Existing home sales and the jump in first-time homebuyers

HousingWire

On today’s episode, Editor in Chief Sarah Wheeler talks with Lead Analyst Logan Mohtashami about existing home sales and the jump in first-time homebuyers.  Related to this episode:  Existing home sales beat estimates, what it signals for 2026 https://www.housingwire.com/articles/existing-home-sales-beat-estimates-what-it-signals-for-2026/  HousingWire | YouTube⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠ https://www.youtube.com/channel/UCXDD_3y3LvU60vac7eki-6Q  More info about HousingWire https://lnk.bio/housingwire  The Top 5:  HousingWire acquires Keeping Current Matters to deepen local data for agents https://www.housingwire.com/articles/housingwire-acquires-keeping-current-matters-to-deepen-local-data-for-agents/  Existing home sales beat estimates, what it signals for 2026 https://www.housingwire.com/articles/existing-home-sales-beat-estimates-what-it-signals-for-2026/  UWM sanctioned after judge orders Ishbia deposition https://www.housingwire.com/articles/uwm-contempt-ishbia-deposition/  Mortgage and real estate battle for the top of the funnel https://www.housingwire.com/articles/consolidation-lenders-realestate/  HUD pilots robotics-built housing and automated permitting https://www.housingwire.com/articles/hud-robotics-built-housing-permitting/  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

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

00:14and first-time home buyers. First, wrapping up our top five trending articles today, number one

00:20goes to the announcement we made this morning that HousingWire has acquired Keeping Current

00:24Matters. Very exciting day for us. That's followed by Logan's coverage on existing home sales,

00:31UWM being sanctioned after a judge orders Matt Ishbia to testify, and then the battle for leads

00:37pitting real estate versus mortgage, and a HUD pilot on robotics-built housing and automated

00:42permitting. Lots and lots going on. Logan, welcome back to the podcast. It is wonderful to be here.

00:48Again, we always start off oil prices down a little bit, 10-year yield down a little bit.

00:53Who knows what's happening, really? But obviously, what happened with the weekend,

00:59it didn't escalate into higher energy prices and higher yields from Sunday. So we are here

01:06today. We still have it broken really above 6.75 on rates. But existing home sales, right? Beat

01:14estimates, year-over-year growth. I know the first-time home buyer percentage caught a lot of people by

01:20surprised. But what we're going to try to do here is just explain that this should not have been a

01:24shock to anyone. The NER's existing home sales reports tends to have a little bit more revisions

01:31lately. But even with all the revisions, all the existing home sales have been above 4 million.

01:36The forecast this year was for 237,000 existing home sales growth from last year. If rates stay six and

01:44a

01:44quarter under, now that everything we've had with higher rates, that would have easily happened

01:49if that was the case. But housing has kind of held up. And we just kind of want to explain

01:53the report

01:54in a little bit more context. I love this because we always say that we have the freshest data. So

01:58if

01:58you've been reading the housing market tracker, if people listen to this, they've known that this

02:03shouldn't be a shock at all, right? This is the same kind of data we've been talking about since March.

02:07You know, one of the things that's happened recently is because the days on market are a

02:14little bit longer, and we've had a few events, right? We had the holidays, which impacted January

02:19home sales data. And not a lot of people wanted to talk about that. The holidays was a big reason.

02:25Then we had this rebound in February, but then we had the snowstorm, right? And then we had the

02:31conflict, but the conflict really hasn't changed things too much from that. What's basically

02:36occurred is rates are lower year over year. Demand has picked up a little bit. If we take the holidays

02:42and the snow data out of the equation, home sales would be a little bit higher earlier than what we

02:50are today. So just kind of take that as a little bit of growth with a little bit more elevated

02:57rates

02:57than we started the year. And we'll take it one week at a time. But our weekly pending home sales

03:03data

03:03has been mostly positive year over year. And again, we're about two to three months ahead of

03:08the NAR. I'm not the biggest fan of the NAR's pending home sales data on a percentage basis.

03:14It gets a little wild to the upside and downside. But if you just followed our tracker and you just

03:18kind of look back, not shocking in that regard. But our total pending home sales really since March,

03:25since toward the end of March is showing year over year growth. So take it for what it's worth.

03:29It's a little bit more higher sales with a little bit more elevated rates than we started the year.

03:34Affordability is getting a little bit better again, because wages are rising faster than home

03:39prices this year. And we go from there. And it's just another tragic year for the housing bubble boys.

03:46God bless all of single one of you guys. It's 13 years going on. It's 14 years now. So

03:52I love you all, but y'all still don't know how this works.

03:56OK, well, let's talk about that first time home buyer, because that's something that stood out to

03:59me in the NAR report. And that's not something that we break out in our weekly tracker. And so

04:05I think the share of first time home buyers, let me get this right. So it went up from 30

04:09percent to

04:1035 percent in this report.

04:12So the NAR has their monthly survey on the breakdowns of investors, cash buyers, first time

04:20home buyers. And one of my one of my smarter friends, Neil Dutta, who, you know, was talked

04:25about being maybe the Atlanta Fed to replace Bostick. You know, he noted that, oh, my God,

04:30look at the first time home buyer percentage. It was 30 percent last year. It's 35 percent.

04:35That that 35 percent number is one of the highest percentages of first time home buyers in the

04:40last 10 years. So this is also a denominator effect when you're working from a very low

04:47level of sales. And then you have a little bit of increase in mortgage demand since first

04:51time home buyers are financed 93 percent plus of their home purchases. You can get a higher

04:58percentage of first time home buyers that fall into a report.

05:01So and one of the things I'd like to emphasize is that the yearly survey of the NAR, who tells

05:09everybody that every first time home buyer is a 40 year old virgin who buys a house at

05:13age 40, which we don't agree with, their first time home buyer percentage was at 21 percent.

05:19And that actually, you know, I had to step in because of that more than the first time home

05:25buyer age. But that survey is a yearly survey from homeowners. The NAR's first time home buyer

05:33percentage really has been like a 30 percent for a very long time. So that's a monthly report that

05:39has sales data versus a yearly savings. So it gets confusing because you have economists and people

05:45go, oh, my first time home buyer is that 21 percent. Guys, it never like got there one month

05:49in the last 12 months. What are we talking about here? Yearly surveyed by owners, monthly sales

05:55data from from agents. Right. So two different things there. So it's a it's a big year over year

06:01increase. But what happened last year in June? Oh, that's when the housing market shifted. Housing

06:09market shifted. This is a May report. So next month, July, we'll have June. The June was the kind

06:16of bottom in sales before sales started to pick up toward the end of the month. And December kind

06:21of ended at a high. So take that into context. Try not to make a big deal about it, because

06:27I know

06:27it took a lot of people by surprise that, wow, that's a big increase. You would affordability

06:32is at all time lows or whatever. You know, people are saying there's no way first time home and all

06:36of a sudden this happened. Right. So just a denominator effect, very low base. We have a little bit

06:42more mortgage demand. So we always kind of make fun of the foreclosure people who take percentages and

06:48increase. So this is just one of those. We have a little bit more demand for mortgage buyers. A lot

06:53of them are first time home buyers in a sense. And the year over year data increased in a noticeable

06:57fashion in that regard. You know, I go you and I both go to a lot of conferences. Mostly you're

07:01speaking a lot of times. I'm sitting there taking notes and I cannot tell you how often I hear that

07:0740 percent. I mean, 40 year old first time home buyer statistic all over at lots of different

07:13conferences in lots of different contexts. It might be the keynote speaker. It might be a panelist. It might

07:17be whatever. And and the same thing with the kind of sales data that we see, like people people cherry

07:23pick things and then sort of like make them bigger than they are. And I know you, you know, from

07:29that that

07:29particular statistic is is stuck sticks in your craw anyway. But I do think it's interesting how

07:35widespread that statistic has gotten. So this is why I always like to emphasize, especially today.

07:43I mean, I have to go on X and make a video today. Yearly survey given to homeowners, 120 questions.

07:49Y'all, man, I do not know how many people are filling out 120 questions. I would like to know

07:54the people

07:55who are under the age of 35 that have filled out 120 questions. OK, y'all got in any case,

08:01then there's

08:02the monthly data. I I've always put more weight on the monthly data. And it just the first time home

08:07buyer percentage didn't look right because there was never a month reported for the 12 month period.

08:13That was, you know, even at 21 percent, it was mostly 30 percent. So so just take the increase

08:19with a little bit of grain of salt. But just realize mortgage demand has picked up a little bit.

08:24Affordability has got a little bit better. Sales are growing a little bit on a year over year basis.

08:30It's going to be a healthy year in the sense that inventory, the NAR's inventory is different than

08:34ours because they count contracts into their total total inventory data. But this is one of these

08:39things that we've talked about. What is the chef kiss that we love to see? Rising inventory, rising

08:44sales, because that can put a lid on home price growth getting out there. And here's a great example

08:49of it. A total active inventory is like one point five five million. And we have over four months of

08:54supply. If I am one point five two to one point nine three million total active inventory NAR with

09:00over four months supply, there is no low inventory talk by me. Done. Finish. That means it would never

09:05really a low inventory talk in the past few decades. It was COVID that was the anomaly that was, you

09:12know,

09:12that really just took us to a level that we've never seen where the supply and demand equilibrium

09:16just broke in a fashion that we as a country have never had to deal with. And now we're just

09:21healthy. Right. And we're just working our way to try to get affordability better. And it's going to

09:26take time. But I think because rates have risen from the lows of this year, a lot of people just

09:33thought it would be like 2023, 2024 and 2025. Well, if mortgage spreads, we're back to 2023, 2024 and

09:412025. Rates are already above seven percent. And we just don't have a lot of data in the past few

09:46years that it works. So now going out of the future, you know, rates are more elevated. We'll

09:52see. But we'll be able to catch this with our tracker articles if things start to fade out again.

10:00But clearly, if rates had been under six and a quarter, no volatility, we would add a little bit

10:07more home sales. Inventory might have been a little bit lower, but we would have had our first year

10:12of growth. We still have enough time to get there. It's just the conflict has really, you know, changed

10:17a lot of variables this year. And we're dealing with that. But today's report should not have been

10:22shocking, but it also needs to be put into context. I love that. That's the context that we need,

10:27like I said, because we see it all the time. I'm glad you brought up mortgage spreads because,

10:31of course, they remain one of the positive stories of this year. And every week in the tracker,

10:35you put like, okay, with the 10-year yield here, mortgage rates here, here's where mortgage rates

10:43would be depending on the spreads. And that's so helpful because it really shows that, like,

10:48because I keep pressing you like, oh, you know, rates are still this. And you're like, Sarah, you,

10:53you know, we need to be thankful for rates where they are still below last year. It's a good reminder.

10:59You know, it's interesting. Lance from Redesign, you know, he talked about, he put a post up and

11:11said that, well, you know, for those people that are expecting sub 5% mortgage rates, you know,

11:16none of the NBA or Fannie Mae or nobody's forecasting that, you know, out there. And I've always said it

11:23this way. I don't forecast mortgage rates because I think it's a prehistoric dinosaur. I mean,

11:29like the oldest kind of dinosaurs ever. It's just, it's not, to me, it's not an effective way. I'd

11:34rather take the 10-year yield, look at it daily, find a range within a year, and then we work

11:40with

11:40it because mortgage rates do not stay constant. It's like some of these forecasts, six and a quarter

11:45for four quarters. Oh, and then next, yeah, 6.375. No, it's just like, we want to take it on

11:51a daily

11:51basis so we could teach people how this works. If you look at the history of economics going back

11:57decades and decades and decades, it's really rare in America to have mortgage rates under 5.75%

12:05if the Fed funds policy is neutral and neutral is 3%. We are not at neutral. The only time we

12:11even get

12:11near 6% is that people think there's the labor market's breaking or the economy's getting weaker

12:16and the 10-year yield goes there. This year is a little bit different because inflation is picked up.

12:21And the labor data state firm, but we have a lot of rate cuts in the system and the spreads

12:26are

12:26better. So we do the slow dance, right? The slow dance between the 10-year yield and 30-year mortgage

12:32rate. And then we add the spreads and we put it in a forecast for a range. And then we

12:35work off of

12:36the economic data. That means you have to follow this stuff religiously. I don't know how many

12:41economists spend their evenings, two o'clock in the morning, six o'clock in the morning, two o'clock in

12:48the afternoon, looking at the 10-year yield and everything that can relate to it. So we're

12:52committed to it. We are truly the insane. We are committed to looking at it 24-7. And this is

12:58why

12:59I caution people on rates getting below 5.75% because you need a lot of things to happen now,

13:05of course, as the labor data has picked up and inflation has picked up, we're far from that.

13:11But the spreads had to do what I thought it could do over time. It had to get there to

13:18even get down

13:19to near 6%. And this is why I always say, y'all about to be grateful that you had near

13:246% rates.

13:26But I think the way I try to teach it is so loan officers and realtors have a better way

13:31of explaining

13:31to people and you show visuals, right? Why do we do shy? The very first time that I saw your

13:42brown

13:42eyes. The reason we use that song is so people could realize, wait a second, this has to come

13:48down here for mortgage rates to come here, but the spreads have to get better. And just like 5.75

13:54to

13:54six and a quarter is like, that's as good as it gets in this environment. If the labor market was

14:00breaking and the Fed gets dovish and all those things, if they happen, we can go there. We

14:05could sing a different song. But for now, we just flow with that range. And this is why we do

14:09ranges.

14:10I appreciate that, but I have no idea what that song has to do with what you say.

14:13Oh my God. You're one of those different, if you don't know shy, okay, you're a different Gen Xer

14:18than I am, right? I'm clearly a different Gen Xer than you are because in the 90s, you were like

14:25doing basketball. Basketball, R&B. Those were the G's. Oh, just for all my Gen Xers who played ball

14:34in the 1990s, in the 80s, man, wasn't that just fun? We're all watching the NBA finals. And by the

14:41way, just want to say to any New York Knicks player out there, you let Wimby do that to your

14:47guy, throw him on the ground like that. We need Charles Oakley to come off. That guy, Wimby better

14:53be put on his ass the first 20 seconds of the game for him throwing a Brunson like that. You

15:00cannot let that happen. Bill Lambert is screaming right now. You cannot let your best player get

15:05knocked down by a seven foot five guy. It is going to be really interesting to see what happens next

15:10after that. Okay. Well, we are out of time. I wish we could keep just talking about basketball here,

15:15but Logan, thank you so much for breaking it all down for us. We will talk again soon. Pleasure.

15:28you

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