How is the housing market holding up amid global shocks?

HousingWire

On today’s episode, Editor in Chief Sarah Wheeler talks with Lead Analyst Logan Mohtashami about how the housing market is holding up amid the economic pressures of the war with Iran.   Related to this episode:   How is the housing market weathering war-time economics?  https://www.housingwire.com/articles/how-is-the-housing-market-weathering-war-time-economics/  HousingWire | YouTube⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠  https://www.youtube.com/channel/UCXDD_3y3LvU60vac7eki-6Q  More info about HousingWire  https://lnk.bio/housingwire   To learn more about Total Expert visit totatlexpert.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 Wheele

Transcript

00:09Welcome, everyone. My guest today is lead analyst Logan Motoshami to talk about how the housing

00:14market is holding up amid all this news about the war, oil prices, and more. Before we dive in,

00:21I want to thank our sponsor, Total Expert, for making this episode possible. Logan,

00:26welcome back to the podcast. It is wonderful to be here. We survived another weekend,

00:33Easter weekend. It's Easter day, actually, today. As we're talking on Monday morning,

00:38the president is giving a live speech, and it's already moved the markets a little bit. Oil

00:43prices are up a few dollars. After that, of course, we have this deadline that's coming up tomorrow.

00:49So the ceasefire offer doesn't look like it was accepted by Iran. So this is a lot going on. And

00:57the whole theme of 24 was going to be the story of the year. And Jack Bauer, Madam President, Chloe,

01:05everyone, Palmer, you know, the whole crew. And we're in April, and it's still going on.

01:11We had no idea how much like 24 this year was going to be. You called it from an economic

01:16standpoint,

01:16but it's not just economics. If I could go back in time and take it back, I probably will,

01:21because this is like way too much drama out there. So I thought you did a great job this weekend

01:26when

01:26you looked at the tracker data, which is all of our weekly housing data. And you were like,

01:32how is housing holding up under this sort of wartime economics? Because lots of different factors.

01:38So let's talk about the tracker and what you found. What does the data say?

01:41Okay. So Sarah Wheeler, when did the housing market shift?

01:45It was June. It was mid-2025.

01:49Okay. So what we said back then and throughout this time is that it's going to take people six

01:54to nine months to figure out what's going on. So July, August, September, October, November,

01:59December, January, February, March. This is nine months now. We're going into April.

02:04Um, if you did not know there was a war, there was a snowstorm, there was AI disinflation and all

02:14these

02:15crazy headlines, private credit, there's all these things that are running around. It is a normal,

02:24boring year that has compressed volatility on a lot of things. And it's confusing people

02:32because people were told it is the most magnanimous amount of sellers ever. It is the lowest housing

02:41demand ever. It is the highest cancellation rates and a whole bunch of other things. And it is quite

02:49calm. And even in places like, you know, for example, San Francisco, the story over the weekend is

02:55some house got overbid by 400,000. San Francisco market, ignore, savagely unhealthy. Inventory is

03:03back to the low levels of COVID. AI money. So you want to take that away, just like throw it

03:09away.

03:09That's just not the national market. Of course, Florida's inventory is down year over year,

03:15noticeably with some, again, duration kick. It's been some time now. But again, Florida was working

03:21from an elevated level of inventory. So it can be declining on a year over year basis.

03:26You take the two coasts out of the equation. What do we have here? What did the tracker article

03:32try to showcase? Okay. A few points. Number one, the growth rate of inventory is now down to 4.67%.

03:39One of the things we've talked about when the forward-looking demand gets better,

03:44you know, inventory tends to slow down the growth-wise. So we ran into a, what we talked about for

03:49months

03:50now. We're going to run into the spring season hard comps. So last year, inventory was good. I mean,

03:55remember how much I was smiling last year? I was like, inventory is a really good thing that's

03:59happening. If you're looking for balance, this is it. Well, here, even though mortgage rates aren't

04:06sub-6%, the growth rate is slowing down to about 4.67%. So it's a normal spring slope. Slope of

04:13the

04:13curve, Wheeler. We love our slope of the curve. You do. So that looks like a normal year.

04:20Housing demand. If you take the snow variable out of the curve, hopefully by now, everyone

04:25realized to take the New Year's and Christmas holiday out of the equation also. You take the

04:31snow, it's pretty much been positive the entire year. Now, rates getting up from 5.99% to 6.64%.

04:40The growth rate of purchase application data has slowed. We went from 12% year-over-year growth

04:46to 5% year-over-year growth to now 1%. So that is a slowdown, right? Higher rates have impacted

04:52that.

04:53Nothing too dramatic, but it impacted that. Our weekly pending sales data for six weeks had positive

05:00year-over-year data. Even though it grew on a week-to-week basis, it's down slightly on a year

05:06-over-year

05:06basis. So we see some of a slowdown, but nothing too dramatic on that side. Price cut percentage

05:12is still, to me, at a very healthy level, but it's still down on a year-over-year basis. So

05:19it's kind of like a normal year. And I think maybe some people were anticipating

05:25that it's much more than that. And hopefully now with people who read, you can take the tracker data

05:32from mid-June, now that we have that nine months. And I think some people are realizing something is

05:38missing here. But if you just followed it, you follow the slope of the curve of economics. We've

05:44always done it, the 10-year yield, mortgage spreads, rates, pending sales, new listings, data,

05:51everything. We put them all together. You have an idea of what's happening because our data is so much

05:56ahead of everyone else's that it's like now people are just catching up. But we're already looking out

06:0330, 60, 90 days already. But now that we are in April, that whole nine month is over. And I

06:10think

06:10some people are just shocked that there's really not much going on. And in certain places where they

06:18thought maybe inventory would escalate in Florida is downed. I mean, it's really embarrassing for

06:24some people that were like, it's worse than 2008. Like the new kids on the blocks. It's not too,

06:30it's worse. Homies go to another dark side of the moon, man. But I always try to get people just

06:38to

06:38kind of read the data, let the numbers, right? Human beings are flawed by birth, right? With their

06:44ideological takes or agenda takes. Numbers. What, Sarah? Closest thing to the handwriting of God,

06:52you would say. They basically tell you the story. So follow the data, let the data be your guide

06:57out here. And again, because mortgage rates are under 6.64, it went to 6%. The demand curve got a

07:05little bit better. Six and a quarter and under is the sweet spot. So we're now elevated a little bit

07:10from that point. Mortgage spreads, even though they have gone from a low about 182 with our data lines

07:16up to 211, is still good enough to keep rates under six and a half. So there's a lot of

07:24things in that

07:24tracker, but it's designed to give you the whole kind of enchilada of what's going on. And again,

07:29if spreads weren't better, different story, right? You're over 7% in 2023, 2024, and you're

07:37basically near 7% in 2025, taking the worst level. So even though the spreads have gotten worse

07:42recently, they're still in a much better spot than where they were in the last three years.

07:46You know, I would tell our listeners, you can find the housing market tracker on the

07:50housingwire.com under the news tab. It's right there. Click on that because what you include

07:57there on the spreads is so interesting because you look at like where the tenure is today. And

08:03then you're like, if we applied the spreads from this time, from this time, here's where it would

08:07be. It would be, I think last week it was going to be over a point, but it's still, we're

08:11still a

08:12point less now than we would be if we had some of the spreads from last year.

08:17Oh, actually, yeah. If we took the worst levels of 2023, we're about 1% higher. Spreads got a

08:26little bit better in 2024 and a little bit better in 2025. So the impact is less, but pretty much

08:322023 spreads over 7%, 2024 spreads over 7%. 2025 spreads, I think it gets us mortgage rates at 6.88%.

08:40The reason I want to incorporate the spread so much over the last three years is that it's really,

08:45really hard for me to get the 10-year yield under 3.80%. And that if this is going to

08:51work,

08:51if the low sixes are going to be the sweet spot to get maybe a little bit of growth in

08:56sales,

08:56like we've seen over the last three years, the spreads have to get better. So every year I make

09:01those forecasts, well, the spread should improve X amount, basis points, X amounts. And here this

09:07year, the difference was I thought we could get to normal is like 160 to 180. I thought we could

09:12get

09:13to 180, but toward the end of the year, the mortgage-backed security purchase announcement

09:17pushed it a lower in a faster timeframe. But still, even with spreads getting worse,

09:25they are still the positive story because I don't see good housing data when rates get above 6.64%

09:32and head towards 7% and above 7%. We always have these flows with data over the last few years.

09:38We get growth and then rates go above 7%, growth goes down. And then we go, here we go again,

09:43rates go back down, growth happens. And then, so we want to see like, how can we get rates low

09:49enough

09:49with less volatility to get, oh, that was the early part of the year. We had sub six and a

09:56quarter

09:56rates, no, hardly any volatility at all. We were running and then it happened. And now we're dealing

10:04with drama, but even with wartime economics, it's, you know, it's still kind of intact, but

10:11definitely you see the growth slow down out here. But outside of that, like you wouldn't,

10:18you wouldn't have known anything. It's just, there's a lot happening this year with AI,

10:24with private credit, with the war in Iran and the snow storms. And there's so much noise out there,

10:31but the housing data has been awfully, very stable. And part of that stability is the compression of

10:38data.

10:38So I think I'm surprised because the spreads, the whole, the whole reason we have spreads is

10:44because they sort of cushion the volatility on either side, right? Like that's, that's what they do.

10:49So I would have thought that they would be much worse now, given what's happening with oil,

10:55what's happening in that larger macro environment, but that's not true.

10:57Well, they've gotten worse, but you know, you have no idea how happy I am. I get to talk about

11:04spreads because people are asking, and, and, and I, I told you this over the weekend and I said,

11:09I, I, I, I told everybody on, on X Twitter or has called the pit of hell. Um, if you

11:16take,

11:17you know, 2023 out of the equation, when's the last time mortgage spreads are above 3%? And people are

11:24like, Oh, uh, COVID nope. Silicon Valley bank. Yeah. Silicon Valley banking crisis did it, but

11:30we didn't get 3% mortgage spreads during COVID, nor did we get 3% mortgage spreads during the great

11:35financial crisis. Everybody's like, what? It's like, I showed it to them. I'm like, Whoa. I said,

11:41yep. Last time we had, it was, uh, I think main June, uh, of 1986. It's rare. It is very

11:49rare in the

11:49last three, four decades to have mortgage spreads above 3%, but we got it in 2023, right? Mortgage

11:58spreads were actually getting better in early 2023. It was a really good story. And then the Silicon

12:04Valley banking crisis happened. And then the Fed rate hike continued while the Silicon Valley

12:09break it. Those now that, that can mess up the spreads. But, um, you know, and then in the late

12:161990s, there was a long-term capital management, um, world drama back then. And even with that period

12:22in time in the late 1990s, early two thousands, mortgage spreads never got above 240. A lot of

12:28people know this because people have lives. This is what I do on training. So the spreads have gotten

12:33worse, but it's going to take a lot more to get to levels that people are like talking about people

12:39think, Oh, we can get back to 3%. Not in this situation. You know, here we are, we have a

12:44war

12:44conflict around the world. It's a lot of drama. It's calling, but the spreads have gotten a little

12:50bit worse, but nothing too dramatic just yet. So if the Fed all of a sudden goes, we're going to

12:54hike

12:55rates, we have to hike aggressively there. That's something that can make the spreads worse. If we

13:01have a few bank failures running out margin calls here or there, that all that could make the spreads

13:07worse. That's, we have history on that, but it has gotten slowly worse, but still very compressed.

13:15So now everyone gets to see it because now we test it in a crazy environment with all the crazy

13:21headlines that mortgage spreads are still in a much better spot. And this kind of is normal because

13:25volatility compressing rate cuts are into the, those are the things that the history of mortgage

13:29spreads, uh, get lower. So a lot, a lot's going on Wheeler. I mean, it's, it's not, it's not a

13:36normal

13:36year, but the housing data for everyone that could read and visually see so far, pretty calm.

13:42And part of that is inventory back to almost normal levels. What happened in COVID was a

13:48historical anomaly inventory below that levels that we had in early was we've never seen that before.

13:54Right. So, uh, just getting back to normal creates less volatility because you're working

13:59from a higher base. That's the compression of volatility by getting data back to normal,

14:04right? That was the whole concept of team higher rates is just to get inventory back to normal.

14:08You don't have to worry about a housing bubble crash or prices of, you know, all that stuff,

14:12but you just got to get things back to normal so you could make things less violent to the up

14:18and

14:18downside. So it is something beautiful to watch, you know, things kind of somewhat get back to normal,

14:24but it's, it's interesting to see with all the drama that we've had this year, that it's,

14:28it's, it's, there isn't a high velocity, uh, uh, uh, uh, in the data. Uh, it is confusing to some

14:34people to see inventory down in Florida and then, you know, see what goes on in San Francisco. Just

14:38take those, you know, two, two, two areas with, you know, slightly great assault for different

14:43issues. Uh, uh, but in the general macro housing data, and now all of you has housing wire

14:48intelligence. You all get subscribers, housing wire. You could go look at your local area,

14:54your city, your state, and everything. I have taught you how to read the slope of the curve

14:59of economics. Now grasshoppers, all my grasshoppers go fly with all the data and all the nerdy things

15:06you have been taught and teach your wisdom out to all the real estate agents and loan officers

15:11and consumers and clients and uncle Dave, because now you have the knowledge. And that's what my job

15:17was coach motor shopping was to teach, to educate. It is. Okay. Well, let's talk about,

15:23so in our last podcast, we talked about the jobs report, and then you got a lot of questions about

15:28that over the weekend. So we wanted to kind of address some of those because people, you know,

15:33it's confusing that the job situation can be confusing. So what did, what are some of the

15:38questions you've got? Because of the jobs report, there was a lot of, a lot of good, good, good,

15:43good questions. So for those who have known me for a very long time, I'm a demographics guy.

15:48And one of the reasons why I have lower job growth numbers is population growth is slowing down,

15:53labor forces growth is slowing down. But because of the AI stuff, a lot of people think, oh my God,

15:58unemployment rates are going to skyrocket because AI is going to kill all the jobs.

16:04Sarah, remember that 2016 article I showed you, like I wrote back then and said, I said,

16:08robots are supposed to take all the jobs, man. Remember all the last, in the last decade,

16:13robots are going to, I showed all these data. And part of it is death prevents very high

16:20unemployment rates. Like Japan, I always say, 40% of Japan's population will be dead, dead by the end

16:27of the century. They sell more adult diapers instead of baby diapers, right? They are a dying population.

16:33Here, we have a lot of good replacement workers and buyers, but we have an aging population.

16:38The baby boomers are leaving every single month. They need to be replaced.

16:43So labor force participation is at the levels that we saw in 1977. That is the main reason why

16:49the unemployment rate is at 4.3%. So what I say at events, what I've said when you've asked me,

16:55I am more worried about having a lack of labor in the future than actually, oh my God, AI is

17:02going to

17:03take all the jobs. Robots were supposed to take all the jobs. Cars were supposed to take all the

17:08jobs and the internet. Goldman Sachs had a very good thing. I don't know. I didn't read the whole

17:17report, but they basically said the AI has taken 25,000 jobs per month in the reports. And then

17:26it's also created 9,000 jobs per month. So the estimate about 16,000 jobs were lost due to AI.

17:34It's like 0.1% of the unemployment rate, right? And it's taking these people a little bit longer

17:39to find work. They eventually do find work, right? People just don't, AI doesn't kill your job and

17:45you sit like a homeless person without a job in the middle of nowhere forever. No, people,

17:52they do find work. They take a little bit longer. So the AI hasn't quite made this big

17:57impression yet, at least from what Goldman Sachs report that just came out today showed. But

18:03the jobs data is very wild lately. We get these big up numbers. We get these big down. It's like

18:08the Federal Reserve tells us, oh my God, there's nobody here. No, we can't, there's no workers left.

18:14And all of a sudden we have 178,000 jobs created. Two months ago, it was 160,000. Why did

18:20the dwarves let

18:21all the humans out of the caves to go find work? So it's just, it's confusing, but you have to

18:28realize when my headline said, we're creating more jobs in 2026 and 2025, it was designed to tell you

18:35the truth that it was the lowest job creation in my lifetime, I think, outside of a recession last

18:43year. It is the lowest bar ever. So even if you get 15,000 jobs plus, you are beating pretty

18:51much

18:51what we had last year. But what I, what I care about is 65 to 75% of believe where

18:56the 10-year

18:57yield and mortgage rates go, which everyone listening to this, that's what you really care

19:01about, is still Fed policy last year. Remember, Sarah, remember when Jerome Powell came and said,

19:07oh, zero job growth might be the new run rate. I do. And I'm like, oh, homie just said that

19:13live

19:13on TV. Okay. I've seen the Federal Reserve now bring out two reports that basically say no job

19:19growth is almost acceptable. So to me, as I'm trying to find a level that they will be fine with

19:26for this year and next year and going out, if it is true, if this is the end of the

19:31labor force growth

19:31in the United States of America, the whole dynamics of this economy, this country goes different for the

19:37next hundred years. But here to what I'm reading is that 33,000 jobs per month is acceptable for the

19:45Fed with those two reports that they're coming out with and what they're, what they're basically

19:50telling the public. So as long as you're creating more than 33,000 jobs, the Fed is like, we're good.

19:56We're worried more about, you know, inflation right now at this moment than the labor market breaking.

20:03And Sarah, you know, I've talked about this since the end of 2022, the Federal Reserve really tracks

20:09jobless claims and jobless claims are extremely low still. And because of that, they will wait

20:15because PCE inflation was over 3% before the war. PPI inflation was near 4% before the war.

20:22Now the war has happened. And they're like, okay, well, we're, we're sending all these reports out

20:26there to basically tell you if we create more than 33,000 jobs a month, we're going to be okay

20:31as long as jobless claims are low. The wage growth is slowing down too, of course, but it's not at

20:373% yet. So I'm trying to figure out a level to where I think they'll just say chill until

20:42the war is

20:43over and everything could get kind of back to normal. So a lot of good questions, but the jobs data

20:49is

20:49very wild. We had weather, good weather in some parts, bad weather in others, strikes and all this

20:55stuff. But if you take the average, the average to me is good enough for the Federal Reserve for the

21:00hawks to say no cuts until we get some clarity on the wars. And that's to me, what matters more

21:06to

21:07me on the 10-year yield and rates than for everyone listening to should matter in that regard. So the

21:12labor data is, it's crazy to say this, outperforming, right? That is crazy. Because the Federal Reserve has

21:20basically sent out these articles saying, oh my God, we could have 3,000 jobs or 10,000 jobs where

21:26we

21:26completely fine because we don't have people working. And then all of a sudden, 178,000 jobs

21:31were created. Where did they come from, Wheeler? Did you let people out of the closet or the basement

21:37or anything? Humans out there, like the Morlocks getting out there and getting those people out.

21:42And so I know it's a lot of nerdy things, but that's what I'm trying to figure out is that,

21:48are they okay with 33,000 plus jobs? And to me for right now, they're fine with that as long

21:53as

21:53jobless claims are still a low. That's the Hawks talking. Of course, Warsh would cut,

21:59Myron would cut, Waller would probably still cut. Michelle Bowman is kind of in between,

22:07but she's a rate cutter. But there's enough Hawks on the Federal Reserve side to say, hey,

22:12listen, inflation is above target. The Labor Day is not beating. And now we have to incorporate the

22:17war into it. How much damage is retail sales going to get hit? The Chicago frontlining data showed

22:23some weakness already in the next report. So a lot to go with, a lot to go with right now.

22:28But on the labor side, they're basically saying, hey, listen, population growth is really things

22:33unemployment rate could stay lower than longer. And to a point, they are correct. It's the labor

22:39force growth being back in 1977 levels that has kept the unemployment rate at 4.3%, technically four

22:48and a quarter, basically, really. But that's where we are right now. And that Jobs article I wrote was

22:54trying to emphasize that. Okay. So what should we be paying attention to this week with the war going

23:00on? Okay. So I don't know what else Trump is saying right now in the live speech. I think he

23:06was giving

23:07a talk and then there was an Easter Bunny was right next to him. He was talking about Iran and

23:12then the

23:13Easter Bunny. I was like, what's the idea was that? In any case, the deadline is tonight. And when this

23:19podcast comes out, it'll be Tuesday. We'll see. Again, if we're going to start blowing up infrastructure

23:24and Iran goes and blows up, all bets are off, man. You're going into full Mad Max stage at that

23:36point

23:36when you started blowing infrastructure and energy and they retaliate. And then this is the most

23:43concerning thing I had when we get past March 21st. You and I have talked about this. What if you

23:50don't

23:50know how to get out of a situation and somebody makes a mistake? Right. And then you're already

23:57dancing with the devil in the pale moonlight. And then all of a sudden, oh boy, who knows how to

24:04quit this? Or do we just keep on? And when we escalate at this point, it gets harder and harder.

24:11And a lot of people are still wondering, why aren't oil prices even higher? There are reports out there

24:16that there are ships slowly moving through that they have their coders off and there's a little

24:21bit more better oil flow out there. Just remember, tankers are slow, giant dinosaurs. Bicycles are

24:28faster than tankers. So it does take a lot to get things going. And I hope hopefully we can get

24:35some

24:35kind of clarity, but who knows? It's just a toss up right now. So we'll take it one day at

24:39a time,

24:40but hopefully now with the tracker data, for now, things are somewhat intact for the housing market.

24:46Logan, as always, thank you so much for giving us all this information. And we will talk again soon,

24:51maybe very soon, depending on what happens with this talk and what happens in between here and the

24:56next podcast. Pleasure, Sarah.

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