Here's how housing survived the Iran conflict

HousingWire

On today’s episode, Editor in Chief Sarah Wheeler talks with Lead Analyst Logan Mohtashami about how housing survived the Iran conflict, the Lisa Cook decision from the Supreme Court and more.  Related to this episode:  How the housing market survived the Iran conflict https://www.housingwire.com/articles/how-the-housing-market-survived-the-iran-conflict/  HousingWire | YouTube⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠ https://www.youtube.com/channel/UCXDD_3y3LvU60vac7eki-6Q  More info about HousingWire https://lnk.bio/housingwire  The Top 5:  How the housing market survived the Iran conflict https://www.housingwire.com/articles/how-the-housing-market-survived-the-iran-conflict/  Supreme Court blocks Trump from removing Fed governor Lisa Cook https://www.housingwire.com/articles/supreme-court-fed-cook-removal/  VA updates appraisal rules, adjusts fees in some regions https://www.housingwire.com/articles/va-loan-appraisal-rules-fees/  Bed Bath & Beyond sets road map built around three housing pilots https://www.housingwire.com/articles/bed-bath-homeownership-platform/  Fannie Mae to expand title pilot program, Pulte says https://www.housingwire.com/articles/fannie-title-waiver-pilot/  Want more from Sarah? Don’t forget to subscribe! https://www.housingwire.com/subscribe/  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 why housing survived

00:15the Iran conflict, the Lisa Cook decision from the Supreme Court, and more. First, I'm going to

00:21review the top five trending articles on housingmar.com, starting with the tracker article

00:26we published Saturday titled How the Housing Market Survived the Iran Conflict, followed by

00:30Supreme Court blocks Trump from removing Fed Governor Lisa Cook. Then we have our coverage of

00:35the VA's loan fee hike proposal and industry pushback, and the latest on the Bed, Bath, and Beyond

00:42acquisition of Fathom, which is part of their overall strategy on mortgage, real estate,

00:47title, and more. Finally, we have Fannie Mae Expands Title Pilot, which continues to get numbers with

00:52our audience. Okay, Logan, welcome back to the podcast. It is wonderful to be here. We wrote

01:00the tracker article now that we're heading into the second half of 2026, and obviously now that

01:06people know for the housing market shifted about a year ago, and comps are going to be a lot different

01:14now going out for the second half. But what we did is we have so many charts that I can

01:20use, and Sarah,

01:21you tell, you just, you'll not have, you know, me posting 40, 50 charts, you know, that we can do

01:28for our tracker. So I've only, I only could post a few. And for this weekend's tracker, I posted our

01:34total pending home sales. Now we have our weekly pending home sales, which is a week-to-week thing.

01:40It's kind of, think of it like jobless claims. Jobless claims have a week-to-week data that can be

01:45very volatile, but you get a sense of a trend, but you got to be able to know enough to

01:50know when

01:50something is pushing it up higher or lower. But our total pending is like a moving average,

01:56like a four-week moving average, like the four-week moving average for jobless claims.

02:00And I put it here because now we're going to the second half, and there's a clear deviation

02:05from 2025 and 2024 data, all while the conflict was going on. So mortgage rates were heading higher.

02:14People are like, oh, who's going to buy a house with this conflict and war and all this? And it

02:18didn't matter. Housing held firm. And the article is basically trying to explain why. And really it

02:24is affordability got better on its own because wages outgrew home prices for the last two years,

02:30but also mortgage spreads. Like we've now had one full first half of 2026, and we've never got mortgage

02:38rates close to 7%, never went above 7%. And whenever that used to happen, it just slowed things down.

02:47And you'd have to wait for rates to get back down to 6%, and there's just not enough time. So

02:52here we

02:53are. If the snowstorm didn't happen, sales would have picked up a little bit more. Hopefully now

03:00people understand what happens in Christmas and New Year's and the slowdown that happens into that.

03:05But housing held up. And now we have a series of data lines to show that inventory never escalated

03:13out of control because demand is so weak. Weekly pending home sales have been pretty much positive,

03:18mostly if you take the snowstorm out of it. Purchase application data has been mostly positive

03:22year over year. And now our total pending home sales, which more of an average, you can see

03:27that it's noticeable. And the article just kind of hints into that why and why the backdrop,

03:33not only for the second half of 2026, is better than the last few years, but also going out for

03:38years ahead. Because we have more inventory, price growth is not going out of insane, and rates are

03:44lower than they have been in the last few years. So talk a little bit about mortgage spreads. A lot

03:48of times in the tracker, you'll be like, this is what the normal level of mortgage spreads is,

03:55where it is, and here's where it is today. So that we know how much better could it get,

03:59or are we pretty much there?

04:00So in recent history, I mean, I could go back and, you know, we had negative spreads at one point

04:06in

04:071980, which 1980 was a crazy year. We had negative spreads, and also we had near 6% spreads. A

04:13lot

04:14was happening back then. Normal, I would say, is 160 to 180, around there. Now, I thought it would

04:20take some time to get back to normal. So every single year we talk about, okay, the spread should get

04:26better now, this amount of basis points, this amount. And then 2026 was the year that we should

04:33get close to normal. But I thought it would happen more to the end of the year, not the start

04:37of the

04:37year. That's where the mortgage-backed security purchase pushed things a little bit lower, faster.

04:43But now everyone can visually see, housing doesn't operate well when rates are above 7%.

04:49And if it happens within a calendar year, it just slows everything down. And you just can't get it

04:55back, can't get rates back down to 6% fast enough to really move the needle much. And that's the

05:00flow

05:01of data, right? In 2023, 4, and 5, rates go up, housing slows down, rates come down, housing picks

05:08up a couple hundred thousand homes, and then it shoots right back up. Not the case this year. And we

05:13had

05:13rates spike up, 76 basis points at one point. But because we are lower than we have in previous years,

05:21and because affordability got a little bit better, and it's no longer a savagely unhealthy

05:26seller's housing market where buyers don't have any kind of say, it is a very healthy market compared

05:33to what we used to have during COVID when that was savagely unhealthy. But now you can see sales

05:39picking up and millions and millions of people buy homes. When affordability is better, they buy more,

05:44and there you go. And I think that was, you know, because it was the midpoint of the year,

05:49now we could show the body of work for the last year. Because when did the housing market shift,

05:53Sarah? Oh, I know this one. Mid-June of 2025. So a year ago.

05:57Mid-June 2025, yes. And now everyone could visually see the supply and demand equilibrium with weekly

06:02pending sales, total pending sales data, purchase application data, inventory channels. And we're

06:08going to go off to the second half of 2026. A lot of crazy things could happen, but for now,

06:13at least this year, the housing market held up.

06:16So where were mortgage spreads last week? And how much better can they get?

06:23So the spreads, the closing date we use is 2.03%. I think the low point of this year,

06:29how we track it, spreads can be tracked differently by depending on who you quote on mortgage rates.

06:34But the low point is like 1.81. So we've got about 20, 25 basis points that can improve in

06:42the second

06:43half of 2026. Getting to 160 might be a stretch. So think about where we are today. That gets you

06:54six and a quarter without any help from the 10-year yield if you get back down to 180. And

07:00that works,

07:01right? If you get a little help from the 10-year yield, you could get under six and a quarter.

07:07If you get near 4% on the 10-year yield with spreads back to normal, you could get under

07:135.75.

07:15So that's kind of how maybe you should project that out in the future. But majority of the move

07:20has already happened, right? And 2023 was, mortgage spreads got to 3.11%. And mortgage rates would have

07:29been above 7% most of the year if it was 2023, 2024, and 2025. So the spreads were the

07:36big factor.

07:37And that's going to stay here for some time. That's a positive. You don't have to worry about

07:41that unless some crazy thing happens where the Fed maybe gets really aggressive on hiking rates or some

07:47crazy recession happens out of nowhere. And the spreads are just basically adjusting to the

07:53volatility of people missing their payments and stuff like that. So for now, look at that as not

07:59only a positive this year, but for years to come, and you could get about 20, 25 basis points better

08:05toward the end of this year. Or over time, you can maybe get 25 to 35 basis points better. So

08:11majority of the move is made, but now everyone can visually see. And that's why we put the total

08:16pending home sales to show, okay, the conflict was happening right about here. This is where the

08:21data is. This is where the data was before. Housing held up pretty good considering, right? And a lot of

08:26that is mortgage rates really didn't get above 6.64% for a long time. And that's usually when things

08:31typically slow down. And we're not really like back to the low points of this year for the reasons

08:37we've talked about in the past, but all positive considering all the drama that has happened this

08:44year. Well, you know, every time you write an article or our other reporters report on it and the

08:49Iran conflict and like yours are like, you know, how we survived the Iran conflict. And my first question

08:54is, I was like, is it over? How do we, how do we look at that? And it's one of

08:58the things you and

08:58I talk about every time you write something, it's like how we should position that because we know

09:04that like largely things, you know, now we have this, you know, piece still in place. And yet we have,

09:09you know, every weekend there's like skirmishes, there's new things, but from your perspective,

09:14you're like, we can say this. When oil traders started to sell every single rally,

09:19they were telling you that the escalation clause or phase of this, this situation was probably not

09:28going to happen just because, just because Iran needs money and Iran, the last thing they need is

09:35NATO coming in and India getting mad and inventory levels getting down to such depressed levels that

09:40it makes sense for the entire world to come in and take Iran out. There's no, there's no benefits.

09:46And I think so many people just don't like president Trump. So they kept on with the negative

09:51themes and they didn't quite look at the oil trading going on. And everyone keeps on telling

09:56me, Oh my God, there's no deal. The conflict is going on. I said, we're talking about the 10 year

10:01yield and rates. And all I care about is oil prices. I don't care about your opinions. All I care

10:06about

10:06is what are oil traders doing because they don't care about your opinions either. Okay. So what the issue

10:14that I would be a little bit concerned about now is Iran is trying to play or manage this game.

10:21Right. And I get, my concern is a few months down the line after oil has started to flow,

10:28they get a few money, then they go, Oh, wait a second. We don't want to give up our,

10:33you know, nuclear things. And then the midterm start coming in. And, you know, a lot of things is that

10:38the U S can't, you know, unless you reauthorize the war, you can't basically go and attack Iran,

10:44you know, they could do defensive attacks, but, um, down the line, this is something I'm mindful

10:50of that, you know, this might perk up again, but for now, all we care about is oil prices coming

10:58lower. I don't, I don't believe America's in general, just the whole Iranian nuclear thing is

11:02not one of their, because people just, people don't assume somebody is going to get a nuclear bomb

11:06and shoot it at someone because then they're going to get shot by nuclear and everyone dies.

11:10You know, North Korea has had our nuclear weapons for years. They don't shoot it at anyone because

11:13they know as soon as they do that. So I don't think Americans are vested in this on the, on

11:18the

11:18energy side. So midterms are coming up, but I'm a little bit concerned down the line, they might

11:23pull some shenanigans and we might revisit this to, to another degree before the midterms, but for now,

11:30oil price is down. We had one fed governor already say that oil prices are down.

11:35And that's, you know, and we had one hawkish fed president who's not talking about three rate

11:41cuts, only one. But so much of the federal reserve hawkish stance over the last two months has been

11:48oil prices, oil prices, the conflict, the conflict, the conflict. We still haven't heard from Beth

11:53Hammock, nor have we heard from Lori Logan, the Dallas fed. No, have we seen Austin Goolsbee smirk and

11:59the Chicago fed say anything, but they made this about that. So I'm waiting for other hawks to start

12:05talking because when Neil Kashkari said only one rate hike, you know, the worst kind of pricing

12:12is over where you get multiple rate hikes in a very short amount of time. So where the 10 year

12:16yield is at, I know mortgage rates aren't back down to where there were pre-conflict, but

12:21and the hawkish tone of the federal reserve, this is as good as you could hope for in this regard.

12:27So I mentioned in, in our intro that, you know, one of our trending stories is the fact that the

12:31Supreme

12:31Court ruled against Trump being able to fire Fed Governor Lisa Cook. It really is, you know,

12:37we've said it's ironic because she's been a dove this whole time. She would like to lower rates.

12:42So it doesn't really change the calculus on, on, you know, Fed funds rate or eventually mortgage rates,

12:48anything that happened with her, but still very interesting as far as the, you know, independence

12:52of the Fed and, and how much he can do to change who's a governor.

12:56So there was no bond market reaction to that because when the federal reserve went hawkish,

13:03Trump lost the numbers, this would have been a very interesting day.

13:07What do you mean? What do you mean by that? Lost the numbers in what way?

13:09So the reason why Donald Trump just wants to take Lisa Cook out so they could, he could put one

13:15of

13:15his own people in. And if he has the numbers where he has more doves than hawks, then they could

13:20cut

13:20rates because there's more of them. It's just a numbers game, right? You need voting members to,

13:25to vote for rate cuts or against rate hikes. The problem is that inflation took off and then the

13:31conflict happened and pretty much most of the, all the hawks went super hawkish. And then there

13:38were more hawks on top of that. So the numbers don't make sense. Even if Lisa Cook was fired and

13:43somebody was put in, he doesn't have the numbers anymore. So that, that whole game plan went to smoke.

13:51And now it's like the bond market doesn't care because Lisa Cook is one of the doves,

13:57like one of the productivity doves and Trump needs someone like her inside. What, what the irony of

14:02all this, you know, you know, is that Lisa Cook has more in common with Kevin Walsh on some of

14:08the

14:08things, maybe uneven policy, housing, stuff like that. And yet this whole thing was trying to get

14:14more numbers like out there. And that's why the bond market didn't have any reaction there. You need

14:20more hawks to sound less hawkish. You need the Beth hammocks, the Lori Logans, the Austin Goolsby's

14:26to finally say, well, they made it every, they made a lot of things about the war. Well, the

14:31oil prices are down. So you bring that start to get back. And we always talked about, we work off

14:36for the 446 level on a 10 year yield at first level, 435 and things get better. We haven't quite

14:42hit

14:42that yet. And then the next one would be 4.24. So you can get spreads a little bit better,

14:48get,

14:48you know, you can get down to six and a quarter in there. And that's kind of how everybody should

14:52kind of look at it, you know. But that's why you didn't see much of a reaction by bond traders.

14:59So here we have a short week. Holidays always affect our housing data. In fact, in this,

15:04in the tracker that you wrote on Saturday for last week, it still had some leftovers from Juneteenth.

15:10We're going to have, you know, an impact of the July 4th holiday coming up. So that's interesting.

15:16But in the short week, it's also jobs week, right? It's jobs week. We'll do our standard jobs week

15:22preview. But, you know, it's good that, you know, we're back to really focusing on the economic data.

15:28And to me, the labor data improving was a huge, huge factor for rates. Because, you know,

15:36last year was the lowest job growth we've ever seen in the 21st century outside of recession,

15:41of course. So the Federal Reserve sounded more dovish. They gave you an extra rate cut.

15:47The whole game plan this year was maybe two to three rate cuts. And then that's it for the economic

15:52cycle. But, you know, if the job data got worse, they might get more. That's all gone away, right?

15:58So I try to always tell people the labor data improving was really a big factor because it's it

16:06basically took away the one reason why some of the hawkish people might have sound dovish because job

16:13growth was so low. And and I think the confusing part is that the Federal Reserve said, oh, we don't

16:18have anyone looking for work. So zero job creation is fine. And then all of a sudden we have a

16:22couple of

16:23reports over 100,000. And, you know, some of, you know, some of the hirings that will happen for the

16:28World Cup, then they'll get fired. And then, you know, you readjust that. But clearly there were

16:32people there. My argument has always been the first year of every trade war is really bad.

16:37Just people just, you know, companies just don't know what to do because we're all over the place

16:42with policy, right? The government is way too big. It's talking too much and there's too much chaos.

16:48But the second year when things start to calm down, that softness tends to tend to tend to come

16:55back to trend. So we want to keep an eye on it. We'll get the job openings data. We get

16:59the

17:00BLS jobs Friday ADP report, but it'll be good to see where the bond market is going to react now

17:06to

17:06data. Now that oil prices are at $70 a share. I keep on saying $70 a share, $70. And we'll

17:15work off of

17:15that. So we'll do our jobs preview before the report, but a jobs week is always big. And that

17:20to me is one of the reasons why yields are probably higher than what some people were looking for this

17:25year. So interesting. Okay. Small, fun note. When I was in college, I worked in Washington,

17:32D.C. for the National Journalism Center. We had to pick one topic to report on throughout the summer.

17:40And mine was U.S.-Soviet arms treaties. So that's why I'm very always interested in these

17:46arms treaties. Mostly that was about ballistic missiles. But I know more about arms treaties

17:50than probably I would ever need. So maybe that's why I keep asking.

17:55Well, you come from a military family too, right?

17:57I do. Yeah. Very interested in all of it.

17:59So I was actually telling someone over the weekend that you and I have a funny common story. Both you

18:08and I were in Iran in 1979.

18:11We were.

18:13And in Iran at the same time, my family came to the States in 1976. So I've been in America

18:19really

18:19since I was one. But we went back and visited and you were in our-

18:24My dad was stationed there.

18:25Yeah. So you and I were actually, we could have done a podcast together back then, you

18:30know? It would have been about, you know, probably dolls and Legos, but still, you know?

18:36Yeah. No, fascinating topic to me. So we'll keep an eye on it. Thank you so much for walking

18:42us through all the economic data. And we will talk again soon.

18:45Pleasure, Sarah.

18:55Pleasure, Sarah.

Category

Transcript

Comments

Recommended