Existing home sales rise as mortgage rates stay near 6%

HousingWire

On today’s episode, Editor in Chief Sarah Wheeler talks with Lead Analyst Logan Mohtashami about existing home sales and what’s happening with oil prices and mortgage rates.   Related to this episode:   Existing-home sales up in February, market faces spring challenges  https://www.housingwire.com/articles/existing-home-sales-up-in-february-market-faces-spring-challenges/  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 th

Transcript

00:09Welcome, everyone. My guest today is lead analyst Logan Motoshami to talk about existing home sales

00:15and what's happening with oil prices and mortgage rates. First, I want to thank our sponsor,

00:20Trust & Will, for making this episode possible. Logan, welcome back to the podcast.

00:25It is wonderful to be here, Sarah. Again, it's only Tuesday. We still have a few more days left,

00:33but this conflict still goes on and some people are just like, mortgage rates fell again. They're

00:40like, what's going on here? So a very interesting week so far. Yeah. So, okay. I want to get into

00:46existing home sales, but before we do that, I do want to talk about what happened between

00:50the last time we did a podcast and this time. So just in that 24 hour period, right? Because at

00:55the

00:55time, oil was shooting up higher. So tell us what happened in between Monday and Tuesday that brought

01:01us to where we are now. Trump made a statement that the war will like end soon or, you know,

01:08something to that nature. And then he kind of said, no, war is not going to end, you know? So

01:11the marketplace took it as, you know, okay, let's, let's calm the oil markets down a little bit.

01:20And that happened toward the end of the trading day. So the 10 year yield fell a little bit with

01:26that. If you actually like try to pair trade it, there are some similarities to what oil prices and

01:31a 10 year yield do it, except the 10 year yields, very low volatility and oil prices are really

01:36escalating. You know, as of this morning, oil was, you know, down to like 84, 83 dollars last time I

01:43checked. Mortgage rates fell again this morning, right? The 10 year yield is at 411, 410 out there.

01:50So we're not that far from 6%. But again, a lot of still a lot of war talk, a lot

01:58of missiles,

01:58a lot of drones. It's still progressing forward. It is one interesting, they, you know, they,

02:05they mentioned about plans to, you know, help ships get through with the military. But,

02:11you know, somebody asked me, why didn't they think of that already? There's a reason why they

02:16haven't done it. Because what if you can't protect the ships? You know, what if they shoot 500 drones

02:22and it gets through? If, if any ship is busted in that very shallow water, it becomes a real big

02:29problem for a lot of people. So I think that's why maybe you haven't had, you know,

02:35Navy, you know, Navy ships help things go through. So there's still a lot of question marks. But

02:44clearly, Trump's statements brought oil prices down. And then, you know, there's statements left

02:50and right that don't make sense. Like, you know, it's not going to end, it's going to end and run,

02:53you know, so we're just dealing with that now. Just remember that every day that goes on,

02:58when things aren't working normal, it just gets harder and longer to get supply up and going again.

03:05And production is being slowed down and stopped in areas. So it just becomes more of an issue

03:11every day that goes on without everything getting back to normal.

03:14What was it? Was it sometime right after COVID, where we had that shipping container ship that

03:19that big ship that got stuck?

03:21That got stuck. Yeah.

03:22And it like backed up everything for two weeks or something. We don't want that. We do not want

03:26that.

03:27Yeah, you don't want the Suez Canal, like repeat out there. So the Strait of Hormuz is very shallow

03:33water. So you do not want like a US air carrier, like, you know, busted in there. So but again,

03:43we're going, we're kind of going into the third week, and we'll take it one day at a time,

03:48one headline at a time. But as of now, there, I mean, who knows what's happening in the background?

03:53Because, you know, you maybe things are being talked about while there's escalating talk, but

03:59we're still not at full capacity of getting ships through. And, you know, you still have countries

04:05reducing their production.

04:07So good news that the that mortgage rates are going lower with this news, right? I mean, like,

04:12this is this is good, because we are heading into spring, the last thing we need

04:15is some escalation in rates to, you know, the high sixes or even sevens.

04:20Well, it's really hard to get above 7% now because the spreads are so good. So you really

04:26need like an acceleration of the labor market. And of course, that that drops Friday really kind of

04:33set the precedent about keeping I mean, we still haven't closed above 415 on the 10 year yield.

04:39And then, you know, I would imagine things would be different if the jobs data was positive.

04:45But for now, mortgage rates actually fell again today, you know, the 10 year yield was at 411. So

04:51again, we just have a healthier backdrop for housing. And kind of like, when you think about it with this,

04:58this chaotic madness world that we're in, you know, the housing market is just very stable,

05:05boring and positive. So are rates. And it's been so long since we've had any of that,

05:12that I just I don't know how people know how to react to something like this,

05:18going out.

05:19We will figure it out. Okay. Talking about that backdrop, that environment,

05:23let's talk about existing home sales that we got today.

05:25So I kind of told everyone on social media, like, just y'all got to just discount these numbers,

05:30you know, because it was it was it really was a big beat of estimates. And what we've talked about

05:36here a lot, the NARs pending home sales data, the monthly that can be a bit wild on the up

05:43and

05:43downside. And I think a lot of people misread that both positive or negative. And what what happened

05:51was January's report was a big miss. We've talked about it many times this thing was going to fall

05:57just because, you know, we have holidays and everything. And not a lot of people just are

06:01trained to know that to be the case. So people made this huge deal about the sales numbers be

06:08this big month about the drop. And there's like a part of me that just wanted to go back and

06:12retweet

06:13everyone's bad take. But then I'm like, no. In any case, they actually revised the January numbers up

06:20to kind of where I thought they would be. And if you look at our tracker data, our tracker data

06:26has

06:26actually worked better than the NARs pending home sales data. Because, you know, in December,

06:32where we stopped writing the tracker just said this, the holidays is going to mess everything up. So I

06:36don't I don't even want to explain to you why are the pending home sales is going to decline now

06:40because it's the holidays and we talk about every single year, you and I. So we didn't even write it

06:45this year. But that tracked accordingly to the existing home sales falling month to month,

06:50they made some revisions positive to January. So but the pending home sales of the NAR data was

06:56was negative again. So there was this estimates for sales to fall and then, you know, kind of went

07:03up 200,000 on a month to month basis. You all got to just ignore this stuff. Right. It's just

07:08holidays

07:09and winter. And just remember, just follow the tracker data. Subscribe to housing wire, get the

07:14tracker data and just look at the forwards because there's multiple data line sets that we use. And the

07:20issue I have is probably the NARs pending home sale will be positive the next one. Is that going to

07:25correlate to existing home sales not being positive? So there's a little bit of tricky

07:29things with how how the NAR reports sometimes. But just remember, since mid-June, the housing

07:37dynamic shifted and that is still intact because rates are near six percent. And because inventory

07:45is up, the inventory growth rate is cooling. It might be we're going to have some negative prints

07:48probably. But the price growth is cooling down. Wages are still rising. Rates are lower. It's a

07:55very healthy, boring, normal housing market, which is just despite everything, despite everything else,

08:02all the chaos around the world. I mean, we had a lot of crazy headlines is, you know, so far

08:07in 2020.

08:08But because the spreads are better, the volatility compresses. And that was the main factor

08:14in the last few years, which kind of, you know, tilted the housing market differently. We get

08:19rates down to six. We couldn't hold it for very long. And it shoots up. It just shoots up above

08:25seven percent. And that's that's not a workable environment here. It's a very workable environment,

08:31but inventory is higher now. So we don't have to worry about like a 2023 housing market where

08:36inventory is just simply not big enough. And there's just too many people chasing home prices

08:40ended up being up six percent that year, even though sales were historically low.

08:45Now it's just a much healthier housing market. I mean, for someone like me, who's been professing

08:49this for some time, I was like, I love it. This is great. A lot of that is because the

08:54inventory

08:54growth we have last year. Now, we don't have that same type of year over year growth. But

09:01the interesting aspect is, you know, how can we actually hold how much longer can we hold six and a

09:09quarter to under? Because it's March now. Right. And we're you know, we're starting to get to that

09:15spring and summer. So if the volatility just stays here, it's it's it's going to be a fine year.

09:20You know, you know, there's no prices escalating out of control. Inventory is not collapsing or

09:27going higher in any big fashion. It is just a very healthy, lovable Logan's chart daddy doctrines,

09:35buyers versus sellers. People have time to make choices. A very healthy housing market.

09:42We are here for it. That's what we all need. Any other economic data that you're watching this week?

09:47I know purchase apps, of course. You know, you know, with with with, you know, we have inflation.

09:53We have we have we actually have a lot of economic reports this week. None of it matters until the

09:59Iran situation gets resolved, because the longer this goes, the more problematic it can be going out

10:07in the future. The housing market is somewhat shielded here. But just in general economics,

10:13when when gas prices go up, diesel, I mean, I think already the farmers are, you know, are asking for

10:20help because fertilizer costs we talked about fertilizer costs last week, you know, stuff like

10:24that is starting to and that can, you know, that can impact the economy going out. So we have to

10:29be

10:29a little bit mindful of that. But to me, it's like, you know, the longer this goes and hypothetically,

10:36let's say inflation does pick up at the 10 year yield goes lower than that to me is like the

10:40bond

10:40market is saying, OK, this is demand destruction. And you don't usually have rates start to go up

10:47aggressively out there unless the Federal Reserve starts to say forward guidance that, hey, listen,

10:52we need to start hiking rates or something like that. So there's a lot of economic data this week,

10:57but it's also backward looking compared to the huge event that we have right now that's impacting the

11:04entire world. This isn't just the US or Iran. It's the entire world out here. And it's it's hard to

11:12get

11:12things moving again, you know, until you get full clarity on what's going to happen. And this is why

11:17it's a very tricky, tricky situation out here because it's like it's Mad Max, man. Energy runs

11:25the world. Right. So, you know, you need things flowing again. So I'm just hoping that, you know,

11:32there isn't like a crazy mistake made by both sides that could just make escalation even worse.

11:40So, again, if it's past March 21st that we don't have a resolution or some kind of,

11:45you know, talk down on this, it'll start seeping in the forward looking data. But we've got inflation

11:52coming up. We have the small business confidence index came out today there. You know, sales are

11:59getting weaker for some some of the small businesses. There's stuff out there still, but this is just such

12:03a huge event that has implications going out. We just need to solve that and then push forward and

12:09get back to the normal data. OK, so, Logan, we have a Fed meeting next week. Kind of kind of

12:14hard to

12:14it's kind of gotten lost in the shuffle right now. Also, nobody expects anything big to happen at that

12:19meeting, correct? No. Some people might have said maybe if there was no Iran conflict and we had that

12:26negative jobs report, maybe the Fed would have said something. But I think the Fed would just basically

12:32say we're monitoring the situation and inflation expectations are what we're kind of keeping an

12:38eye on. But the longer this goes, we'll see if it gets sticky. See, there's so many supply shocks that

12:45we've had in the last few years that the Federal Reserve just I mean, they can't kind of not just

12:50kind of ignore it anymore because it might take some time to get things up and going again. That's the

12:55one thing with COVID. That's the one thing with COVID. You know, global pandemics, very inflationary.

13:01Then the disinflation happens. Well, that inflationary disinflation took longer than what the Fed was

13:06hoping for. But, you know, I think that's that they'll be a little bit maybe careful because, you know,

13:13we're coming toward the end of Powell's tenure. But I'm sure they'll say things. They're monitoring the

13:21Middle East situation. But also they want to be sure that, you know, everything gets back online and working

13:28again. And that's the thing, you know, you know, we it took forever to get stuff done before during

13:35COVID. And that, in a sense, you can't get things moving. And the global pandemics, you know, for

13:41hundreds of years ago were really bad, you know, but now you have a global economy and you just you

13:46can't, you know, have things working as much. So I think they'll talk about it. But of course, I don't

13:51think anybody's talking about cutting rates or hiking rates. It will be interesting to see the

13:56the Federal Reserve's committee on what they think is going to happen because nobody had a negative

14:0392,000 jobs report. Right. You know, and the Beth Hammocks, the Lori Logans, the Austin Goolsby's,

14:12the these people who say the labor market is fine, it's stable. It's, you know, it'll be interesting

14:17to see what they think, because if you have a few months where they're negative and the unemployment rate

14:23is increasing and jobless claims start to pick up, what do they do? Because it's really the hawks

14:29that are there's there's enough hawks out there to prevent rate cuts from happening. But do they

14:34change their language because of that report? Or they just say it's a one off and it's okay. But

14:40we have to be mindful here. We have not created jobs really kind of for a year now. And if

14:46it really

14:46wasn't for health care and social services, we'd have a lot more decline in jobs report. So I'll be

14:53curious to see what they think about that last jobs report, because that was not on anyone's

14:59radar for a job loss. Now, they'll probably fall back and say jobless claims are still low and

15:08the economy still growing. But now you have the shock of war. And we'll say it'll be interesting.

15:15It'll be an interesting Fed meeting for for different reasons this time.

15:19Well, and of course, Jerome Powell, his chairmanship coming to an end supposedly in May,

15:25but we we don't have a we don't have a new Kevin Warsh is like, don't don't don't put me

15:29up.

15:30Fine. Let's let me let me just kind of stay back here for a while until all this drama runs

15:35out.

15:35Who wants this job? I mean, have you noticed you haven't heard anything from Kevin

15:40at all? He's like hiding because I'm not saying a damn thing out here, you know, because I don't

15:45blame him at all. This is a crazy time to be saying anything about because the old Kevin Warsh would

15:50be

15:51very hawkish right now. You know, he would sound that he can't do that. He's Trump's boy. Now he's

15:57got to he's got to do what he says. So it'll it'll it'll be it'll be interesting. It's really interesting

16:03year. I mean, there's a lot of dynamics. And then there's like the housing markets like sales are

16:11rising a little bit. Price growth is really cool. Yeah. I mean, you cannot have asked for a better

16:16backdrop considering everything the housing market had to be dealing with. Like if home prices were

16:20up four or five, six percent, that's a different question. I wouldn't consider that healthy, but

16:25we still have inventory growth. It's not it's not a lot, but we're at elevated levels and mortgage rates

16:30are down to six. You know, we can we can do stuff there. So again, the existing home sales market

16:36is

16:36much different than the new home sales market. We had that conversation yesterday that the builders

16:41are still dealing with a lot of completed units for sale and they are not the march of dimes. So

16:46they sell homes as a commodity. So it's a much different you got to like separate those two

16:50things out there. But so so far so good on the housing side. And then we'll we'll take it from

16:56here. But it was good to see that some of the revisions for the NAR report, the January report

17:03came up to what what what I thought the data should be. And then the December report was revised a

17:08little

17:08bit lower. That's kind of where I'm looking for actually for 2026 home sales to be at. But all good

17:15in that front. But there's just President Logan, Palmer, Jack Bauer, Chloe, all these characters out

17:22here. And we're just dealing with a lot of a lot of noise, a lot of crazy, not noise, but

17:29just a lot

17:30of crazy activities. It's like a whirlwind. Right. You know, out here so much change between when we

17:36talked, which was at noon on Monday and then like by close of day yesterday. So it's just it's it's

17:42a

17:42crazy time. So they don't know. They don't like a preacher say to you, you're you're like doing the

17:47the Lord's work trying to manage me out here. You know, I don't think it was a preacher. It was

17:52just

17:52a person. But yeah, I was like, yeah, Logan's the whirlwind, man. He's chaos. So so you've done a

17:58pretty good job of containing me. I always like joke with Sarah that if Sarah can't make it, I'll do

18:03this show live by myself. And Sarah, no matter what, will never, ever let me have an event by myself

18:11ever again. We that happened one time. And she's like, you're not doing that anymore. You know,

18:16I am always the bad guy in these stories, but that's OK. It is my job to be the bad

18:20guy sometimes.

18:21So but Logan, I really do appreciate you. I appreciate the the article you wrote up yesterday

18:26about how oil prices relate to mortgage rates. I thought that was super smart, had some great points.

18:32And I appreciate you being on the podcast. So thanks again.

18:35Ten year yield still hasn't closed above four or 15. I got that can't stay like that forever.

18:41It's got to pick a side. Either you go lower because you don't think economic growth is or you

18:45think inflation and economic growth will be fine. So it's it's been a nice tug of war for a while

18:50now.

18:51All right. Well, we will talk again soon. Thank you.

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