- 6 days ago
On today’s episode, Editor in Chief Sarah Wheeler talks with Lead Analyst Logan Mohtashami about the Iran conflict uncertainty and housing inventory going negative year over year.
Related to this episode:
Housing inventory just turned negative year over year
https://www.housingwire.com/articles/housing-inventory-just-turned-negative-year-over-year/
HousingWire | YouTube
https://www.youtube.com/channel/UCXDD_3y3LvU60vac7eki-6Q
More info about HousingWire
https://lnk.bio/housingwire
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.
Related to this episode:
Housing inventory just turned negative year over year
https://www.housingwire.com/articles/housing-inventory-just-turned-negative-year-over-year/
HousingWire | YouTube
https://www.youtube.com/channel/UCXDD_3y3LvU60vac7eki-6Q
More info about HousingWire
https://lnk.bio/housingwire
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.
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NewsTranscript
00:11Welcome, everyone. My guest today is lead analyst Logan Motoshami to talk about the Iran conflict
00:16heating up again and housing inventory going negative year over year. Before we dive in,
00:21I want to recap the top trending stories on HousingWire.com. First is the weekend tracker.
00:26Housing inventory just turned negative year over year. That's followed by the breaking news from
00:31the weekend that Brookshire Hathaway is going to acquire the builder Taylor Morrison. Then we have
00:35the story that's now a week old but newly relevant. What happens to mortgage rates if the Iran conflict
00:40is over? Closing out the top five, as the Florida housing market finds its footing, sellers still
00:46face pricing realities. And our announcement of the 2026 marketing leaders. Logan, welcome back to the
00:53podcast. It is wonderful to be here Monday morning and hello. Wow. Here we go again. Over the weekend,
01:01Trump did some amendments, but then Israel attacked Lebanon and Iran says we don't want to talk to you
01:08guys anymore. So what happened this morning? 10-year yield went up, $4.50. Oil prices, WTI, $93.94 last
01:18time I checked. So we always said this process is not going to be pretty. There's going to be a
01:24lot
01:24of crazy headlines. There's going to be people who try to sabotage this. But just to give everyone
01:30some perspective, if the deal was not going to happen because we are in June, then WTI oil prices
01:38will be well over 125 because we're running out of time now. Also, Iran has a financial and
01:47every incentive to try to get something done. Because if we go into July, NATO then comes in.
01:52If we take NATO for their words, because it's going to get a lot hectic for everyone around the world
01:57if oil doesn't pick up. So regards to that, what we're going to see is how is this whole process
02:07going to work out with the bond market and oil prices? So kind of keep an eye on that 115
02:15level
02:16for oil prices. And then if the 10-year yield goes north of 470, that to me is that the
02:21bond market
02:22and oil prices are saying the deal's not in place. But as long as you just get these bounces
02:28and then something works out, we just move it along forward. Because everyone has something
02:34to lose if this goes from the second week of June all the way to September, because we are dwindling
02:41down those inventory levels of inventory and it becomes more problematic for everyone, especially
02:46Iran if NATO gets involved. Because then your banking system will be in crisis, your currency will start...
02:54So there's an incentive for everyone, but it's late in the game. You do not have much time left.
03:03So you mentioned the price of the WTI index and all of that. So throughout this conflict,
03:10what you've said is that you're looking at the oil traders, the people who are setting those prices,
03:15as being people who have maybe more insight into this situation than almost anybody. They're very
03:20involved. They know what's going on. And so you've looked to them to say they believe this or they
03:24don't believe that, right? They believe we have a deal, we don't. So from your perspective, even though
03:29it went up, it didn't go up, the oil price didn't go up enough for you to say, yeah, they
03:33think there's
03:34no deal. To me personally, oil prices should be a lot higher, but everyone's kind of waiting for that
03:44deal. They've done a lot of things to put reserves in. But to me, if at this point, because we're
03:50in
03:50June now, if the deal was done, then oil prices should be a lot higher. Look for NATO and the
03:58US
03:58to go after. Iran will lose any kind of benefit on anything. So to me, it's just, I haven't seen
04:05enough damage on the oil prices to believe that they think this is something bigger than just...
04:11So when you say the deal is done, you mean the deal is not going to happen?
04:14The deal's off. Yeah. So I just don't think everyone... People like to make something big
04:23of headlines. But really, if there was no deal, oil prices should be a lot higher. The 10-year
04:30yield should be a lot higher. That's not even a question anymore. Because now we're in June too.
04:36This is different than, let's say, four or five weeks ago when everyone was dumping their reserves,
04:41in. But everyone has something to lose at this point. So you have to think of it not as somebody
04:48who doesn't like Donald Trump or who doesn't want the 10-year yield to go up or whatever this is.
04:55I'm looking at that WTI prices because it should be a lot higher today. It should be a lot higher
05:01last week or two weeks ago. But to me, it's just everyone kind of just is running on these headlines
05:06and time, right? Time is not on anyone's side. And escalation is always a fear. But I'm always
05:16afraid of somebody just making a mistake that they'll regret three, six months later.
05:24Not a lot of people understand the pain that Iran's going through right now. And can they drag this
05:30out? They need to make the best kind of deal for themselves because they have no deterrent.
05:35This is not like North Korea. North Korea has a nuclear weapon. Iran doesn't. And it's not like
05:40Iran would get a nuclear weapon and shoot it at Israel because then they'll have a nuclear attack as
05:47well. So there is no end game here. And the deterrent sign, if you're Iran, you need to
05:53make this as painful as possible so it doesn't happen again. So there's a lot of back and forth.
05:59But to me, what the 10-year yield in oil prices did today is not saying that the deal's off.
06:06So it was just a week ago that you, it was officially a week ago, right, that you wrote,
06:11what happens to mortgage rates if the Iran conflict is over? That's been the number one story on our site.
06:16People are very interested in that. How does that, you know, what you wrote there,
06:21what has changed in a week for you? Or do you feel like that story still holds?
06:25Nothing. Absolutely nothing. The 10-year yield, if the 10-year yield sees that the Iranian deal,
06:31the easy layup was kind of that 4.46 level. We're four basis points off of that. So nothing changes.
06:40To me, the only reason I said if the conflict is over is that I need to see ships moving.
06:48Like,
06:48you got to get ships moving. Even if there's a deal, if ships don't move, you keep elevated oil
06:54prices. And if you keep elevated oil prices, the 10-year yield is elevated, you know. So there's one
06:59thing to even say you have a deal, but you got to get ships going, right? So the whole progression
07:04down from that level at 4.46 is you got to get oil prices down. You got to get diesel
07:10prices down.
07:11But stage one, we're four basis points off of a headline. Now, two weeks ago, oil prices heading
07:19up higher, 10-year yield. If the deal is officially off, you would see escalation because we are in
07:26June. There's no more leeway anymore, man. You've got people asking Trump for, you know,
07:34checks now to help, you know. So there's a lot going on that, to me, is like, if you thought
07:40this was the case, then you just, it should be much higher. Bond yields should be much higher.
07:45Oil prices should be much higher.
07:47Okay, then we will turn back to the economic news, which is what I know you would rather be
07:51talking about. And the tracker data that we got over the weekend, which shows that inventory,
07:57housing inventory, indeed, it went, the growth of it went negative year over year.
08:01So it's not shocking to anybody who reads the tracker, or it's not shocking to anybody who
08:07listens to the podcast. Sarah Wheeler, when did the housing market shift?
08:11Mid-June, 2025.
08:13And we've always said it takes six to nine months for everybody else to catch along.
08:16Now, it's almost a year now, right? And there's a lot that goes into housing economics,
08:23you know, how we talk about our slope of the curve and how we track everything.
08:27Just remember, COVID-19 recovery model, April 7th, 2020. November 9th, 2022, the forward-looking
08:34housing data, if it improves, this is the inflection point that shifted the whole market.
08:39Mid-2024, the housing market is shifting positive. Purchase application data was negative. It's funny,
08:45we've had some of the best housing data was with purchase application data being down year over
08:48year. That's why that survey is a little bit tricky. But mid-2025, what happened last year,
08:54why I like this so much is that for number one, I get balance. I was very happy with the
08:59inventory
09:00growth early last year, big smiles on my face. But based on how I track housing, the 10-year yield
09:08was
09:08about to get to a level to where mortgage rates get 6.64 and starts heading lower. If that occurs,
09:14then the housing market already shifted. You simply cannot have that kind of inventory growth
09:20with elevated rates. Now, rates were seven and a quarter to 6.75 when inventory was growing at
09:27that point. But then the demand curve changed. Purchase application, mostly positive year over
09:31year. Weekly pending sales, positive. If you take the holidays, which I still can't believe we have
09:36this conversation every year, that people don't really go home shopping during Christmas and New
09:42years. But we do it. Snowstorm, conflict. If mortgage rates stayed at six and a quarter and
09:48under, you have more demand, less inventory. But now you've seen this for one year. So podcast 20
09:55discount code for HousingWire. We have an app now. But HousingWire Intelligence is here to show you how
10:02everything works in your city, in your state, in your zip code that you care about. My job is to
10:07explain
10:07the national economics of housing what shifts this. Now, it went negative in a period of time where
10:13people said, worse than 2008 or the greatest seller market ever in history, the highest cancellation
10:20rail. You had all this stuff happening in the second half. And I was just like, homie, we got these
10:24people buried. We plant the foot on the ground and then we just go, okay, we'll see what happens six
10:30to
10:30nine months from now. So we're here. And it looks normal to me. I think that the surprise is how
10:37the year over year declined in inventory in Florida. That's where if you look at that data line,
10:43so much of the year over year, and remember, Florida was working from elevated levels. So you
10:48have to take that in context. But I think so many people put it as this massive surge and here
10:52it comes
10:53and it went negative. It's quite embarrassing, man. It's like performance anxiety or something for some
10:59people. In any case, looks normal to us. So again, we just follow with the tracker data every single
11:05weekend. We track everything daily, but the supply and demand equilibrium is just following what it
11:10did late 2022, mid 2024, and what we saw now, just because we are having the lowest rate curve
11:17to start a year. And because housing affordability got a tad better by itself because wages are growing
11:24faster than home prices. That looks about right. This looks very healthy to me. It's not the unhealthy
11:30housing market of late 2020, all of 2021, and the savagely unhealthy housing market early 20s. So
11:36all A pluses on that side. But I think if you didn't read the tracker or haven't followed our podcast
11:43or
11:43anything, then it's probably a shock on that side. And again, we want to teach this. But again,
11:50all of you have your own area, state, city, zip code. Now you can become a much better housing
11:56expert than most of the people out there who are yapping away for some time.
12:01Okay. So not only we have the inventory, but also, if you look at new listings, they took a dive,
12:06but what do you point out? It was Memorial Day weekend. So maybe people didn't want to list their
12:11homes.
12:12So it happens every national holiday. The week-to-week data gets hit because you have a big
12:19holiday weekend. You're not working at full force. This is why the whole Christmas, New Year's thing
12:24drives me crazy. It's like if Christmas and New Year's in the middle of the week, homies, what do
12:28you think people are doing? No, they're not. They're enjoying the holidays. But Memorial Day weekend. So
12:33we're going to get an increase in inventory next week. We're going to get an increase in new listings.
12:37That's the two-week period. We spent so much of last year trying to teach people this because I
12:41kept on seeing people try to make big, big, like macro themes off of one week that had a holiday
12:48impact. And even some of our readers do that. They go, oh, well, look at this. I was like, homie,
12:54it's a holiday. So just remember, we're going to get a rebound on the new listings and inventory next
12:59week, and we just take it from there. But it should not have shocked anyone because we said
13:03the year-over-year comps are going to be really difficult going into mid-June. So if you see negative
13:09data, don't be surprised. And we just go with that. And I think to me, this is a much healthier
13:14housing market because now you've got buyers versus sellers and you've got a marketplace
13:20on a fair balance game right now. Some states are different than others, but in any case,
13:27this is a lot more better functioning market than in the past. This is why big smiles always last year,
13:34this year. You're not going to get these titanic nominal national home price crashes to bring
13:40affordability better. It has to do it with time. And that's never the popular answer. Trust me.
13:45People say, oh, my God, well, home prices have to fall X. Why does home prices have to fall X?
13:50Right.
13:5180 years of data, and then come on. But this, at least, it's heading in the right direction.
13:57As long as wages are outgrowing home prices, if home prices were running at 4% to 5% this
14:03year,
14:03I'm having a different conversation, but that's not the case.
14:06Well, let's talk about mortgage spreads because they remain the very positive story they hear of
14:11this, but they did go up last week. So this is another confusing thing. So this is twice now
14:17mortgage spreads have gone up. But just remember, mortgage spreads, the job is to reduce volatility.
14:23volatility. So a lot of people think mortgage spreads are going to shoot back up to 3%. Just
14:29remember, it's very rare after 1996 to have spreads at 3%. In fact, it's never happened until
14:36the Silicon Valley banking crisis and the Fed was still hiking rates. But when yields go down
14:42aggressively like they did in February, like they did recently, we went from 4.68 down to like 4.43.
14:48The spreads can get worse because they're trying to reduce volatility. Going into the year,
14:56you know, I thought we could get to 180 on the spreads toward the end of the year because of
15:01the
15:01mortgage purchase announcement. The MBS market took the spreads lower. So we're kind of still
15:08almost back to normal. But on a period where yields go down, spreads can get worse and has nothing to
15:16do
15:16with like, oh, the conflict or anything like that. It's the way it's trying to reduce volatility to
15:22the upside and downside. And this is during the conflict, like the craziest part of the conflict,
15:27mortgage spreads were going lower. So just think of it as a equilibrium to try to reduce volatility
15:32and EPO risk. And that's kind of what it is. And that's how spreads have been for decades and decades
15:38and decades. I think the spreads are a mystery to many people. And even like how, even once they
15:44understand what they are and so, you know, how they work is, is complicated. You know, you're
15:49it's probably the most nerdiest thing that nobody wants to talk about. I mean, still today,
15:56we don't really see people talk about spreads like we do. Like we track it, we try to explain it.
16:01We forecast how it should go lower. I think I'm honestly, I think there was only four people,
16:07maybe in 2024, that's that spreads are going to get lower. You know, it's just not, it's,
16:11that's not a common thing, but now visually, again, anybody who read the tracker for the last
16:16few years, they get it now. Right. So you understand kind of how spreads work because
16:20I can't get mortgage rates under 5.75%. We had one of those, uh, uh, uh, grifting guys again,
16:28who talk about, Oh, my mortgage rates are going to 4% because of this. And this, and like homie
16:33put
16:33a 10 year yield chart. That was like three months old. You know, I was like, what the hell is
16:37it? So
16:37I'm trying to explain to people. It is really, really rare in the history of America. If the
16:42fed funds rate is neutral policy is three spreads are not back to normal to get mortgage rates under
16:475.75. The reason I keep on saying that is because it's 2026 and we've not been able to break
16:52under
16:525.75 for a reason. That makes sense to me. If you look at how mortgage rates in the 10
16:57year yield
16:57and spreads work for decades and decades and decades. Um, but I can get towards 6% if spreads just
17:05get
17:05toward back to normal. We had that. We had that early this year, no volatility under six and a
17:11quarter. The 10 year yield wasn't under three 80, but we got mortgage rates around 6%. Imagine if that
17:18was the case, the entirety, you get a little bit better demand, nothing booming or anything. You
17:23get a little bit less inventory probably, but you know, a little bit more functioning, but a lot of
17:29drama this year, right? A lot of crazy headlines. Uh, uh, and, uh, um, we just have to try to
17:35make
17:35sense of it all for everyone, but this is why we created the tracker at the end of 2022. So
17:40everyone
17:41can read everyone. We have a working model for everyone. We, you see the data, you see, you back
17:46test it and then you go with it. Right. And if something changes positive or negative, we don't hide
17:52that. We go with it either way, but we try to create a model with rates and affordability and
17:57everything to go there. And now you can do it. Housing wire intelligence podcast, 20 discount
18:03code. If you want it for your own area. Love it. I love that. Um, and I would say like
18:08all of the charts that you include in the tracker, they go together. So we look at the price
18:13cap percentage for last week and it's down from this time last year. Um, and, and that
18:19also has like, it, that goes in with the inventory that goes in with the purchase apps, that goes
18:22in with pending sales. All of them work together to, to paint a picture, which you then
18:27summarize. You have all of the, all of the parts, but you also have the whole. So I think
18:31that's great. Okay. The rest of this week, it's jobs week, right?
18:34Jobs week. And, um, what happened last week was very encouraging to see that softer economic
18:39data actually made, uh, uh, the 10 year yield fall by itself. You know, it's been a while,
18:45right? And of course we're, we're sitting here Monday morning and the 10 year yield went
18:48up because of the headlines, but eventually at one, at one point this ends completely. And then
18:54ships start, remember the key is ships, ships have to start moving. I don't care what deal
18:59is announced. You got to get ships moving. You got to get oil prices down. You got to
19:03get diesel prices down and we're running out of time. But in any case, we're going to
19:07have to go back to economic data. Uh, so it's going to be very interesting with jobs a week.
19:11Well, we'll give a jobs a week preview a little bit later this week, but I really want to see
19:15how the bond market reacts to data now because the labor data is outperforming, especially what
19:22the fed considers. Doesn't matter what you and I think about the labor market. To me,
19:26the break evens of the federal reserve is a little bit above 30,000 that if you could just
19:30create more than 30,000 jobs, it could keep the unemployment rate low. Now last year at this time,
19:36you know, one of the reasons why we really wanted to highlight the tracker data is some people,
19:41smart people were saying that the fed has to cut rates because you don't have good history. If
19:46national home prices are falling and the unemployment rate is rising and the job,
19:50the labor market's breaking. That is historically true. None of that was happening last year.
19:56The jobless claims weren't breaking. There was no, if national nominal home prices were falling,
20:01it'd be so easy to see in the data. We all saw it in the second half of 2022, right?
20:07You can't hide it,
20:08but so many people want to front load rate cuts into, you know, this environment. And that just wasn't
20:14the case. And we had a lot of smart people talk about nominal home price declines in the second
20:19half. And especially in Q4, it never happened, right? Because when did the housing market shift,
20:24Sarah Wheeler?
20:25Oh, mid-June, 2025.
20:27Mid-June, 20. So we just go with that. And again, my price forecasts have been typically lower than a
20:34lot of other people. And this year's slight negative 0.62% decline. I've not changed anything.
20:43Like in 2024, when the forward-looking data got better, I knew my forecast would be wrong. I had
20:48a 2.33% forecast that year, but inventory was much lower back then. So when the rates got lower,
20:54it changed the whole pricing curve. This year, it's getting more and more difficult for my forecast to
21:00be right. I admit that. But for right now, we're just going to keep it as is. But if rates
21:06had gone
21:06lower or do go lower, and the inventory curve goes like this, and the price cut percentage says,
21:12it's very difficult for my forecast to be right. But we talk about this every week so everyone could
21:16understand how it works. And you all have visuals. Even if you didn't read, you can see, right? You
21:23can see how it is. So it should not have shocked anyone that inventory went negative year over year
21:30before mid-June, because we're working from harder comps. And this is the lowest rate curve
21:36post-2022. And we hug and we kiss some mortgage spreads. We take it out on a date. We send
21:41it on a
21:42vacation. You know, whatever it is, without mortgage spreads, none of this would have been here. Mortgage
21:47rates would have been over 7%. Could you imagine 2023 spreads? We're talking about near 8% rates
21:51again. But this is why spreads is very important, because it tested itself with two conflicts, right?
21:58Godzilla tariffs and the conflict in Iran spreads got worse, maybe 19 to 25 basis points at worst case
22:06scenario, if you take the last two. So nothing too dramatic right there. It's a benefit for everyone
22:11because its job is to try to reduce. And again, no conflict. We have a whole different conversation
22:17with housing. But it is here, so we have to go with it, right? You don't hide behind anything. You
22:22go
22:22with the data. Agreed. And listeners, keep up with us on housingmar.com. If something big changes with
22:30this conflict, be sure that we're going to be writing about it and Logan will do the analysis
22:34of what does this mean for the housing market. Right now, his current article that's still
22:39top of the charts still stands as far as the levels that he looks at. So Logan, thank you so
22:44much
22:44for being on, for keeping us up to date. Pleasure.
22:53Pleasure.
22:55Jewellery McAdmin was that we were in the means of the
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