- 2 hours ago
In this episode, HousingWire's lead analyst walks Zeb Lowe through how it actually works: why the 10-year yield and mortgage spreads matter more than the Fed funds rate, which labor data he watches first, and how he reads purchase apps, pending sales, inventory, and price cuts to judge pricing power. He also makes the case that today's market is structurally healthier than the 2000s bubble, thanks in part to 2005 bankruptcy reform and post-2010 QM rules. Plus, what he's watching for the rest of the year: the Fed's hawk-dove split, labor resilience, and oil risk out of the Strait of Hormuz.
Related to the episode:
Zeb Lowe’s LinkedIn
https://www.linkedin.com/in/zebulon-lowe-a02353a4/
Logan Mohtashami's LinkedIn
https://www.linkedin.com/in/logan-mohtashami-5167631/
Buy one, get one FREE tickets to the Mortgage Banking Summit on October 1st
https://events.housingwire.com/mortgage-banking-summit-2026
Want more from Zeb? Don’t forget to subscribe to LendingLife.
The Power House podcast brings the biggest names in housing to answer hard-hitting questions about industry trends, operational and growth strategy, and leadership. Join HousingWire’s Zeb Lowe every Thursday morning for candid conversations with industry leaders to learn how they’re differentiating themselves from the competition. Hosted and produced by the HousingWire Content Studio.
Related to the episode:
Zeb Lowe’s LinkedIn
https://www.linkedin.com/in/zebulon-lowe-a02353a4/
Logan Mohtashami's LinkedIn
https://www.linkedin.com/in/logan-mohtashami-5167631/
Buy one, get one FREE tickets to the Mortgage Banking Summit on October 1st
https://events.housingwire.com/mortgage-banking-summit-2026
Want more from Zeb? Don’t forget to subscribe to LendingLife.
The Power House podcast brings the biggest names in housing to answer hard-hitting questions about industry trends, operational and growth strategy, and leadership. Join HousingWire’s Zeb Lowe every Thursday morning for candid conversations with industry leaders to learn how they’re differentiating themselves from the competition. Hosted and produced by the HousingWire Content Studio.
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NewsTranscript
00:00Welcome to Powerhouse.
00:01If you spend any time around HousingWire,
00:04you've heard cultural keystone phrases like
00:06Hodor, hold the door from Game of Thrones
00:09or McFly, McFly from Back to the Future
00:12or my personal favorite,
00:14you shall not pass from Lord of the Rings,
00:17all tied to things like the 10-year yield,
00:20purchase apps, mortgage spreads, and price cuts.
00:24Today's guest has a knack for making mortgage
00:26and housing market data fun and easy to digest.
00:30Behind the humor sits a complete model
00:32of how the housing market actually works.
00:35Logan Motoshami is HousingWire's lead analyst,
00:37and today we're doing something different.
00:39This isn't necessarily a market update.
00:42This is Housing Market Analysis 101 taught by Logan.
00:46By the end of this episode,
00:48you won't just know what Logan thinks.
00:50Hopefully you'll understand how he thinks,
00:52so you can read the market the same way he does.
01:05All right, Logan, thank you for joining me.
01:07It is wonderful to be here.
01:09I think this is the first time you've ever interviewed me.
01:12No, but I've been looking forward to this one for a while,
01:15and this actually leads into a larger educational project
01:18that we're going to be working on together.
01:20So I'm looking forward to kind of picking your brain a little bit,
01:24and I appreciate you sharing your time with us.
01:25It's a pleasure, and you shaved for this event too.
01:29So, you know.
01:30So, funny story, I sneezed Saturday morning
01:34while I was trimming my beard,
01:35and it jammed the guard down,
01:37and it took just a lawnmower through half of my face,
01:41and I pulled back, I looked at the mirror,
01:43and I was like, there's no going back from this.
01:46I did that four years ago, and I got on a show,
01:50and Sarah looked, she's like, you look so different.
01:53I don't know what I said.
01:55And I just, I look 10 years younger,
01:57because I had a mustache when I was 13.
02:00So I've always had.
02:01But if I shave this off, I look a lot younger.
02:04So, yeah.
02:05So I was there once.
02:07Yeah, I've heard the same thing,
02:08that I look much younger,
02:09because I don't have the salt and pepper so much anymore.
02:11But, okay, well, let's, before we get into the data
02:16and the way that you,
02:17because that's why I brought you on,
02:18I wanted to talk to you about the way that you see the market,
02:21the way that you track the data,
02:22and your kind of unique,
02:25your formula that you've kind of put together
02:27to make sense of the market.
02:28But before we actually get into that,
02:30I was curious if you could share the origin story
02:34of your model,
02:37because you've been doing this for a long time.
02:38You have your specific way of seeing the market.
02:42And I'm curious to know if or when your kind of framework
02:47clicked into place for you.
02:48Was it something that evolved over time?
02:50And did you set out to solve a particular problem
02:56when you were, you know, learning this
02:59and then kind of creating your own analytical voice?
03:03So this actually goes all the way back to 2014.
03:08And I was, when I started writing about economics in 2010,
03:12it was more commentary work.
03:14But then I realized listening to the internet
03:17and watching the internet, everyone lies.
03:21And it was really, really bad.
03:23And I remember in 2014, I'll never forget it.
03:26Quantitative easing was ending.
03:29And a lot of people thought, okay,
03:30here, mortgage rates are going to go up to 8%.
03:32The U.S. is going to collapse.
03:34And I was just like, this is not how it works.
03:37So I thought to myself, at that point,
03:40I made, you know, kind of an investment in,
03:43let's talk about everything in a more analytical sense.
03:47So we could maybe give people kind of a framework
03:50of how data works.
03:52Now, this also means that,
03:54like I always talk about,
03:55economics done right should be terribly boring.
03:57It is not created to be a fun, sexy thing
04:00or, you know, create doom porn.
04:01So you're not going to be as popular,
04:04but it gives some people an out to where it's going on.
04:08And then for me,
04:09it was like a lot of where housing demand really moves
04:12is really around the 10-year yield,
04:14mortgage spreads and demographics.
04:16And, you know,
04:17the yearly forecast became a little bit more detailed
04:21in 2015 and on.
04:23Of course, I didn't work for HousingWire
04:27until the last two weeks of 2019.
04:29Then here we are.
04:31COVID happens right away.
04:33I track economic cycle things first.
04:36I'm a housing person second.
04:37So writing a COVID-19 recovery model
04:39based on everything that we talk about,
04:42that worked out well.
04:44But, you know,
04:45we created the tracker at the end of 2022.
04:49And the tracker design,
04:51which is part of HousingWire intelligence for everybody,
04:54was created to give people a real live look
04:58of what's happening today and tomorrow.
05:02But it's not designed to be like flashy or anything
05:05because housing economics is one of these things.
05:08It's very sticky and slow.
05:09It doesn't really have these high velocity moves.
05:12What happened during COVID was basically anomaly
05:14with all data itself.
05:17But I thought if we created the tracker
05:20and incorporated Altos data into it,
05:22this way we can create a live database
05:25for people to follow to see what's going on.
05:28And if anything was really cracking
05:30in any big macro way,
05:32you'll be able to see it with our tracker first.
05:35So this started, you know,
05:36even though I started in 2010 writing,
05:38it was really toward the middle of 2014
05:40and then 2015 on
05:42that we just wanted to keep it simple
05:44for people to understand.
05:45But realizing that it's probably going to be
05:48the very, very boring,
05:50but it's going to be the right way
05:51of looking at housing economics.
05:53Right.
05:53Can you, I mean,
05:54I think you've already kind of stated this,
05:56but can you kind of underscore
05:57the importance of the,
05:59like the weekly tracker
06:00to your annual forecast?
06:03Because like you were saying earlier,
06:04it's sticky and it moves slow.
06:06So why is that weekly tracker
06:08so important to you?
06:10To me, it's important because,
06:11you know, just to give you an example,
06:14my premise has always been
06:15that the housing market after 2022,
06:18housing data gets better
06:19when the 10-year yield
06:20and mortgage rates can get below 6.64
06:22and head toward 6%.
06:24But it's really hard for me
06:26to get very excited about the 10-year yield,
06:28you know, getting low enough
06:30to get mortgage rates under 5.75%.
06:32However, with the tracker data,
06:35we create these ranges for the 10-year yield.
06:37We work off of that.
06:38We can show people exactly
06:39what's happening today
06:41that'll come out in the data line months ahead.
06:45And this way,
06:46the tracker can visually show you
06:47how demand starts to pick up
06:49or how demand starts to get weaker.
06:51And you create that rate variable.
06:53And then also,
06:54it gives you a live look
06:55of how inventory works, right?
06:57And I think that's the main thing.
06:59What's happened after 2010,
07:01the odd frank qualified mortgage,
07:03the whole structure of the U.S. economy,
07:05especially housing change,
07:06where I always talk about 70% to 80%
07:09of home sellers or buyers.
07:10If mortgage demand goes up,
07:11first-time homebuyers don't give you a house,
07:14inventory can slowly go lower and lower.
07:16And the problem,
07:17what happened in COVID,
07:18for the first time ever,
07:19we actually had an authentic shortage,
07:21something I didn't really believe in the past.
07:23But you can see what happened.
07:24Too many people are just chasing too few homes.
07:26But this way,
07:28since 2022,
07:29inventory has been rising.
07:31Home prices haven't been crashing.
07:33The supply and demand equilibrium
07:34is actually getting healthy
07:36because price growth is in check,
07:37wages rise.
07:38And then you can see how demand works
07:40on a weekly basis.
07:41So you don't have to wait
07:42two to three months
07:43for the existing home sales report.
07:45You get to see it now,
07:46what's going to see in the reports later.
07:48And I always say that
07:49when there's any kind of shift
07:51in the housing market,
07:52it usually takes people
07:53six to nine months
07:54to catch up to us
07:55on what's happening.
07:56But this way,
07:58with the tracker,
07:59weekly pending sales,
08:00purchase apps,
08:0110-year yield,
08:02mortgage spreads,
08:02which is something fairly new
08:04to a lot of people.
08:05It's a really big deal now
08:06in 2026.
08:08These things give people
08:09an idea of what's happening
08:11in the national market,
08:12but now everyone can do it
08:13in their own local market.
08:15And this is why
08:15the tracker was a must.
08:16Like, we needed to get it
08:17out there for everyone.
08:19Right.
08:19Okay, so we're actually
08:20getting into some stuff
08:21that some of the data points
08:23that I really wanted to,
08:23again, pick your brain about
08:25and see how you weigh them.
08:28I think that starting
08:29with a 10-year yield,
08:30actually,
08:30because I think
08:34for a housing professional
08:35that is wanting
08:37to kind of step
08:37into this world
08:38and understand more
08:39about the way
08:40that the market works,
08:41we kind of default
08:42more to the Fed fund rate,
08:45right,
08:45and making that something
08:47that is the center
08:48of their focus.
08:49But whenever,
08:50I mean,
08:50mortgage spreads
08:51is one thing
08:51I want to talk to you
08:52about later,
08:52but you talk about
08:54the 10-year yield
08:55so much
08:57and don't really
08:58reference the Fed funds rate
09:00in relation
09:01to the same amount,
09:03I guess,
09:03with the 10-year yield
09:04from what I've picked up
09:05from you.
09:05Can you explain why
09:08and can you walk us through
09:10or walk me through
09:10how a 10-year yield
09:12actually ties into
09:14or becomes
09:14an actual mortgage rate,
09:15if that makes sense?
09:17So I actually don't forecast
09:19mortgage rates per se.
09:21I forecast where I think
09:22the 10-year yields go.
09:24Why?
09:25Because, you know,
09:25when I go speak
09:26on the Nerd Tour,
09:27the first thing I say,
09:28there has been a couple
09:29that have been slow dancing
09:30with each other
09:31since 1971.
09:32The 10-year yield
09:33and 30-year mortgage
09:34basically have trended together
09:36for decades
09:37and decades
09:38and decades.
09:39So what drives
09:40the 10-year yield
09:41really drives mortgage rates
09:43and the difference
09:44is mortgage spreads,
09:45of course.
09:47That gets you
09:48your mortgage rate.
09:50But the 10-year yield
09:51is longer duration, right?
09:53You borrow
09:54debt for a longer term,
09:56so it's not so much
09:57tied to the short-term
09:58Fed funds rate.
09:59The Fed funds rate,
10:00Fed policy itself,
10:02to me,
10:02is 65% to 75%
10:05of where the 10-year yield
10:06could range in
10:06within a cycle
10:07is Fed policy.
10:08So it does matter,
10:10but you can have
10:11the mortgage rates
10:11go up and down
10:12and have the Fed funds rate
10:14do nothing, right?
10:16It could basically,
10:17how policy is being driven
10:19or how the Federal Reserve
10:20talks to the marketplace.
10:22But is that a common mistake
10:23that you see people make,
10:25especially like originators,
10:26right,
10:26that are wanting to know
10:28where, you know,
10:29where rates are going
10:29or provide some sort
10:31of data point
10:32back to their referral partners
10:34where they just,
10:35people,
10:36if people without
10:38the correct guidance
10:39or, like I said,
10:40are kind of stepping
10:40into this more
10:42analytical world,
10:43they are,
10:44they're focusing
10:45on the wrong data points.
10:46Is that a common mistake
10:47that you see?
10:47It is in the sense
10:49to where,
10:49you know,
10:50the bond market
10:51gets ahead of the Fed
10:52funds rate, right?
10:53Like by the time
10:54the Fed has cut rates
10:55or hiked rates,
10:56the bond traders
10:57are already well ahead.
10:59So when it,
11:01when the Fed does hike rates
11:03or cut rates,
11:04most of the time
11:05it's already been priced in.
11:07So it is an important variable,
11:09but it's really,
11:11it's almost an aftermath.
11:13And, you know,
11:14so many times,
11:14like for me,
11:15it's like,
11:15like when a lot of people
11:17say, oh,
11:17don't worry,
11:18mortgage rates
11:18are going to get to 5%.
11:19I don't have any history
11:21in the U.S.
11:22where if the Federal Reserve
11:24tells people
11:24the Fed funds rate,
11:25if we go to neutral policy
11:27where eventually
11:28they want to get down
11:29to when inflation is tame,
11:313% mortgage rates,
11:32we don't have much history
11:33of mortgage rates
11:33getting below 5.75%.
11:35So that's where the Fed fund
11:37does matter
11:38in a more longer discussion.
11:39But basically,
11:41it's a lot of economic data work
11:42on a day-to-day,
11:44week-to-week basis.
11:45The jobs data matters,
11:46inflation data matters.
11:47Those things can move rates
11:48up and down.
11:49But the Fed funds rate
11:51is usually policy
11:52that's already been embedded
11:53into the system.
11:54This is why I always say
11:55just kind of follow
11:56the 10-year yield and spreads.
11:58They will guide you
11:59in that slow dance.
12:00Whatever the Fed funds rate does,
12:02the Federal Reserve
12:03usually tries to guide
12:04ahead of time.
12:05And bond traders
12:06typically get ahead.
12:07Sometimes they overdo it
12:08to the upside.
12:09Sometimes they overdo it
12:10to the downside,
12:11which they've done
12:12very commonly
12:12in the last few years.
12:14But it's really
12:15the slow dance.
12:16And the slow dance
12:17is the most important thing.
12:19So whenever you publish
12:21your forecast
12:22and your ranges,
12:26what's your thinking process?
12:28I mean,
12:28what all...
12:29It's kind of a loaded question,
12:30I suppose,
12:31but what all inputs
12:32are really going in
12:34to your forecast
12:36and making it
12:37in a hierarchy
12:38of importance?
12:38So when I say,
12:40okay,
12:41for example,
12:41the 2026 forecast,
12:43the 10-year yield
12:43ranges between
12:45380 and 460, right?
12:47If we go below 380,
12:49something went wrong.
12:50If we go above 460,
12:51something went wrong.
12:52But the ranges should,
12:53for the most part,
12:55stay in line.
12:56It's very similar
12:57to the previous year
12:59in 2025.
12:59I had the same 10-year yield,
13:01but the mortgage rate forecast
13:02was a little bit different
13:03this year
13:04because mortgage spreads
13:04got better.
13:05We'll go into that
13:06a little bit later.
13:07But then I get to work off
13:09of the economic data, right?
13:10And what happened last year
13:12in 2025,
13:14a lot of people
13:15didn't think mortgage rates
13:16could go down
13:16because the federal debt
13:17was high
13:17and inflation was high,
13:18but it's like
13:19labor over inflation.
13:20If labor data gets softer,
13:21bond traders will take
13:22the 10-year yield lower
13:23like they've had
13:24pretty much every year
13:26in the last few years.
13:27But if the labor data
13:29starts to improve,
13:30then that variable is gone.
13:32And that's what I saw
13:33this year.
13:35Regardless of what people
13:36think about the jobs
13:36market,
13:37the Federal Reserve
13:38set guidelines
13:39to everybody
13:39and say,
13:40really,
13:40if we just create
13:4133,000 jobs per month
13:43and the unemployment rate
13:44is low
13:44and jobless claims are low,
13:46the market is better.
13:47So bond traders
13:48finally picked up on that.
13:49And I thought
13:50the labor data improving
13:52was the first step
13:53into mortgage rates
13:54going up higher
13:55for the reasons
13:56that the Federal Reserve
13:57has said.
13:57They basically don't think
13:58the labor market is weak
13:59and they don't want policy
14:01to get too loose out there.
14:04So that's one way
14:06how throughout the year
14:07we track jobs data
14:09and seeing where it is.
14:11If the labor market
14:12started to get worse
14:13and jobless claims
14:14are rising
14:14and unemployment rates,
14:16then the 10-year yield
14:16can go down to a range.
14:18But it really shouldn't
14:19break under 380.
14:21It did for a little bit
14:22in 2024
14:23because a lot of people
14:24thought we were going
14:25to a recession,
14:25but we weren't.
14:26So that's how the flow
14:28of data
14:28and the 10-year yield
14:29and mortgage rates,
14:30that's how I look at it.
14:31So when I set the forecast,
14:33I try to encompass
14:34everything that could
14:34possibly happen
14:35within the year
14:36and then we just work off
14:38of the economic data daily.
14:40And I always tell people
14:40I literally have no life.
14:42This is all I do 24-7, right?
14:45That and watch football
14:46and play Call of Duty.
14:47Pretty much that's it.
14:48So I track everything
14:50and that's why I think
14:51it's important to highlight
14:53that, listen,
14:54with the jobs data
14:56getting better,
14:57it's really hard
14:57to get mortgage rates
14:58under 6% with Fed policy.
15:00So we need to leave that.
15:01And then inflation picked up
15:03and then the conflict happened, right?
15:05And this is a whole
15:05brand new variable
15:06and we have to incorporate it
15:07into the data lines.
15:10For example,
15:10I showed a chart today
15:11showing the straighter
15:12of Hormuz traffic, right?
15:14When traffic went down,
15:15the 10-year yield
15:16started going up.
15:17When traffic picked up
15:18a little bit,
15:19the 10-year yield
15:20started to go down
15:20and now it's gone down again
15:22and the 10-year yield
15:22has gone higher.
15:23So these things are variables
15:25within a calendar year
15:27that to me,
15:28you have to track
15:29to see where things
15:30are kind of going.
15:31Yeah, you touched on this
15:33actually in your last response
15:34but one of your key phrases,
15:37we actually joked about
15:38having coffee mugs
15:39and T-shirts made over
15:40is labor over inflation.
15:42And I was wondering
15:44if you can just suss that out.
15:46Can you explain
15:47what that means
15:49and why labor data
15:53is more important
15:55than the data
15:56surrounding inflation?
15:57So the Federal Reserve
15:59has a dual mandate
16:01of price stability
16:02and maximum employment.
16:05And if the labor data
16:07is getting softer,
16:09then you have to realize
16:10like what's going on.
16:12Is it policy is too restrictive?
16:13Now you see this
16:14in the housing market, right?
16:16Housing starts
16:16and permits are going lower,
16:18residential construction jobs.
16:19So if the Federal Reserve
16:21feels like,
16:22you know,
16:23a policy is too restrictive,
16:26then if the jobs data
16:27is getting weaker,
16:28the tenure yield goes down.
16:30And this happened in 2023.
16:31It happened in 2024.
16:33It happened in 25.
16:34It briefly happened in 2026
16:36when people thought
16:36AI was about to take
16:37all the jobs.
16:38We had one negative report.
16:40So to me,
16:41if the labor data
16:42was getting weaker,
16:43if the unemployment rate
16:43was rising
16:44and jobless claims,
16:45every time
16:46the tenure yield goes down.
16:48Why?
16:48Because the Federal Reserve's mandate,
16:50if they see that
16:51the labor market is breaking,
16:52that means you're risking a recession.
16:55Bond traders want to get ahead
16:57of the Federal Reserve on that.
16:58So they'll take yields lower
17:00and they do the heavy lifting early on.
17:03And they did the heavy lifting
17:05on the other side.
17:06Now that the labor market
17:07is stabilized,
17:08the Federal Reserve says it's fine.
17:10Bond markets have gotten
17:11well ahead of any Fed rate hike,
17:13right?
17:13We're at a yearly high
17:15or close to yearly highs
17:16of mortgage rates.
17:17That's how the flow of data,
17:18but the jobs data to me
17:19is the key.
17:20And trying to convince people
17:22that the Federal Reserve
17:23is okay with these job supports,
17:25break-evens,
17:25like how much jobs
17:26you need to create
17:27to keep the unemployment rate
17:28has been challenging.
17:29But bond traders
17:30just take that
17:30and go with it, right?
17:31Because I always say
17:33bond traders are here
17:33to make money.
17:35They're not here as ideological.
17:36They are here to make money
17:38because their bonuses
17:38and everything revolve around it.
17:40So they don't want to be
17:41kind of wrong on that sense.
17:43And considering what has happened
17:45with inflation
17:45and the conflict
17:46and the labor data,
17:48it looks about right to me.
17:49The conflict to me
17:50is the real big driver
17:52of yields this year,
17:54but the jobs data
17:55has stayed firm enough
17:57that the Federal Reserve
17:58does not feel like
17:59they need to comment on it
18:00too much.
18:00Unpack the bond market
18:01and bond traders.
18:02Why are they so important
18:04and integral
18:04into this soup, I guess?
18:07The entire world
18:08revolves around debt
18:10and the cost of debt.
18:12So I always say
18:13the bond market
18:15is literally Godzilla.
18:16The stock market
18:17is like to me,
18:19baby Godzilla.
18:19You know,
18:20the bond market,
18:23how people borrow,
18:24how companies borrow
18:25and everything,
18:26how countries borrow,
18:27really.
18:28Like when our dollar
18:29gets too strong,
18:30you know,
18:30it could cause havoc
18:31around the world.
18:32So to me,
18:33the bond market
18:34is everything.
18:34I literally like go to bed,
18:36I wake up in the middle,
18:37I look at the 10-year-old
18:38and all this stuff.
18:39So that to me
18:40is the most important data.
18:42I'm structurally biased,
18:43of course.
18:44So that's why I always say
18:45the bond market
18:47to me
18:47is the most important
18:49data line
18:49just for the general economy
18:51in terms of,
18:52you know,
18:52what's really going on
18:54with the economy,
18:56the strength
18:57of labor market.
18:58And usually,
18:59the value of those go up,
19:00that's the economy
19:01is actually doing
19:02better than what people think.
19:04Okay.
19:04So walk me through
19:05your hierarchy of data.
19:08I mean,
19:08on any given week,
19:09right?
19:09Let's say there's a week
19:10that has,
19:10your jobs report
19:11is released,
19:13the CPI,
19:13there's Fed minutes,
19:14you know,
19:15that are all kind of landing
19:18within 24,
19:1848 hours,
19:19within a week.
19:20What do you,
19:21like,
19:21what do you look at first?
19:22What do you prioritize?
19:24And are there signals
19:26that many people
19:30pay attention to
19:31that you ignore?
19:33So I would say this.
19:35I remember giving
19:35my recession model
19:37dissertation
19:37to the conference board.
19:39The conference board
19:40are the people
19:40that created
19:41the World Bank,
19:42the IMF.
19:42They give their information
19:43to the White House
19:44and Federal Reserve.
19:45And I created
19:45the six recession
19:46red flag model.
19:47There's certain things
19:48that we want to track
19:49within a cycle.
19:51I always lay everything
19:53on two kind of reports.
19:55Number one,
19:56the weekly jobless claims data.
19:57So in 2022,
19:58when people,
19:59when everyone thought
20:00we were going to recession,
20:01I stress to people,
20:03do not talk
20:03about a recession
20:04until jobless claims,
20:06the weekly jobless claims.
20:07Four-week moving average
20:08heads toward $323,000.
20:11If that ever happens,
20:12mortgage rates
20:13are going to go lower,
20:14housing will probably outperform,
20:15but the economy
20:16is probably going
20:16into recession.
20:18So far since then,
20:19that has never happened.
20:20That to me
20:21is one of the key data lines
20:22that happens
20:23every single week.
20:23I also like to follow
20:24residential construction workers.
20:28Traditionally,
20:28what happens
20:29right before a recession,
20:30this index starts
20:32to fall
20:32and fall noticeably.
20:34It's rolling over now,
20:35but it isn't
20:37having its normal dive.
20:38That to me
20:39is a very,
20:39very key
20:40recessionary indicator line.
20:41Those are two things
20:43that one is weekly,
20:44the other is a monthly
20:45data lines
20:46that I generally
20:47get the health
20:47of the economy.
20:49Also,
20:50retail sales.
20:51I mean,
20:51retail sales
20:51for the most part
20:52is always positive,
20:54right?
20:54In a growing population,
20:55you typically grow sales.
20:56We consume services
20:58and goods.
20:59So that's one
20:59of the monthly data lines
21:00that I keep an eye on
21:02as well.
21:03Wage growth
21:04is something,
21:05you know,
21:05if inflation goes up
21:07too high,
21:07your real incomes
21:09go lower.
21:10That's usually a negative
21:12for the economy.
21:12That's something
21:13I keep an eye on.
21:14But if you ask me,
21:15like if I had two data lines
21:17that I track,
21:18one on a weekly
21:19or monthly basis,
21:19residential construction
21:20workers on the jobs reports
21:22and the weekly
21:23jobless claims data,
21:25and I go back
21:26to every single cycle
21:27post-World War II,
21:29there's a certain
21:30percentage of increase
21:31of jobless claims
21:32that has to happen
21:33before the economy breaks.
21:34It has not happened yet
21:36and it's not shocking
21:37to me that
21:39recession's not happening
21:40or rates have made
21:41that next leg lower
21:42that they typically do
21:43when that occurs.
21:45You've,
21:46you mentioned
21:47mortgage spreads
21:48a time or two
21:49since we've been talking.
21:50Earlier,
21:51you,
21:52you had mentioned
21:54the phrase
21:54which is
21:56the slow dance,
21:57right?
21:57That's,
21:57I mean,
21:57that's been,
21:58that's like a mainstay
21:58on HWD,
22:00you know,
22:00every day,
22:01every other day,
22:02the slow dance,
22:02the slow dance,
22:03the slow dance,
22:03we intend
22:03your treasury yield.
22:04But one of the things
22:07that you've,
22:07that's also been
22:08a recurring theme
22:08is that spreads
22:09have been the quiet hero,
22:11I believe,
22:11is how you put it,
22:12of the housing market
22:14this year.
22:14Can you explain why?
22:18About three years ago,
22:20I was at a mortgage conference
22:21and I asked everyone,
22:23how many here know
22:24what a mortgage spread is?
22:25It was like 500 loan officers
22:27in there.
22:28Like three people
22:28raised their hand
22:29and I was like,
22:30oh my God,
22:31I have done a terrible job.
22:33I have never talked
22:34about mortgage spreads enough
22:35and I was like,
22:37this has to change.
22:38So mortgage spreads
22:40are the difference
22:41between the 10-year yield
22:42and 30-year mortgage.
22:45Usually in the,
22:46in the recent history,
22:47the spread is 1.6
22:49to 1.8.
22:50What occurred in 2023
22:53was that the mortgage spreads
22:55were getting better.
22:56It was,
22:56it was a positive thing.
22:57Then the Silicon Valley
22:58banking crisis happened
22:59and then the Federal Reserve
23:00kept hiking rates
23:02during the Silicon Valley
23:03banking crisis.
23:04So the spreads
23:05got above 3%,
23:06which is rare.
23:07How we track spread
23:09with the FRED data,
23:10the last time spreads
23:11got above 3%
23:12was actually 1986
23:13when the credit datas
23:14were in stress back then.
23:16It didn't get there
23:17in the Great Recession.
23:18It didn't even get there
23:18during COVID.
23:20That means mortgage rates
23:21are about
23:23one and a quarter
23:24to one and a half percent
23:25really higher
23:26than what they normally
23:27should be.
23:28That's a problem,
23:29right?
23:30And for myself,
23:32looking at the Fed policy,
23:34neutral,
23:34I can't really get
23:35the 10-year yield
23:36under 380.
23:37So it is going to be
23:38difficult to get mortgage rates
23:40even near 6%
23:41unless the bond market
23:43thinks the labor market
23:44is breaking.
23:44So every time
23:45the bond market
23:46is worried about
23:47the labor market,
23:47the 10-year yield goes down,
23:48but it took a lot
23:50to get the mortgage rates
23:51down to 6%.
23:52However,
23:53I was like,
23:542026 is going to be
23:55the year, right?
23:562025, we had improvement.
23:582026 should be the year
23:59we get closer to normal.
24:00That means
24:01that we should have
24:02the lowest mortgage rates
24:05in the last few years
24:06because the spreads
24:07aren't going to let rates
24:08go up.
24:08So part of the tracker,
24:10just to show everyone
24:12an example,
24:13if this was,
24:14if we're in 2023
24:15right now,
24:16mortgage rates
24:16are 7.84%
24:18because the spreads
24:19were bad.
24:19If we're in 2024,
24:21mortgage rates
24:21are near 7.5%.
24:23If we're in 2025,
24:25even mortgage rates
24:25are 7.5%.
24:26Why does that matter?
24:27Is that I've not seen
24:29housing data
24:30be positive
24:31when rates get
24:32above 6.64%
24:34and then head past 7%.
24:35That's been the last few years.
24:37This year,
24:38because of mortgage spreads
24:39and why I say
24:40hug a mortgage spread,
24:41it's the hero.
24:42It is compressed volatility
24:44and it's kept rates lower
24:46for a longer period of time
24:47than the previous years.
24:49But it was 20,
24:5026 was going to be the area
24:51that you get close to.
24:52we got close to,
24:53I think the lowest
24:54was 1.81%.
24:55And that has kept rates
24:56from getting above 7%.
24:58And that's why it's important
24:59because once you get
25:00above 7%,
25:01we just have,
25:02we really don't have
25:03any positive data out there.
25:05And the market tends
25:06to slow down
25:06and then it waits for rates
25:07to go back lower to 6%.
25:09We just do this back and forth
25:10and we don't really go anywhere.
25:11But this year,
25:13because the spreads are,
25:14even in the last
25:15existing home sales,
25:16home sales were up
25:182.4% year to date.
25:20If rates had just stayed
25:21near 6%,
25:22you could get
25:23a couple hundred thousand
25:24more home sales.
25:25It'd be the first year of growth
25:26and we kind of take it from there.
25:27So mortgage spreads
25:29without them improving
25:30is something that's,
25:31hey, guess what?
25:32That would have never,
25:33never been a positive story
25:34for housing
25:35and most likely sales
25:36would be even lower today.
25:37That's why I highlight
25:38mortgage spreads
25:39and hardly anyone knows about it.
25:41It's just not,
25:42it's one of the nerdiest
25:44geeky things out there.
25:45And I just think people
25:46are very uncomfortable
25:47while talking about it.
25:48I show like a little,
25:50the history of mortgage spreads
25:51going back to the 1970s
25:53and what pushes it higher or lower.
25:56It's not something
25:57people want to talk about,
25:58but it was really important,
25:59especially for this year.
26:00And it's going to be important
26:01going out for the next
26:02four, five, six years
26:03that spreads are closer
26:05to normal now.
26:06Yeah.
26:06Well, I mean,
26:07that's why I wanted
26:07to ask you about it
26:08because I mean,
26:09I came,
26:09I've been in the industry
26:10for 15 years.
26:11I was an originator,
26:11worked on the corporate side
26:13at a mortgage company
26:14before I came here.
26:15And then being,
26:17I mean,
26:17listening to you every day
26:18and being part of
26:19the housing where ecosystem,
26:20you know,
26:21and the importance
26:21of the mortgage spreads,
26:22it's just not something
26:23that prior to working
26:25with you and working here
26:27was not something
26:27that I was exposed to
26:28and it's relative
26:29a lot of importance.
26:30Everyone has a life, man.
26:31Everyone has a life.
26:32Nobody,
26:32I mean,
26:33who talks about mortgage spreads?
26:34Nobody does,
26:35you know,
26:35I mean,
26:36my economic nerdy friends
26:37don't even really
26:37talk about spreads,
26:38you know?
26:38So I felt like,
26:40you know,
26:40you know,
26:41you know,
26:42being the chart daddy
26:43and talking about housing
26:44that I had to invest time
26:45into this
26:46and teach people this.
26:47And we started this
26:48a few years ago
26:49and putting into the tracker
26:50and then I just give people
26:51an update.
26:52So hopefully more people
26:53know about it
26:54and they can visually see
26:56why it's important now.
26:57I think that's the,
26:57that's the thing about 2026
26:59is that mortgage rates
27:00would have been above 7%
27:01most of the year
27:02if it wasn't for spreads
27:03being better.
27:03And housing data
27:04just doesn't do well
27:05when rates get above 7%.
27:07So.
27:07Well,
27:08how do you,
27:08how do you think about
27:10on the,
27:10on the demand side?
27:11How are you thinking
27:13about purchase application data
27:14and,
27:15and weekly pending sales?
27:18So one of the reasons
27:20I like to track
27:20the 10 year yield
27:21and rates with demand
27:22is that you try to figure out
27:24where the demand curve
27:25starts to get better.
27:26Last year,
27:27mid June,
27:27I said,
27:28okay,
27:29I'm putting my foot down.
27:31The housing market
27:32is going to shift
27:32right about here.
27:33A lot of things
27:34are going to change.
27:35It's going to take
27:35six to nine months.
27:36And when I talk about
27:37supply and demand equilibrium,
27:39rates are going to go
27:39below 6.64.
27:41Demand's going to pick up.
27:42Inventory growth
27:43is going to slow down.
27:44Pending sales
27:45and everything's
27:46going to go up.
27:48And we got to see
27:49that early on.
27:51Oddly enough,
27:52the snowstorm
27:53was the biggest hit
27:54to demand this year
27:55than,
27:56than previous.
27:58This is my kitty,
28:00by the way,
28:00that's going to come
28:01and invade sometimes.
28:03So the pending home sales data
28:04is actually the key thing
28:06to keep looking out ahead.
28:08Like purchase application data
28:09looks out 30 to 90 days,
28:10but our weekly pending sales
28:12gets into the sales data
28:1330 to 60 days out.
28:15So we want to take
28:16the 10 year yield
28:17mortgage spreads
28:17and figure out
28:18what rate does the demand
28:20start to get better?
28:21And then does that
28:21shift the inventory data?
28:23That usually is the case.
28:24And this is one of the reasons
28:25why a lot of people
28:27were shocked
28:28that the last existing
28:29home sales report
28:29actually had negative
28:30year over year inventory.
28:32We showed that a few times
28:33in our weekly prints
28:34going out in the future though
28:36for the rest of 2026,
28:38it's going to show,
28:39it's going to be a lot harder
28:40to show growth
28:41because the comps
28:41are going to be different now
28:42because last year
28:43weekly pending sales
28:45were picking out
28:45purchase application data
28:46was picking up,
28:47demand picks up.
28:48So the year over year growth
28:49started to happen around here.
28:51So it's going to be harder
28:52to show growth
28:53with rates higher now
28:54on a year over year basis.
28:55And this way you get to see
28:57what's really going on
28:58on the housing demand side
29:01months before you get to see it
29:03in the existing home sales report.
29:04We don't want to wait
29:05for kind of stale data
29:07to tell us what we already know.
29:09We want to get ahead of it
29:10and then figure out
29:11what needs to happen
29:12for demand to get weaker
29:13or better
29:14or, you know,
29:16or is it a healthier
29:17inventory environment
29:18or is it a not healthy
29:19inventory environment
29:21because of rates?
29:22And I've been very happy
29:23with 2026
29:24because even though
29:26mortgage rates
29:27did get, you know,
29:28near 6%,
29:28prices aren't escalating
29:30in any kind of big fashion.
29:33People don't have to worry
29:34about 6% rates
29:35and prices taking off
29:36in a big way.
29:37I thought it was
29:38a very healthy year
29:39in that sense
29:40that price growth
29:40has been kept in check
29:41and wages are outpacing
29:43even with demand
29:44picking up early on.
29:45And now with rates
29:46obviously higher
29:47and demand slowing down,
29:48the last thing
29:49I'm worried about
29:50is prices going off again
29:51and not helping
29:53affordability get better
29:54because every year
29:55that goes by
29:56and affordability
29:56gets a little bit better
29:57on its own
29:58due to prices,
29:58that just means
29:59that you need
30:00less and less help
30:01from the 10-year yield
30:02and mortgage spreads
30:03to have demand
30:04start to grow.
30:05Okay.
30:06And on the other side
30:07of that,
30:07more on the supply side,
30:09new listings data
30:10and price cuts,
30:10what are you looking for
30:11and how do you follow those?
30:13Yes.
30:13And again,
30:14how important are they
30:15relative to your overall analysis?
30:17I always think that
30:19if the housing market
30:20was breaking,
30:21if there was really
30:22stress in the economy,
30:23the new listings data
30:24would take off.
30:25Our new listings
30:26are homes that come
30:27onto the market
30:27that don't have a contract
30:29right away.
30:29Normal,
30:30and I just don't think
30:31a lot of people
30:32knew this data line.
30:33Normal is about 80,000
30:34to 100,000
30:35during the seasonal peak months.
30:36Like all housing data,
30:37it's very seasonal.
30:39We haven't had a normal year
30:41yet post-COVID.
30:42Our new listings data
30:44has picked up
30:44the last few years
30:45even though rates are elevated
30:46because most sellers
30:48are homebuyers.
30:49You want to see
30:50new listings data pick up
30:51and then that person
30:52really needs to wait
30:53for somebody
30:54to buy their house
30:55like a first-time homebuyer
30:56or an investor
30:57and then they get
30:58to sell their house
30:58and buy another one
30:59and the transaction model
31:00starts to pick up there.
31:01So it's been very,
31:03very positive
31:03that we see new listings data
31:05start to get closer
31:06to normal out there.
31:07But I would say
31:09during the housing bubble
31:10crash period,
31:10this thing was running
31:11at 250,000 to 400,000
31:13per week for years.
31:15Like that's,
31:16you know,
31:16the market was breaking.
31:18It was very unhealthy
31:18and all that.
31:19Now throughout
31:20this whole period of time,
31:22three years,
31:23three and a half years now
31:24after the big sales crash
31:26in 2022,
31:27new listings never got to normal.
31:28So the homeowner
31:30is in much better
31:31financial shape
31:32than a lot of people think.
31:33And that keeps,
31:34you know,
31:35the housing ecosystem
31:36looking like it normally does,
31:38like it has.
31:39Outside of 2008,
31:40what's happening right now
31:41looks pretty normal
31:42to other housing cycles
31:44that I've seen in decades
31:45where sales start
31:46to flatten out
31:47or in some cases go lower.
31:49Affordability gets
31:50a little better,
31:50rates go lower
31:51and the demand picks up
31:52for years to come.
31:53We're just in that process
31:55right about now.
31:55We just not had
31:56that rate level
31:58get to the next stage
32:00for demand to easily grow.
32:02Like I use the new home sales
32:03as a good example.
32:04New home sales
32:05are at 2019 levels.
32:06If we had 2019 levels
32:09in existing home sales,
32:09that's 1 to 1.3 million
32:11more home sales.
32:12Nobody's talking about
32:13the housing market then
32:14like, you know,
32:14it needs help
32:15or anything like that.
32:16So I just don't believe
32:18we can get mortgage rates
32:20to that level
32:21with the Fed policy
32:22where it's at.
32:23So what do you see driving,
32:25what are the,
32:27I don't know,
32:27it doesn't have to be
32:28three, three, four, five
32:29factors that are really
32:30that drive price?
32:32I mean, to me,
32:33it's if you look
32:34at the history
32:35of housing economics,
32:36I always like to go back
32:37to 1942 to 2026.
32:39Nominal home prices
32:41rising is very normal.
32:43It's actually very rare
32:44to have nominal home prices
32:45decline in America.
32:47If you take 2007 and 11
32:49out of the equation,
32:50we actually never had a year
32:51where home prices fell 1%.
32:53In 1990, it was 0.7.
32:55In 1991, it was 0.1, 0.2.
32:58But the supply and demand
32:59equilibrium gives you an idea
33:01of when pricing gets weaker.
33:03In parts of the country,
33:04there are prices
33:04that are declining.
33:05There's parts of the country
33:06that are still rising.
33:07But when inventory grows
33:09and new listings data
33:11starts to pick up,
33:13usually the price cut percentage
33:15starts to rise
33:16if demand doesn't grow with it.
33:17In the previous decades,
33:18we used to have rising inventory,
33:20rising sales,
33:21and rising prices.
33:22Now, because of qualified mortgage
33:24and a lot of things
33:24have changed,
33:25when you see inventory grow
33:27and demand start to get weaker,
33:28then the pricing starts
33:29to get weaker
33:30and you see it
33:31in the price cut percentage,
33:32that's going to be
33:33the key data line
33:34to give it to you.
33:34Like right now,
33:35for the most part of the year,
33:37price cut percentages
33:38were slightly lower
33:39than last year.
33:40Home prices were up 1% to 2%,
33:41but now,
33:42now that rates
33:43have gone up higher,
33:44demand has slowed down
33:45a little bit,
33:45in some cases,
33:46it's gone negative.
33:47We see the price cut percentage
33:48catching up the last year.
33:49I believe it could probably
33:50surpass it
33:51if rates still stay elevated.
33:52And that gives you
33:53an idea of pricing.
33:55It doesn't necessarily
33:56ever mean that home prices
33:58are crashing
33:58on a national basis,
33:59but it gives you
34:00the flow of price growth.
34:02And for the most part,
34:04most price indexes
34:05are up 1% to 2%.
34:06It's actually above my forecast.
34:08I was looking for
34:08a slight decline,
34:09but rates started
34:10the year off lower
34:11than I thought.
34:13But now we get to see
34:14how that works
34:15and our price cut percentages
34:16are slowly picking up higher
34:17as demand is slowly
34:18going lower.
34:19And inventory growth,
34:20even though there's not
34:21much of it this year
34:22on a year-over-year basis,
34:23it's at a much higher level
34:25than what it was in 2022.
34:26Like 2022,
34:27March of 2022,
34:29the savagely unhealthy
34:30housing market,
34:30I said we only had
34:31240,000 single-family homes
34:33available for sale.
34:34In a country of our size,
34:36that's very unhealthy.
34:37But now we're,
34:38you know,
34:40about 870,000.
34:42It's perfectly healthy and normal.
34:43And this is how
34:44the supply and demand
34:45equilibrium works
34:46with housing
34:46for decades and decades
34:47and decades.
34:48And people don't have
34:49to worry about
34:50kind of the worst
34:51take scenarios out there.
34:53All right.
34:53Well, I got two last,
34:56two more questions for you.
34:57And this one,
34:58I mean,
34:59this entire conversation
35:01has been leading
35:02to this question.
35:04And I know this is probably,
35:06it's an impossibly hard question
35:07for you to really answer.
35:09And I don't want me
35:10to put you on the spot
35:11necessarily,
35:11but if you,
35:12like if you had a 60
35:13or 90 second response
35:16to,
35:17or the opportunity
35:18to lay out
35:19like Logan's grand theory
35:22of everything,
35:24what would that,
35:25what would that be?
35:26Because I feel like
35:26we've really,
35:26I mean,
35:27we've touched on it
35:27throughout,
35:28but if you could,
35:29you know,
35:29summarize that
35:30in 60 to 90 seconds,
35:31I would much appreciate that.
35:33Economics is really
35:34demographics and productivity,
35:36right?
35:36People,
35:37people consume goods
35:38and services
35:38and they work.
35:40When you have
35:41healthy demographics,
35:42you can grow
35:42your economy out there.
35:44We still have
35:45a very,
35:46very healthy
35:46young replacement workforce.
35:47Like,
35:48you know,
35:48the baby boomers
35:49are leaving the workforce
35:50and Gen X
35:51are older now,
35:52but the millennials
35:52are still massive
35:53and Gen Z
35:54is massive
35:55and Gen A
35:56will be,
35:57will be big as well.
35:58So the demographic
35:59side of the U.S.
36:00is better than China,
36:01Japan and Europe
36:02out there.
36:03On the productivity side,
36:04you know,
36:05we are,
36:05we're becoming
36:05more efficient.
36:06I don't know
36:07about the AI
36:08productivity miracle
36:09that people are,
36:09are,
36:10are baking on,
36:12but when productivity
36:13picks up,
36:14that's a positive
36:14for the economy.
36:15The economy output
36:16could be more
36:16by doing less
36:17and that's in general
36:20how I look
36:20at economics
36:21in total,
36:22but also
36:23for the U.S.
36:24it's,
36:24it's balance sheets.
36:25I think the,
36:26the biggest story,
36:27if I had every young
36:28analyst in America
36:29right now,
36:29I say you get yourself
36:30versed with the 2005
36:32bankruptcy reform law
36:33and the 2010 Dodd-Frank
36:35qualified mortgage law
36:36that structurally
36:37changed the entire
36:38U.S. economy
36:39for the rest of the century.
36:40It never gets talked
36:41about why,
36:42because we don't allow
36:43consumers to over leverage
36:45with credit anymore
36:46without checks and balances.
36:47Like you can kind of
36:48do it with auto loans
36:49because auto loans
36:50don't have it,
36:51but for the most part,
36:51mortgages and everything
36:53is the safest vehicle now
36:55more than ever.
36:56It means it's very boring,
36:57but, you know,
36:58it's a good thing.
36:58So those are kind of
36:59my big themes
37:00about economics in general.
37:03And what do you look at,
37:04what,
37:05what stories
37:06or data points
37:07are you looking
37:08or watching at
37:09for the next,
37:09or for the rest of the year?
37:10I mean, for me,
37:12it's this struggle
37:14between the Fed hawks
37:15and the Fed doves.
37:18Do they get the rate hikes?
37:20And it's really to me
37:20as long as the labor data
37:22stays positive enough,
37:25you could probably get
37:27one to two rate hikes
37:29at some point
37:30over the next few months.
37:31But the market's
37:32already priced it in.
37:34So if the market's
37:35already priced it in,
37:36if the conflict
37:37could just end
37:39and the flow of oil
37:41can get out there,
37:42and then that is one thing
37:44the Federal Reserve
37:44will remove
37:45from their list of worries.
37:47And then the tariff inflation
37:49was supposed to be a one-off.
37:50And if that starts to dissipate,
37:52that's a really big thing
37:53because then
37:54the Federal Reserve
37:55can tell bond traders,
37:56OK, OK,
37:56the war, you know,
37:57we don't,
37:58we don't really need
37:59to go too aggressive anymore.
38:00You get the 10-year yield
38:01down just a little bit more
38:03with spreads being good.
38:04You could get growth
38:05going again.
38:06So I'm,
38:07I'm really waiting to see
38:08if the closer
38:09we get to midterms,
38:10they find a solution
38:11to the,
38:11to the straight-of-home moves.
38:13And then does the tariff
38:14one-off
38:15starts to ride up
38:16and how the Federal Reserve
38:17responds to that
38:18or how the hawkish
38:19Federal Reserve people
38:20respond to that
38:20because what happens
38:22in housing really revolves
38:23around the 10-year yield
38:24and that's a really big deal
38:25for the rest of the year.
38:27Excellent.
38:28Logan,
38:28thank you so much.
38:29I know we're up on our time
38:30and I really,
38:31I really appreciate you
38:32coming on
38:33and sharing the,
38:35My pleasure.
38:36I won't shave my mustache
38:37next time
38:37because, you know,
38:38people got mad at me
38:39last time,
38:40but yeah,
38:40definitely I'd love
38:41to come back.
38:42All right.
38:42Well, it was a pleasure.
38:43Thank you, Logan.
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