- 21 hours ago
On today’s episode, Lead Analyst Logan Mohtashami talks about Treasury's decision to buy back more debt and how that is impacting mortgage rates.
Related to this episode:
Mortgage Rates
HousingWire | YouTube
HousingWire Mortgage Banking Summit – October 1
More info about HousingWire
Want more from Sarah? Don’t forget to 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.
Related to this episode:
Mortgage Rates
HousingWire | YouTube
HousingWire Mortgage Banking Summit – October 1
More info about HousingWire
Want more from Sarah? Don’t forget to 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.
Category
🗞
NewsTranscript
00:10hello everyone logan moshami lead analyst for housing wire and guess what you get another
00:17solo act this week uh sarah wheeler does not have technical issues but legit she literally can't get
00:24in front of a computer right now for travel so i am here again uh we have a lot to
00:30talk about today
00:31i've been up since 1 50 and i had to do a cnbc interview at 2 a.m pacific time
00:36so so i'm on my
00:3811th cup of coffee but uh a lot of uh housing data a lot of uh reports uh interesting things
00:46about the treasury uh what cnbc asked we're gonna go over all of them uh today but today is our
00:52big
00:52day for housing wire uh housing wire intelligence uh of course uh we've talked about it for some
00:58times on my tracker data that i do every single weekend is again designed to teach everybody
01:04what's going on with the national data but the housing wire intelligence now you could do it
01:08for your local data so uh we think that's very important because of course real estate is
01:13all local the national economics uh matter because you know all housing moves with uh
01:19national data but every city is going to be a little bit different and i encourage everyone
01:25to go in and now that you've read the tracker you've listened to my podcast you are all versed
01:31in how to read housing data more prolifically so housing wire intelligence is up and adam or
01:36everyone out there be your own chart daddy chart mommy be your own nerd and teach everyone how it goes
01:43again if i do my job right all of you know and then you can teach everyone and we can
01:47take care of all
01:48the doomers out there in america but a lot's happened this week uh we're going to go over a few
01:53uh
01:53subjects uh number one um housing starts and how i wrote the uh article is there is no shortage
02:01in housing um not a controversial topic for me because you know i've set numbers uh out here for myself
02:09uh i do not subscribe to what other economists have talked about for years uh they'll bring out reports
02:17that'll say there's two million shorts there's three million short the white house said there is
02:2210 million i don't care about that stuff nor will i ever even read any of this stuff i'm a
02:28market guy
02:28so i just look at what's out there in terms of active listings and uh in the previous decade uh
02:37for
02:37those who did not follow my work um my general principle starting in 2010 is that we simply don't
02:42have enough qualified home buyers to have like a real recovery in housing because there's a lot of
02:46issues prime age population growth uh peaked in 2007 it's going to take a while to get our household
02:51formation back up together uh we have a lot of debt deleveraging uh this also means housing starts and
02:57new home sales are going to have the weakest recovery ever you're not going to get 1.5 million
03:01housing starts until years 2020 to 2024 that worked out perfectly but uh we always hear this housing
03:08shortage so my number is very simple for the existing home sales market if you get 1.52 to 1
03:15.93 total
03:16active listings and over four months supply shortage story gone now that's not normal inventory normal
03:25inventory is about um two to two and a half million if you go back to the nar data our
03:31data is a little
03:31bit different because we don't count contracts it's pretty much around a little bit over a million
03:35single family homes available for sale during the peak period so we're almost back there but to me
03:40with months of supply for over four months and that much we're fine and i can prove it by you
03:48know we've
03:48got to that metric in 2025 and 2026 and you look at price growth right the forecast last year in
03:542025 was
03:55for 1.77 home price growth nationally we ended up with 1.3 this year i was looking for a
04:01smidge of a decline
04:020.62 but uh home prices are up maybe one to two percent right now so because inventory is at
04:10a level
04:10that i feel you don't have to talk about a shortage we work off the supply and demand equilibrium so
04:16on that side of the equation the existing home sales market i'm i'm finished now if inventory went
04:23back lower and monthly supply is under four months i go back to this is a very unhealthy housing market
04:28but we're not there it's a very very healthy uh uh portion the inventory growth that we've seen
04:34really from 2024 to 2026 we'll get into that a little bit later but housing starts down again uh um
04:42multi-year low uh permits were up you know it's it's a quirky data line where you have basically one
04:48one
04:48positive and then the other side goes uh negative but this has been going on for years now and to
04:55the
04:55builders right uh we always say the builders aren't the marcher dimes they're here to make money the
05:00supply and demand equilibrium they they don't have to worry about rates above over six percent uh because
05:06they can buy down rates and even with buying down rates uh housing starts have been going uh lower and
05:13lower for years in a time and period where everyone was told we need to build a lot of homes
05:18because you
05:19know uh uh we have a shortage well if you had an authentic shortage then the demand would actually
05:26justify that that's why i like to use the housing bubble years new home sales got up to 1.4
05:32million
05:33sales were booming back then so housing construction was booming back then as you get older and older as
05:39a country you know you've built a lot of homes right we have over like 140 million 48 million total
05:44housing
05:45units in america so it becomes a little bit more precarious for builders to just like okay i'm
05:50going to put my head down and start building i'm not sure if i could sell this house by the
05:53time it's
05:53ready they don't do that so that article showed you a lot of charts to explain why i believe it's
06:00just not
06:00the case uh uh out there so i've got numbers i've got metrics because i'm just a market guy i
06:06just
06:07i drew i draw these black lines on inventory data when we get here we're okay uh out there so
06:12that
06:12that that topic is the why why i believe the shortage is over but it's been over for me for
06:17some times because of the existing home sales inventory but this housing starts data right i
06:23think that's some people are so why aren't we building homes i encourage everyone in that article
06:27at the very bottom we go back to june of 2021 and in june of 2021 i wrote an article
06:33said as soon as
06:34rates rise this is all going to come to an end don't expect a housing construction boom it is august
06:402026 housing starts are pretty much at early coven 19 recession levels and housing permits are aren't
06:47going anywhere uh we're not crashing in terms of new home sales so housing construction isn't
06:52crashing we're pretty much holding the line around 2019 levels so that's a positive but it takes
06:58sub six percent mortgage rates to even do that so when people criticize the builders well
07:02they're buying down rates listen you'd have less housing construction you'd have more people
07:06unemployed uh i don't care how they do it as long as they can keep sales at bay and keep
07:11people
07:11employed and we still build homes every single year uh i i stress to people it could be a lot
07:17worse than
07:17what we see uh today that's one subject second subject cnbc uh called and wanted to know about
07:24you know the 10-year yield or yields rising surging everywhere you know uh and how does it impact the
07:30housing market as we talked about in the previous uh uh podcast you know there's really not too much
07:37going on in housing but we always tell people this principle whenever mortgage rates get below 6.64
07:45and head towards six percent and if we could just stay there housing demand grows we've seen that in
07:50the past few years but the past few years rates would shoot up very fast and because the spreads are
07:55bad
07:56uh mortgage rates would get over seven percent fairly quickly not the case this year uh um so
08:02home sales are still positive year to date uh we had purchase application data come out uh
08:07it was down uh um two percent week to week down three percent year over year when i think about
08:12purchase application if there's any kind of big moves either up or down you need double digits
08:16you need 10 to 20 either the upside or to the downside so we did have seven to 12 to
08:2315
08:23percent year over year growth when rates were near six percent but now that's not the case anymore uh
08:28we've had some negative prints on purchase application here we've had some negative prints on our weekly
08:33sales so uh same thing as always when rates get above 6.64 and you get a little bit of
08:37duration
08:38demand starts to fade a little bit but i kind of emphasize there's a few really positive points with
08:43housing this year number one inventory is up we're not seeing much growth on a year-over-year basis
08:48there's only 1.28 year-over-year growth but going out for the rest of the year demand is still
08:53doing this inventory will be allowed to grow we don't have a hard comps anymore uh healthy right
08:58prices are in check better for affordability and mortgage spreads right this is why i've always
09:04emphasized mortgage spreads it would be a very unhealthy uh housing market in terms of spreads
09:09being back to where they were in 2023 2024 or in 2025 because then housing demand gets hit even more
09:15so there's a lot of things that are positive in the market that's kind of what i want to say
09:19but
09:19uh same principle as ever when rates just get down near six we see it all the data lines pretty
09:25much
09:25mostly as positive when they get above six not the case so that was a uh uh the the concept
09:32of what we
09:33wanted to talk about on cnbc uh this morning and now the treasury uh uh scott the scent in a
09:40really
09:40really funny way uh announced they wanted to uh double the size of uh government uh buying back uh the
09:47long end of the market the coupons which will start i believe on september 9th 10-year yield
09:53fell a few basis points off of that mortgage rates went just a smidge lower i look at this
09:58is how i looked at the mortgage-backed security purchases uh by pulte early in the year as a
10:04defensive mechanism not an offensive mechanism but a defensive mechanism as we can see yields have been
10:10rising whenever the 10-year yield gets above 460 white house gets a little bit nervous uh we saw that
10:17in
10:17godzilla uh tariffs where they scott percent literally came into the white house shut the
10:23door on navarro didn't let him back in and told trump you got to tweet this stuff bonnie yields are
10:28going
10:28up um this is not the first time uh he's done something the japanese yen the intervention was not
10:34done by dollars but it was done by euros because they're worried about if you know they've got to sell
10:40treasuries to to defend the yet so another defensive mechanism by the white house when the 10-year yield
10:47is about 460 and i and i stress this going back all the way to november of 2024 when steven
10:54mnuchin says
10:55we really like to have the 10-year yield at 450 or under you know they would prefer it to
11:00be around 380
11:01to 420 but you know they they do not want the 10-year yield above uh 450 and we've seen
11:07uh stuff being
11:08done when it's above 460 so they want less volatility in the bond market that's why i look
11:14at it as a defensive mechanism so that's that's that's another subject uh out there so let's talk
11:20about the recent uh housing data pending home sales as we talked about in the last podcast should be
11:24lower it's lower by smidge i actually think it's a little bit weaker than that but pending home sales
11:29from the nr could be pretty wild on on a month-to-month basis uh so that's not shocking in
11:35that purchase
11:35application data we talked about in housing starts uh we talked about but when we go back to uh the
11:41monday the builders confidence data uh builders confidence data picked up a smidge and these are
11:47tilted to smaller builders not builders that you know are publicly traded and have a a lot of money to
11:54uh
11:55buy down rates if you look at all the data lines that we show in you know in our article
12:00all you know
12:01whether it's the overall confidence sales and everything is just not screaming housing construction
12:06so you got a heads up on what's happening with the builders and i always say the rate of change
12:11of the builder survey is it's a very good indicator the last time it started to move up higher is
12:17when
12:17rates went lower and then you know the builders saw demand pick up so a little bit more of a
12:23complicated
12:23story for them because they've always lived in a sub six percent world new home sales are at 2019 level
12:29if
12:29i took 2019 levels of existing home sales where that's a one to 1.3 million more existing home
12:34sales nobody's going to care about housing there's no portable mortgage discussion or 50-year mortgages or
12:40you know uh capital gains all that stuff goes away so builders are a little bit uh uh still in
12:48that managing supply uh and the charts in there talk about it i i me personally whenever the builders get
12:53total completed units above 120 000 they're just not they're not going to be building homes much that
12:59number has come down lower over the last few months that's a positive so if rates could just get a
13:04little bit lower going down there and uh maybe they can uh feel a little bit more confident but again
13:10limits right um if there was no covid if there was no tariffs with fed neutral policy being three
13:18percent it is very very difficult you know mortgage rates under 5.75 we just do not have a lot
13:23of history
13:23you can get there if the bond market overreacts and spreads are good you know 2024 with spreads
13:29today could have got us there but it's just there's a reason why i just can't get to that next
13:34level so
13:35i have to work with what is plausible here and and it was really this the housing market could still
13:39function uh with rates just getting near six percent we're not that far off right i think the pricing
13:44today was about six point seven two percent uh on the 30-year fix so overall um there are some
13:51positive stories here uh inventory is still elevated from the unhealthy levels of of covid and that means
13:58prices aren't escalating until positive um we when we see the spreads act like this this means you don't
14:05need too much to go lower so in a sense a overall positive story and here's puff uh puffy is
14:15of course
14:15the cat that raids my uh interviews from time to time uh he he does not like mortgage spreads discussion
14:22and he does not like me getting up at 1 15 in the morning either out here but overall taking
14:27now
14:28everything we just talked about housing starts uh not going anywhere uh the shortage story should be over
14:34uh healthier housing market in terms of inventory being uh up uh mortgage spreads are still a
14:39positive home sales are positive year to date but again if rates stay above 6.64 and head up higher
14:46growth slows down we go basically nowhere so a very interesting week uh and still no real positive
14:53news on the conflict and and i encourage people if you could ever see a chart of the straight of
14:57hormuz and the traffic out there and then you look at where the 10-year yield the only time that
15:02the 10-year yield actually acted very good in in the last few months is when traffic started to flow
15:07and bond yields went lower on that so if you really wanted to help the housing market don't do portable
15:13mortgages or 50-year mortgages or capital you know get this conflict over with don't overdo the tariffs
15:20get the 10-year yield get these hawkish feds off and then you can get rates just a little bit
15:25lower and
15:25there you go you got to take it with that and uh that's the theme of today's podcast thank you
15:30everyone uh please go check housing wire intelligence in your local area with active listings new listings
15:36pending sales and uh sarah wheeler will be back uh tomorrow
Comments