Why home sales remain positive

HousingWire

On today’s episode, Editor in Chief Sarah Wheeler talks with Lead Analyst Logan Mohtashami about mortgage spreads and positive home sales.   Related to this episode:   Better mortgage spreads are still keeping home sales positive  https://www.housingwire.com/articles/better-mortgage-spreads-are-still-keeping-home-sales-positive/  HousingWire | YouTube⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠  https://www.youtube.com/channel/UCXDD_3y3LvU60vac7eki-6Q  More info about HousingWire  https://lnk.bio/housingwire   The Top 5:   UWM likely better off after losing Two Harbors deal, KBW says  http://housingwire.com/articles/uwm-two-harbors-deal-kbw  Better mortgage spreads are still keeping home sales positive  http://housingwire.com/articles/better-mortgage-spreads-are-still-keeping-home-sales-positive  America 250 is a turning point for American homeownership  http://housingwire.com/articles/america-250-future-us-homeownership  Introducing the 2026 Women of Influence  https://www.housingwire.com/articles/introducing-the-2026-women-of-influence/  Could a $475 Compass fee spark the next wave of real estate lawsuits?  http://housingwire.com/articles/transaction-fee-lawsuits-nar   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

00:11Welcome, everyone. My guest today is lead analyst Logan Motoshami to talk about mortgage spreads

00:17and positive home sales. But first, here are the top five trending stories on HousingWire.com.

00:22Leading the list is our continued coverage of the Two Harbors acquisition with the headline,

00:27and UWM likely better off after losing Two Harbors deal, KBW says. Followed by this week's

00:33Tracker article. Then we have America 250 is a turning point for American homeownership,

00:38which is a contributed article by David Spector, chairman and CEO of PennyMac. Then we have the

00:442026 Women of Influence article. And finally, we have transaction fee lawsuits test broker disclosure.

00:50Pleasure. Logan, welcome back to the podcast.

00:53It is wonderful to be. It's good that we're having a Monday where we're not talking about oil prices.

01:00It is so good.

01:01And we're talking about red cards and suspensions and taking suspensions out and U.S. soccer. And

01:06I try to wear my, you know, as close to a U.S. soccer outfit I possibly can.

01:12I love it.

01:14Representing the U.S. It's playing Belgium. Of course,

01:16the game will be decided by the time this podcast comes out. But yeah, it's a nice change of pace.

01:23I love it. No. So, you know, our office, the housing of our office is in downtown Dallas on

01:28Main Street, which they have closed off because we have some of the World Cup teams staying in the

01:34hotel right across and then their buses are there. And so there's, they close off the street and it's

01:39full of their supporters. So it just depends on which day it is. I think it's Spain and Portugal today,

01:44but it's, it's so fun just to be right in the middle of something like that.

01:46So it feels like, you know, going to a chart daddy nerd, nerd tour event.

01:52Well, there you go. We, we need more, we need more fans for that. Yes. Okay. Well,

01:57you alluded to it, the fact that we didn't have a war weekend and then like the, you know,

02:02a snapback that we have to do talk about oil price on Monday. So that's great. So let's talk

02:06about what are you looking at? You know, um, before we address like the, the, the topic of

02:13the day is can mortgage spreads get better? Cause that's, you know, the, the big theme of the,

02:17of the tracker. But before we start off, I just wanted to note that, you know, uh, Lance Lambert

02:23from Resi put up a stat about, you know, institutional wall street sellers and they were up 400% year

02:33over year. And, uh, I'm not, I'm not buyers, right? You're saying sellers, sellers, 400% wall

02:41street selling homes. You know, I'm not a big fan of percentage basis off of, uh, off a low base

02:47effect, but in any case, we sat here with the tracker inventory is negative barely, not by much,

02:54but slightly down year over year in a, in a, in a time where, when everyone said, Oh, BlackRock is

02:59buying all the homes. And once they sell all the homes, inventory is going to skyrocket.

03:03And the day that that report came out, our tracker was down slightly year over year.

03:09And I was thinking of all the, all that hype over the last few years about wall street owning

03:14all the homes. And once they sell, you know, and, and then I saw another headline this morning

03:19that said, you know, Biden and, um, you know, kind of wall street was, uh, uh, uh, or immigration

03:26immigration. Uh, the federal reserve wrote an immigration paper that showed that 30% of home

03:32price gains during COVID was because of that, uh, illegal immigration. I was thinking, Oh my God,

03:37I totally forgot. How would I be remiss? The Guatemalans come from Mexico, go to Los Angeles,

03:42those beautiful Los Angeles homes for 15 and $30 million. They're outbidding BlackRock, you know?

03:50So how's BlackRock supposed to buy all the homes when they're competing against the league? I'm like,

03:55some of the stuff is just crazy out there. So it was nice that, you know, we're talking about

04:01suspensions and unsuspensions and soccer and everything. And everyone had fun making their

04:05own videos about it, but, uh, the world we live in. Did everyone have fun or was it just you

04:10having

04:10fun making your own videos? No, a ton of people had fun. I mean, it's one of these things, you

04:16know,

04:17as a former basketball coach, the one thing I would have done if I was the Belgium coach,

04:21we'd be like, nobody talk about this. We don't care. We beat the Americans with the full team,

04:27you know, five, two earlier. So we were, we're not going to cry about this, you know,

04:32because once you start crying about it and you know, you know, you know, you get your,

04:35get your guys all geared up and ready to go. I love it. Okay. Well, let's dig into the tracker,

04:41which as you said, um, our headline this time, uh, was really based on like spreads again, um,

04:47coming in. So what did, what was remarkable about the tracker for you this week?

04:52So to me, it's, you know, the question is, can the spreads get better? Because obviously now,

04:57now that we're in July, it was another week of total pending home sales being positive,

05:02weekly pending home sales being positive, purchase application data was positive,

05:05but it's really because mortgage spreads have compressed enough to keep rates from going above

05:10seven. So the question is, can the spreads get better? You know, and, and to me, it's like,

05:16I thought one 80 right, right now the spreads are roughly at 2% getting to one 80 would be

05:22like

05:22normal. And that, that should have happened toward the end of this year. So we can get a little bit

05:27of improvement on the spreads, but we also have to remember the fed has gone hawkish and we're sitting

05:33here Monday morning and Christopher Waller, Waller, who was team labor over inflation last year is

05:40still team labor over inflation this year, except the labor data got better. And he was one of

05:46the doves that became a hawk. He didn't really talk about oil prices in a big way, but he kind

05:52of said the labor market got better and inflation took off. So it's kind of like our theme that not

05:59only was inflation taken off before the conflict, the conflict happened in the fed kind of, you know,

06:04went full hawkish. So it just makes it a very interesting July meeting. We're going to, we're

06:11going to hear from Lori Logan as well this week. And she's one of the hawks. Like, how does the

06:14fed look at

06:15this? Because right now it just looks like to me, the market is pricing one rate hike toward the end

06:21of the year. So the, the curve of the 10 year yield is higher. We're sitting here today as 4

06:26.48%.

06:26So, you know, so the spreads can improve a little bit more where instead of, you know,

06:35kind of six 16 rates, you can maybe get to six 40 at the spreads, but the labor market improving

06:44inflation rising, and then the conflict on top of that are really the big story. So kind of don't

06:49look at spreads in a, it's going to be going down in a meaningful way. You could get a little

06:56bit

06:57improvement, but what is, what, what it's done is what you and I talked about when we first,

07:02you know, I remember we were in Utah and I was on stage with Mitt Romney and we're talking about

07:07it. And I got the peanut butter jar of Fannie Mae spreads, great tasting. You know, I thought it

07:14was a defensive mechanism back then. And now you could all see a defensive mechanism of keeping

07:20rates from not going up higher. Like it has. It was the MBS spread, right? I mean, the MBS buying

07:25that,

07:25that was announced. It did, but I, but, but to be honest with you, I thought the spreads would have

07:30been,

07:30you know, toward one 80, toward the end of this year anyway. So the spreads, what they're doing

07:34right now, look, look normal. Right. And they were buying, you know, toward the second half of,

07:40of, uh, 2025, but, but as long as you stay within this range, it can work, right? I'm sure everyone

07:49wants lower rates. That's, uh, I'm not disputing that, but we have to be a little bit more realistic

07:54that policy has shifted. And now we're starting to get more fed people talking about it. Well,

07:59the labor data is not breaking. So, you know, Paul, the rate, uh, inflation is taking off. So

08:05things have to change. And that's what Christopher Waller, who should have been the fed president,

08:10um, fed chairman, but he kind of gave his, uh, a heads up on it and talk about the dots

08:15and things

08:16not changing. So labor market first, you know, then the conflict, but now the conflict is over.

08:22So we go back to labor market, you know, being stable. And I think that's why we need to keep

08:26an eye

08:27on the labor data as well. The internal stuff, the weekly stuff, uh, because that really matters.

08:31Now, uh, it's labor over inflation on the other side, but inflation is above targets. So you don't

08:36have that drift down to 4% on its own. And it doesn't look like you're getting any rate cuts,

08:42uh, this year, unless the economic data changes in a meaningful way.

08:46And, and we'll be happy just not to get rate hikes. I mean, after everything we've been

08:50through, like, listen, that would be a win if we just didn't get any rate hikes. So here's two

08:56things, uh, two of the charts on this week's tracker, I think make the case that as, as great

09:01as, as it is for us to talk about it, I wish that people could just go and see, and

09:06they can,

09:06right? Like they should go see it because the mortgage spreads chart, it just, that just seeing

09:11it visually, you get, you understand why that's so important. And then the total pending home sales,

09:16we, we don't always, you don't always include the total pending home sales in the tracker,

09:20but you did this week. Maybe you can explain why.

09:24I always like to put the weekly, it's a weekly tracker. So I want to get the freshest data. Now,

09:29weekly data could be tainted. It's going to be tainted because it's July the 4th. Uh, so next

09:34week's tracker is going to, is going to look different. And then you get the rebound effect on

09:38after the July the 4th, uh, uh, week, but the total pending home sales is more of a slower

09:43moving average out there. And you could see the clear deviation. Like we, for the first time in

09:48many years have a clear deviation from our sales data than what we saw in 2024, 2023 and 2025.

09:56So as rates started to go lower and stay within that range, I think this is one of the things

10:02that

10:02when I started the year out, I said, we can get 237,000 more existing home sales. If rates just

10:08get

10:08six and a quarter and under that's, that's legit. And that's just based on, you know,

10:12whenever rates get near 6% demand picks up, whenever it shoots above seven demand slows down,

10:16you lose the year, right? You can't get any traction with that. But this year, because

10:22mortgage spreads are improving, I don't have to, I didn't forecast 70% higher. So this is the first

10:28year where we have the lowest rate curve ever. And that's mostly spreads and where the 10 year yield

10:34is right now. What we always like to show people is where would mortgage rates be in 2023? You're

10:39like 7.7%. We'd be near, you know, seven and a half percent in 2024, and we'd be above 7

10:46% even in

10:472025. So the spreads have kind of done their thing. And this is why you can see that kind of

10:52little

10:52breakout in home sales, nothing spectacular or big anyway, but another year of wages outpacing home

11:00prices, affordability gets a little better, the lowest rate curve in, in, in many years, that's how

11:06you get the growth. And then that's the weekly tracker. And just remember our weekly data that we

11:10show, our weekly thing goes 30 to 68 days out in the forward. So it doesn't hit the sales data,

11:16you know, uh, uh, until maybe August and, and, and, and even maybe even September. So it's a forward

11:23looking, that's why we like to do the weeklies, but I just wanted to show the total pending is to

11:27kind of see that, you know, we're, we're, we're breaking out just a little bit now. Existing

11:31home sales are going to come up this week. Uh, we have a very, very low comp on a year

11:36over year

11:37basis because when did the housing market shift, Sarah? Oh, mid June. That's my line. Mid June,

11:42mid June, 2025. And it usually takes about, it usually takes people six to nine months

11:48to kind of, uh, get it. Cause they're working with backward data, but you know, the forward looking

11:52data of one rates go lower labor over inflation. Now we're here and we can move. We could,

11:56we could work with this, uh, uh, again, just to, I mean, I, I, I have to be realistic to

12:02where I

12:02think mortgage rates can go. I just don't have much history of getting the 10 year yield below

12:07three 80 and mortgage rates getting below 5.75. So the spreads had to be a big part of 2026

12:14and it

12:14has to be a big part of 2027 and 2028 and going out whatever Kevin Warsh wants to try to

12:20do with the

12:20housing market or convince whatever we're here. We can just grow a little bit. And you know,

12:25the best part is it's not like home prices are taking off. If home prices were going above,

12:30uh, wage growth, you and I be having a different conversation, but that's not the case. It's a

12:35very healthy market in that where buyers and sellers. And I mean, it's beautiful to watch.

12:40And I mean, just for, just for me to see this, this kind of work itself out, but a lot

12:44of it had

12:45to do with mortgage spreads or else rates would get above 7%. And we get to test it to see

12:50if 7% plus

12:51has the same kind of impact, but, uh, uh, a positive tracker in that light. And that's why we wanted

12:57to

12:57show the weeklies and the total pendings altogether. I think another, uh, chart that I love looking at,

13:04um, in the tracker and also people can find it on housingwire.com, right. Um, is the national

13:09single family inventory because, uh, you know, comparing it to when we were doing this podcast in 2022,

13:15when you were doing the tracker in 2022 and it got to that all time low inventory and then seeing

13:22this chart now and seeing how much more, and of course last year, 2025 sort of outperformed. We

13:26had this like more than 30% growth in inventory and 2026 is laying right on top of that number.

13:33So I think this year, uh, this week we're, you know, down 0.11%, 0.11% over year over

13:39year,

13:39but it's still laying right on top of that 2025 number. And when you see the chart, you see how

13:44much

13:44better that is than 2024 or 2022, or especially, I mean, 2023, especially 2022. So it's another one

13:52where I'm like, guys, go look at the chart. I'm not even a chart person. I'm not you. I'm not

13:57the

13:57chart daddy. Um, but you know, I don't want to be the chart mommy either. I do not. That sounds

14:04terrible. No, but I mean, I think that's a really good chart, that inventory chart, you know, you know,

14:10the slope of the curve is how we like to talk about economics, but what happened is toward the

14:16end of 2020, we were in a really bad spot. And unfortunately everybody goes into this kind of

14:23doom porn craze and people just thought home prices are about to crash. Cause I mean, every year that

14:28happens, but to me, the housing market was unhealthy then because inventory got to a level that I've never

14:32seen in history is very, very abnormal. And also we have a lot more people working now than we did

14:39in

14:39the seventies, eighties, and nineties, five generation of home buyers. And it was just not

14:43a good spot. That was a whole concept of team higher rates for those who don't know, or new

14:48listeners in 2021 early, the media circuit that I did with Bloomberg back then in January, February,

14:55it was like, Oh no, guys, guys, guys, we need higher rates. This is not, this is shortages are the

14:59worst

15:00of all things because you don't get a real, a good accuracy price thing. And simply home prices just took

15:07off in 2021. And the whole concept of team higher rates is trying to get something higher to try to

15:12cool this down a little bit, because this is very, very unhealthy. And then what happened was things

15:17got worse going into early 2022. So in February, I deemed the housing market for the first time ever

15:26savagely unhealthy. It's the worst housing market. I say it's kind of like what's happening in San

15:29Francisco. It's just, you know, prices are escalating out of, out of control, but this is the national

15:34data. And we got all the way down to 240,000 single family homes. Now people always ask,

15:39why is our data different than the NAR and everyone else's? The NAR's data counts pending

15:44contracts. We are just basically single family homes, not on contracts, the raw data out there

15:50available for sale. And with housing wire intelligence, all of you could go there. You

15:54could look into your own city zip code state to see what it's gone, but it's fresh data. And that

15:59was

15:59just not going to work, you know? So the, so it was just like, I threw, threw up every flag

16:04and said,

16:05this thing has to kind of crash itself down. Cause we would have had another year of 20% home

16:11price

16:11growth, which would have killed future demand even more. And then when rates started to rise,

16:16inventory started to pick up. And then it was like, you know, four to 5% mortgage rates weren't doing

16:22the damage. You know, I remember 2022 getting interviewed when rates went from 6%, but then

16:29came back down to 5% and said, this is not going to work still. Like we need higher rates

16:33to, you know,

16:34I think for multiple interviews, we need higher rates to put a lot of people on their bleeps.

16:38We got to get inventory back up. So we get the supply and demand equilibrium. So we could have

16:42sales growing again, but for a longer period of time. And unfortunately what happened in 2023,

16:48which was another, a bad year inventory still wasn't high enough that you could have 6% mortgage rates,

16:56go to 8% mortgage rates, but still have 6% home price growth that year. So those weren't very

17:04healthy

17:04housing markets, but now buyers and sellers, housing's very slow moving. It's not, you know,

17:10like a stocks or anything like that. So we have a much more functioning housing market than we did

17:16in 2020 to 2023. And we're just kind of working on ways, but the problem is a lot of people

17:20just

17:20think, Oh, wall street's going to sell. Everyone's listing their homes and inventory is going to

17:24skyrocket. Like it did from 2005 to 2008. Home prices are going to crash. You have to be an idiot

17:29to buy a house, even though I have no life and I'm on a podcast and I'm doing porting every

17:34day.

17:35I digress. Um, but don't listen to men's stock. Oh, just, just, just men. And we have a lot of,

17:42uh, I don't, there's something about, and we do have crazy women. We know some crazy women who go

17:47out there and just constantly post doom stuff. But what it did is the tracker was designed to show

17:53that the housing market shifted mid June, the forward looking data's got better. And what

17:57happened in 2023, actually inventory went negative because it had a very honk up. So we were talking

18:02about, you know, guys, don't be surprised if inventory goes negative this year, especially heading

18:06up to mid June, but it's a healthier market because we're up here. We are up here, not down

18:13here. Down here is not going to work, but up here is, and it's slowly working itself right.

18:19And there is no instant gratification. You're not getting rates at three, four or 5% anytime soon.

18:24But what you needed is price growth to cool down wages grow. And it's just housing. It's not the,

18:30like the sexiest fun thing to talk about, but this is how it operates. So the tracker was designed

18:36to show everyone forward looking data. So you can be six months ahead of everyone else.

18:41And we had this over the weekend where people just, you know what? I was surprised. I thought

18:44inventory would go well above 2019 levels on the national side. And we always said six to nine

18:50months. It's taking people almost a year to figure out things have shifted because I think they work on

18:56old stale data and they listen to too many doomers out there, but most home sellers are buyers,

19:01right? So that's 20 to 30% of inventory leftover. If a mortgage demand picks up just a little bit,

19:07that's supply and demand equilibrium changes. We showed that late 2022 going into 2023. We showed

19:12that mid 2024. Now the Mona Lisa, the Van Gogh, the Monet, the Manet, all the great artists,

19:21the 2025 June, all the way to July of 2026. Now all of you get to see it. We've made

19:27us a big point of

19:28the podcast and the articles going back one year. This is how it works. If you care about how it

19:33works, you come to the chart daddy, no one else. But if you want to listen to doom porn, if

19:40you want

19:40to be entertained in that stuff, if you just hate everything in life and just think everything's

19:44miserable, I'm not your guy. I'm never going to be your guy. But if you want the data, if you

19:49want

19:49how we explain housing economics, listen to the tracker, come to the podcast, join Housing Wire so you

19:56get housing wire intelligence and you can do it in your own area. So you do not have to listen

20:02to those crazy people. Let the data do the talking out there. You can be the local expert for your

20:08market. Absolutely. Okay. Well, Logan, thank you so much. I know we've got existing home sales. We'll

20:13be looking for you to write up this week and more, more fed speeches to come. As you said, we

20:18have

20:19Lori Logan. So we'll be looking for that, but thank you so much for writing the tracker and keeping us

20:23up

20:23to date. My pleasure. And by the way, 10-year yield, 4.48, right? Again, right? So just remember 65

20:32to 75%

20:33of where the 10-year yield and mortgage rates can go is Fed policy that we work off the spreads.

20:40And

20:40that's how it's been since the Pelopetian War. So you want to be the detective and not the troll

20:46in this discussion. Okay. We had two more Loganisms to end the podcast there. As always,

20:53thank you, Logan. Talk again soon.

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