A clear pathway to sub-7% mortgage rates for Thanksgiving?

HousingWire

On today’s episode, Editor in Chief Sarah Wheeler talks with Lead Analyst Logan Mohtashami about mortgage rates and how they could drop below 7% by Thanksgiving.  Related to this episode:  A path to sub-7% mortgage rates is back on the table https://www.housingwire.com/articles/sub-7-mortgage-rates-path/  HousingWire | YouTube⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠ https://www.youtube.com/channel/UCXDD_3y3LvU60vac7eki-6Q  More info about HousingWire https://lnk.bio/housingwire  Top 5 Trending:  Exclusive: CrossCountry Mortgage demands payment from former LOs, invokes 2-year non-solicitation https://www.housingwire.com/articles/ccm-customer-poaching-former-loan-officers/  A path to sub-7% mortgage rates is back on the table https://www.housingwire.com/articles/sub-7-mortgage-rates-path/  Open Real Estate gets a boost from independents — and an opening from MLSs https://www.housingwire.com/articles/open-real-estate-826-letters/  Strata Land launches as builders face land-capital squeeze https://www.housingwire.com/articles/strata-land-partners-launch/  D.R. Horton’s silver-lining playbook for 2027, … with a catch https://www.housingwire.com/articles/dr-horton-2027-outlook/  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.

Transcript

00:10Welcome, everyone. I'm joined today by lead analyst Logan Motoshami to talk about what's

00:15going on in the market and what the economic data was in our tracker. Before we dive in,

00:20here are the top five trending stories on HousingWire.com. First, we have our exclusive

00:25cross-country mortgage demands payment from former LOs, invokes two-year non-solicitation,

00:31followed by the tracker, which is a path to sub-7% mortgage rates is back on the table.

00:37Then we have MLS executives weigh open real estate and listing control. And Strata Land

00:43launches as builders face land capital squeeze. Finally, we have D.R. Horton's silver lining

00:49playbook for 2027 with a catch. We are ready to dive in. Logan, welcome back to the podcast.

00:55It is wonderful to be here. And wow, this might be the week of the year in terms of what's

01:03left in

01:04the calendars. Because as always, we don't like to do too much talking about economics the last

01:10two weeks of the year because people get ready for the holidays. But we got jobs week. We got

01:16tariff talk. We got midterms. We got Iran conflict headlines, Fed speeches, 10-year yields,

01:24head and shoulders patterns, hold the line at five. We got the whole enchilada. So I'm very excited

01:29for this Monday. Man. Okay. Well, let's dive in on what's happening this morning. And actually,

01:35we're doing this a little bit this afternoon. What have we seen as far as what's happening in the

01:40markets, how that's affecting the bond yields? So all we care about is that we want this head

01:45and shoulder pattern on the 10-year yield to break lower. And of course, the key thing for

01:50everything is that that 5.35 level held. And now it's become lower because the AI is now part of

01:56the

01:59equation. Last I checked, Core Reaver stock is down again. Intel stock is down again. The 10-year yield

02:04is at 4.88. We're trying to break that lower. I caution everybody, let's wait until the end of

02:11Friday at the close to see where we end. But definitely, it is in play for bond yields to go

02:18lower if some of these issues are still persistent in terms of the AI slowdown story. But then

02:25there's lots of headlines between the conflict with Iran and everything. Oil prices are down

02:32noticeably. So the backdrop is there. This could be it. And we don't need much. We just need a little

02:38bit more help on the spreads. The spreads have worsened. Just remember, when mortgage rates shoot

02:43up very fast and then the 10-year yield makes a very aggressive move lower, spreads do get worse

02:49because its job is to compress volatility. So you get a little bit better spreads. You get the 10-year

02:53yield under 4.85%. You could get under sub-7% mortgage rates. And I tell you, we got the

03:00marketing

03:00going, all I want for you for Christmas, sub-7%. Mariah Carey and I are on the posters and we

03:07look

03:07good together. So we're pumped for the holidays. You do. You look well matched there. I don't know

03:13how that's legally possible, but I guess she gets like a cut if you do an AI thing of her,

03:18right?

03:19Very interesting. Okay. So one of the things I wanted to ask you about, obviously, in the tracker,

03:24you talked about the three things that we need happen to get under 7% rates. And the conflict

03:31is one of them. Is the fact that oil prices is lower because we've seen like the leader of Iran

03:37said there might be a deal? I mean, and do markets react to that the way they used to?

03:42So to me, it's if oil can trade between 67 and 82 and there's actually like a deal done,

03:50that's the last time the 10-year yield actually got noticeably better. But that was the MOU deal.

03:56That was a while ago. And that's obviously broken up. So the market's like not falling for any head

04:03fakes anymore. And this is why the 10-year yield is still elevated. Of course, there's a lot of other

04:07reasons like that. But, you know, President Trump said after the midterms, you know, the Iranian playbook

04:14is to make the politician in America suffer the most possible, you know, Carter and Reagan. That's

04:20what they did. The midterms are coming up. So the oil traders have been very good on this in terms

04:27of

04:27trying to maybe get ahead of the story. But we'll see. We'll see what happens after the midterms and

04:33maybe takes about one or two weeks if this is finally going to come to an end. And one variable

04:40that the Federal Reserve has used for their hawkish statements, diesel prices, oil prices,

04:45embedded inflation, that thing can go away. We need oil between 67 and 82 dollars. It needs to

04:50be traded on there. So, you know, you made that correlation between oil prices and how the 10-year

04:56yield was moving early on in this conflict. Now it seems like how the AI stocks are moving,

05:02what we're seeing in that market is doing a lot for the 10-year yield, which I know we talked

05:06about

05:06the last one. But what are you seeing today on that same thing? You know, for housing wire

05:10intelligence, I give constant updates. Poor Sarah has got to like, you know, I got da-da-da-da-da

05:15-da-da-da-da-da.

05:15And I said, just kind of look at core weave stock and the 10-year yield. And of course,

05:21Meta announced another bond issuance and euro sales. So, but to me, it's like, okay, Intel's down again,

05:27core weave stock is down again, you know. So, it's just the god kings bled, right? And that's kind of

05:35it.

05:35But the 10-year yield is still elevated. Why? Because the Federal Reserve,

05:3965 to 75% of where mortgage rates can go is still Fed policy, right? And the Federal Reserve has

05:45not

05:46really said anything dovish, but they kept on telling people AI, AI, AI, inflation, inflation,

05:53inflation. So, any kind of slowdown from the AI boom is positive for rates. So, that's number two.

05:58You got that. You got the reigning conflict and you got the AI slowdown. That'll get it there.

06:03Okay. So, tell us what the third one was, the tracker.

06:08Well, I mean, in general, the main thing for what we try to do with the tracker article the last

06:15four

06:15or five weeks is that I believe we had a key technical level that would look like it we're

06:21going to test. We tested that level. Okay. Bond yields moved lower without any kind of material news.

06:29Okay. So, that's the big key. If the 10-year yield had closed above 5.35% and you got

06:34hawkish Fed talk

06:36and the conflict was still going and the labor data is fine, you had the potential for more bond

06:40selling. That came down. But now you have three different variables that we're looking on. The

06:45Iranian conflict, the Federal Reserve didn't like. The AI story, the Federal Reserve was talking about.

06:51But also, you know, it's jobs week this week. And so far this year, the jobs data hasn't really

06:59materially done anything to bond yields. Where last year, last year, if it wasn't for healthcare

07:06services and social services, we would have lost 843,000 jobs on there. So, those two kept it out.

07:13That wasn't recessionary in the sense jobless claims were still low. But it is a very good thing this week

07:18to test with now AI softening, maybe, with the labor data and a conflict. Well, we got a lot.

07:26We got a lot this week. And we just want to break that head and shoulders pattern.

07:31But I would say, for me to get really excited about rates, I need that 10-year yield to close

07:36below 4.70 and get spoiled through bond buying. And then I got something materials there. But for now,

07:41a lot of people were talking about, hey, 9% rates. Here it goes. And within a

07:46few days, you hold the line, stay with me, charge it down, reversal. And now we're talking about sub

07:537% rates, not putting 6.5% mortgage rate ornaments on the Christmas tree with Mariah Carey.

07:59So, things could change quickly. And that is the history of the bond market at key technical levels.

08:07Right? Gandalf, 3.37, 2023, for you all that remember that. Hodor. We've got tested the Hodor line,

08:15a few times, late 2023 and in 2024. We broke it for a few days. And then it just shot

08:22right back up.

08:23So, here we go. Gladiator, hold the line. Bond traders are here to make money. They are traders.

08:28They're not ideologues. They're not people that go, oh, I'm going to show the U.S. government.

08:34We're bond vigilantes. We're going to sell bonds. And they go, homies, if you do not buy that trade

08:39down, you're going to not get your bonus. Right? So, I'm just very excited because it was so gloomy

08:45there for a while. But key levels held and now we push it forward. And this week, we have a

08:50bunch of

08:51variables that could maybe help things out. But definitely sub 7% for the holidays. Didn't get

08:57it for Halloween, but definitely Thanksgiving and Christmas and New Year's. We'll see and we'll just

09:04take it from there. Listen, if we can get below 7% for Thanksgiving, that would be incredible.

09:10We could all be very thankful for that. And let me give you guys a really good example

09:15of where we are. Let's go all the way back to 2023. And the 10-year yield hit 5%. We

09:22had 8%

09:23mortgage rates back then. 8% mortgage rates with a lower 10-year. Why? Because the spreads were worse.

09:29And then when the Federal Reserve cried uncle and they said, we're done hiking race. Usually when

09:34the Federal Reserve is done hiking race, there's always this big rally in the bond market and

09:38mortgage rates go lower. Right? We did a really egregious move lower, man. The 10-year yield went

09:44from 5% all the way down to the hoarder line in December, like two days before Christmas. I'm like,

09:51whoa, boy, we tested that hoarder line. And then it was just been back and forth in channel. But

09:55mortgage rates went from 8% all the way down to like 6.65. Because mortgage spreads are better

10:02now, you don't really need to have that aggressive of a move to get down to 6.65 or around

10:09there.

10:10Spreads have gotten worse recently. We're about 40 bases off the low point of the year. But I'm

10:17really curious to see how the next six to eight weeks go with everything in play. And maybe you

10:24what happened was we had about eight weeks of positive data. Positive week-to-week data out

10:30there. Even though purchase application data was down here, the week-to-week data, I need to see

10:35about 12 weeks. But that positive eight weeks gave us a couple hundred thousand more home sales

10:41in the months ahead. And then rates shot up over 7% again. And then we go nowhere.

10:48So I am curious to see how the data looks now because affordability has got a tad better

10:53because wages have outpaced home prices in the last two years. And now rates are not that far

10:59from 7% right now. And maybe you could get a little rally in the bond market, break that head

11:05and

11:05shoulder patterns, and we'll see where it goes. But boy, we went from just complete 8% to 9%

11:11mortgage

11:11rates doomed to, whoa, the data stabilized and now sub-7%. So it moves quick. And that's why you

11:17all need a chart daddy 24-7. Everyone needs one good nerdy friend. It might as well be me because

11:24I'm going to make it as fun as possible, but as informative as we can.

11:27And nobody is on top of it more than you are. So, and I would say you mentioned

11:32Howzumar Intelligence. You update the insights throughout the day. People are really addicted to

11:38it now. They're like, if you don't get it right at 8 o'clock in the morning central time, they're

11:41like, where is it? I need it. I hear from them. So if you guys aren't doing that, you should

11:47definitely

11:47become subscribers and subscribe to Intelligence. Okay, well, let's dig into some of the other things

11:53that we saw with the tracker, right? So let's talk about inventory.

11:57Well, here's the thing. What do we know about housing data going back the last three years

12:03to 10 months? Inventory tends to grow when rates get above, especially above 7% and mortgage demand

12:12is suppressed. So what's occurred, which is interesting to me, we have a little bit above

12:196% year-over-year growth. We have much easier comps to show year-over-year growth. And the inventory

12:25growth, considering where rates are, isn't really that much. I know a lot of people want to make a

12:31story out of it. I just don't think there's not much going on there except for the traditional

12:37rates go higher, mortgage demand is suppressed, housing slows down, inventory is allowed to grow.

12:43We don't really have a much velocity, but we're kind of getting toward the end of the year. And over

12:48the next few weeks, we should see the seasonal declines. Nothing crazy on the new listings data side

12:54either. But what we've seen in the last two weeks is similar to what we saw in 2023, when mortgage

13:02rates

13:03went from 8% down to 6.65. Just two weeks, it's stabilized. The two-week period is higher than

13:11it

13:11was three weeks ago. Purchase application data grew a little bit. If rates can go half a basis points

13:19lower and the forward-looking data gets better, and some people choose to ignore it for the fourth

13:26year. I don't know what to tell you all, but the inventory growth looks normal to me, but it's also

13:33not a very high-velocity event because we're almost down to normal. The new listings data, I just tore up

13:40people on X. By the way, X is getting really weird because almost everybody is an AI generated.

13:46So I'm telling you all, if anybody sends me an AI generated, you're getting muted and you're

13:51getting reported as spam. There's no way a human being should be doing AI.

13:56Okay. Okay. Wait, wait. So an AI generated, what? Because you're the king of AI generated images

14:01and videos. I do videos, but their response are not human.

14:04Oh, I see. In other words, if they want to argue with you about economics and they use AI.

14:11If they want to even be put into the conversation, you cannot put an AI generated response. No. Or an

14:17AI bot. You have to stay yourself, man. Homies, y'all got to realize if you start letting Skynet do

14:25your stuff for you, woof. You don't think that's even a little bit hypocritical?

14:29No, no. Because my words are my words. I would never let Skynet take over. I make a ton of

14:35videos

14:36out there, right? That's fine. But my words are my words because those are what you live by,

14:41right? If I do, if I'm Michael, pretending to be Michael Jackson doing a thriller dance,

14:45okay, that's not me talking about, oh, the 10-year yield channel is here and you bounce off.

14:50Fair. Yep.

14:51So, so yeah. So it's just.

14:54Okay. Now we know there's another trigger for you.

14:57Oh my God. I'm just like, y'all got to step up and play ball. This is my problem. We

15:00have a lot of

15:01people who don't want to step up and play ball. We have a lot of people who want to talk

15:04or have a

15:04goddamn Skynet AI talk for them. You, you are never going to be great by shoveling it off

15:11to Skynet. You're never going to, you're never going to learn how to play. Cause then if you get

15:15into a live discussion with somebody and you're like, oh, what would my Skynet person say? Yo,

15:20no, not skilled, not athletic enough, not talented enough. Oh Lord. Sorry, weak players out there.

15:27Y'all got to play ball with yourselves. So I just, I just muted like my, my, my whole ex

15:31is quiet.

15:32Cause I pretty much muted like 99% of the responses now. Cause we're not letting Skynet

15:37take over that easily. Um, what I want to see going out is if the Ford data gets better,

15:45does it get a little bit better with mortgage rates, not getting below 6.64? Cause that's what

15:50happened in 2023. Uh, when rates went from 8% down to 6.65. I've never seen growth until I've

15:58seen

15:58rates get below 6.64 and head down there with duration. We have the seasonality impact of

16:04housing. That's going to happen soon. You want to take that out of the equation,

16:08but now affordability has gotten a little bit better, you know? So it makes the tracker more

16:13interesting. So all I say is that it's stabilized because we had a very, very fast decline, which

16:18always happens. It happens every time rates get above seven, especially with high velocity,

16:23but right now. And remember, you're not going to see this in any reports until like 30 to 60 days

16:30from this, from, uh, this point out going out of the future. So the next existing homes, the next

16:34two existing home sales before it might be soft, but it's something to keep an eye on because we've

16:39been here before. Right. And that's why I'm a little bit more excited that, you know, who, if we could

16:44just get a little bit lower and then, you know, we're, we're doing the, Oh, guess what? When did the

16:50housing market shift, Sarah Wheeler, you know, mid June, mid June. Okay. So why was it? It was

16:56rates. Yeah. Rates were going lower and spreads were getting better. So demand picked up and it

16:59did all the way up until shocking enough when rates got above 6.65 and then headed above seven.

17:05We just do this back and forth, but at some point that back and forth doesn't work. Uh, uh, you

17:11get

17:11ready for growth. So I'm, I'm very excited for the next few weeks, but it really is a setup for

17:15spring

17:16and just imagine no conflict, no trade war. The AI, the AI story isn't booming out there,

17:24but, uh, uh, the labor variable is, is, is, is the tricky one because, you know, unemployment rates

17:29are still low. So it is exciting because a few weeks ago, everyone's like, Oh no, this is, you

17:34know, and all of a sudden key technical level hell. And this turns quick guys. And I, and I guarantee

17:40you, man, there are going to be people that are going to be waiting six months. If rates go lower

17:44and the forward looking demand picks up, it'll be six months from now. And they go, what happened?

17:49You know, you don't wait for old stale data. You don't want to be old and slow. No, you know,

17:54you do not want to be old and slow. You want to play ball, man. So, so you don't have

17:59that much

17:59time in the world to live. So you don't want to wait for like old stale data. You want to

18:04go with

18:04it, go with it and run with it out there. So by the time that this airs, right, it's going

18:08to be

18:09Tuesday. It's going to be midterm day. Like we always say, anything could happen in between one

18:14podcast and another, but it will be really interesting to see, like you said, this, this

18:18might be the most incredible week, the most interesting week of the whole year, given that

18:23it's midterms, given that we have the jobs data, given that we've, you know, president Trump has said,

18:29I'm going to do something after the midterms to, to figure out this Iran situation. It's going to be

18:35wild. Yeah. Yeah. We, we have a lot of variables, but, but for now, I think the key thing is

18:42that

18:425.35% level held, right? You know, I don't bring out those fictional characters unless it's something

18:48really important and Gandalf and Hordor and everything, but boy, we, we've got a lot of

18:55jobs, AI, midterms, Iran, ISM manufacturing data was, was, was still pricing hot out there. We have

19:03fed speeches. So this is it. And then we go into, I just, I just love November and I love

19:09December.

19:09You know why? Cause it just reminds me of football and I like it in the Niners, my Niners are

19:14going to

19:14get healthy again. And then I used to be a basketball coach in the, in the previous century. So it

19:18just

19:18reminds me of, you know, all the fun stuff, uh, that comes with November and December. So I I'm

19:24pumped. Do you feel the energy out here? I do. If we could get lower rates, everyone's going to feel

19:30the same way. So let, let's, uh, fingers crossed. Thank you so much, Logan, for, um, for tracking

19:35this so closely and seeing when things, uh, when we hit a tipping point. Pleasure Wheeler.

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