percentage rise with it. And now that we've had

07:10multiple years of inventory growing and price cut percentages going, what's happened is price

07:16growth has cooled down on a national basis. Uh, but this is what the start of the year is now

07:22getting to the point where if, if things continue this way, we might have some negative year over

07:28year data on the price cut percentages. But last year was last year created very hard comps, uh,

07:36on inventory and price cut percentages. So, uh, we have to be mindful of that, but because rates are

07:42lower and demand has picked up our weekly pending, uh, uh, sales data are at multi-years highs. The

07:47price cut percentage is slowing down on a year over year basis, still growing, but if things continue,

07:53it could be flat and then we'll see what happens, uh, toward the spring season. But again,

07:58it's, it's considering everything we've had to deal with and, you know, rates still being above

08:056%, uh, uh, it's as good as, it's as good as start because the curve of the data started to get better

08:11mid-June and that has continued. And that's what you want to see. You want to see duration with,

08:15uh, positive housing data, because then you start to get a flow. You get sellers that are buyers,

08:21that seller gets somebody to buy their house. That person buys another house. And then the whole

08:24transaction model of housing, uh, functions a lot better in that environment.

08:29If you guys are listeners and, and, and, uh, you don't know where to find the housing market

08:33tracker, we've made it really easy on housingwire.com under the news tab. It's right there,

08:37housing market tracker. And the thing that I love about looking at that story visually,

08:41we can talk about it, but the charts make a huge difference. You know, I'm, I'm not so much a chart

08:46person. You are the chart daddy for a reason. Um, I'm not so much charts, but boy, this week and the

08:51last week to the purchase application chart and, uh, and the pending home sales, I feel like there's

08:57some real value in seeing the actual charts. Yes. Basically the charts kind of speak for

09:02themselves, right? When the slope of the curve is positive, when it's negative, it's negative,

09:06but, uh, it's always a positive thing. At least for me, when, when price growth cools down,

09:11affordability gets a little bit better sales pick up. All right. Uh, even, even though the growth

09:16rate of inventory went from 33% now down to a single digits, it's still a much healthier environment in

09:23this. And now that rates are lower and less volatility there, you get a functioning housing

09:29market. That's what you want to see. That is what we want to see. Okay. Let's take a larger look and

09:34let's talk about FedWeek. Yeah. Interesting. Interesting FedWeek because, uh, Rick Reader's name

09:41is, uh, uh, uh, uh, coming out more, which I find it hilarious that the BlackRock guy might be the head

09:48of the Fed and then it just, the conspiracy theories are just going to go out to overdrive my Lord. Um,

09:56in any case, uh, of course, nobody thinks there's going to be a move, uh, either way, but, uh, you know,

10:04whatever, whatever you have the Q and A's, it gives you a clue about what, what, what, um,

10:12what the Fed might be thinking or, or the members, right? So we, we have people that see the labor

10:17data is not as strong as they want, but then we have people that say, Hey, look at GDP is growing

10:21at 5%, you know, consumption is good. And always remember the history of economic cycles when the

10:28economy is really, you know, retracting industrial production falls, real retail sales falls,

10:34wage growth slows down, uh, domestic investment slows down consumptions. So we're not there in

10:41that, in the data pool. So it'd be interesting to see the backdrop between the Hawks and the Doves now,

10:46because in a few months, Powell's gone, uh, uh, and somebody else is going to take the helm. So,

10:52you know, that side of the equation that whoever it is, is probably going to be more dovish than Powell,

10:58but then you have the leftover camp, you know, between the Hawks and Doves of what to do. And

11:02really, I mean, realistically, you only have like two or three, maybe rate cuts left in this cycle,

11:08uh, unless the labor market breaks. So a lot of things are being priced in, uh, uh, there. So I

11:15think much different backdrop for this Fed meeting, cause we know nothing's going to happen, but we're,

11:21we're laying the crumbs. Why do we lay crumbs? Sarah Wheeler. I know you hate this. Mother economics

11:28is a serial killer and she wants to be caught, right? She wants to be caught. So they leave

11:33crumbs. So the Fed, they'll, this meeting will leave crumbs between the Hawks and the Doves and

11:38where they think, uh, uh, things are going. And there's just so much noise out there. I mean,

11:43there's so much noise, uh, around the world that, uh, it's easy to lose focus, but, uh, keep an eye on

11:53the Hawks versus Dove and how that goes. And then eventually when Powell gets replaced, uh, we'll

11:58have this whole new discussion about what this Fed chairman believes in. And, uh, uh, uh, interesting

12:05times, 2026, just a continuation of the post COVID nothing is normal. There's drama 24 seven somewhere.

12:14So this is going to be interesting when the Supreme court decides to rule to make, um, to make public

12:21their ruling on the Lisa cook firing that, that Trump wanted to do and has pushed all the way to

12:27the Supreme court, because that's going to be that, that could move markets a little bit, right? Like,

12:31I feel like that there would be a market reaction to that. I mean, a part of me thinks that the Rick

12:39reader of the, uh, uh, fed chair is maybe the white house realizes they can't fire a bunch of people

12:47and, uh, someone like a Kevin Walsh or Hassett might not be as effective, uh, in there. Uh, I mean,

12:55Christopher Waller would be an effective trying to get the troops all to work together. But, uh, um,

13:02if, if the white house believes they can't fire fed governors, then a Rick, uh, Rick reader might

13:09be a little bit more of a suitable choice in this environment to go out, uh, in the future. But

13:14again, it's a black rock guy. Oh, I just can't wait. Look at this, you know? So, uh, in any case,

13:21the 10 year yield today, even with all the noise and, and just, just for everyone, I know a lot of

13:26people, there's all this talk about Japan and the, the, the, the U S governments might intervene.

13:31Why, why so many people follow the Japanese, uh, market, their currency and their bond yields. A lot

13:37of people say that if Japan is going to have to defend its currency, then they have to sell U S

13:42treasuries. And, you know, if you look at the data, there is some relationship there, but I think

13:47that's, uh, that's a lot of the recent talk. So a lot to go with, with the government side of the

13:52federal reserve this week, but, um, it might be that you, you, we keep all the fed governors for

14:002026 and then the economic data, which it should be the economic data runs a show. Uh, that'll make it

14:07maybe a little bit less drama for, for this year with, uh, the federal reserve. If they're just

14:12going to be working off of economic data and you have a less hawkish, uh, uh, fed fed chairman.

14:18Okay. So when you're looking at the Japanese, what's happening in the Japanese market, what do

14:22you think? I mean, a lot has gone on with the Japanese economy. I mean, their stock market is

14:29rebound, which a lot of people never thought can happen. They have inflation there. They're managing

14:33their economy, but, uh, they had a very, very, very dramatic move in their bond market. So

14:39again, whenever they have to defend their currency, when it gets too weak, uh, these kinds of events

14:46happen. So, uh, just talking about possible intervention, uh, out there, just calm the

14:52markets down a little bit. And we're talking about the 10 year yield, just getting like the four 30,

14:56four 31 off of that Davos, Japan weekend. So, uh, we'll see if there's any intervention out there,

15:03but again, these are global bond markets. I think we, we start to get into, uh, you know,

15:08I'm just trying to teach people the 10 year yield and 30 year mortgage rate flow dance with the

15:12spreads, boy, you know, talking about the yen and the U S and that's some, sometimes too much

15:19information is too much information, but, uh, uh, that's what a lot, when a lot of people see Japan

15:24and then they say, well, if the U S is going to help, then the 10 year yield should calm down. This is

15:28what they're talking about. But again, we're, we're kind of in the low end of the range that

15:34we've been in over the last year. And, uh, fed policy is much less strict now, and we're going

15:40to have a different fed governor. So, uh, the 20, 26 will be different in that light.

15:45Okay. Well, we will, we will look to you, Logan, to let us know when we need to think about the

15:50Japanese market or what, or that, what the effect is going to have on the 10 year. Okay. That's,

15:54that's your job. Oh yeah. I've done video charts on my Instagram just because, you know,

15:59visually showing this to people, uh, it makes it a little bit easier, but for now, um, focus on the

16:05economic data. We'll get a new fit chairman. Uh, so far in 20, 26 housing data looks, uh, a little

16:12bit better than what we've seen in the last few years. And just remember when rates get down just

16:17to 6% and just stay there. It's a much different backdrop than seven and a half and 8% and seven, but

16:23we never had that sharp reversal, right? Because the labor data didn't warrant it. November and

16:30December of 2024, we had 260,000 plus jobs created. 10 year yield went up as, as it should

16:36have, but fed policy is, is less strict. Now we get a new fed chairman mortgage-backed securities

16:42are being purchased. The spreads were already near, uh, normal levels before the year starts. So

16:47less volatility positive for housing. As always appreciate you.

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