On today’s episode, Editor in Chief Sarah Wheeler talks with Lead Analyst Logan Mohtashami about jobs week, mortgage rates and recent housing headlines.
Related to this episode:
Mortgage rates unfazed by crazy economic headlines | HousingWire
https://www.housingwire.com/articles/mortgage-rates-unfazed-by-crazy-economic-headlines/
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 sce
Related to this episode:
Mortgage rates unfazed by crazy economic headlines | HousingWire
https://www.housingwire.com/articles/mortgage-rates-unfazed-by-crazy-economic-headlines/
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 sce
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NewsTranscript
00:00welcome everyone my guest today is lead analyst logan modashami to preview jobs week and talk
00:11about monetary policy mortgage rates and some confusing housing headlines logan welcome back
00:17to the podcast it is wonderful to be here sarah how was your weekend it was it was fantastic i
00:24went to a dance recital for my two and a half year old granddaughter and that is the most precious
00:31thing in the whole world of course they don't actually do any dance but i loved it it was
00:35amazing oh good good good of course now we're doing things a little bit different now um we're going to
00:41record a podcast on monday just because if anything happens uh over the weekend uh this weekend was
00:47somewhat mild compared to the other ones but clearly what we could see is the the trade war
00:54is not going as planned i would say in terms of getting deals uh china kind of you know has been
01:01holding some uh some of the stuff that they uh sent to us uh as part of the trade deal so they're
01:07negotiating japan hasn't signed a deal yet so a lot of that over the weekend of course the ukrainian
01:13airstrike uh to russia oil prices are up a little bit um but this way we thought we could handle
01:20everything that happens on a monday and bring this out on tuesday just because things get uh uh things
01:26can get hectic and of course last night uh bill pulte went on uh twitter again and demanded that uh
01:34jerome powell actually uh cut rates yeah that's part of their ongoing pressure on powell right but i don't
01:40think it's gonna work i mean powell has said like he's pretty resolute on that so but we will get
01:45something this week that could change that it is jobs week it is jobs week and of course for all of
01:53you who haven't listened to the podcast before we always believe here that paper rock scissors the
01:57labor market is more important for rates than inflation um and uh speaking of which i'm uh pulte
02:04last night said that the fed cut one percent before the election and then uh the growth rate of
02:11inflation was higher during that period of time well technically that's true but that's not what
02:18the fed uh actually is looking at the growth rate of inflation you remember when when the fed tracks
02:24this they look at three six 12 month core pce headline inflation was 2.1 percent if they really just moved
02:31off the growth rate of inflation and believe that neutral policy was you know much lower they would
02:38have cut rates already but that's that's not kind of how they operate this time but as jerome powell
02:43said you know they were a little bit late in cutting in uh 2024 because you know the labor market was
02:49getting softer uh uh and uh they reacted to it a little bit late and that's why they did a 50 basis
02:55point cut but now again jobs week are really important for those multiple data lines as job openings
03:02data is something the fed really tracks uh the quits and hires in that are very key
03:07adp report is the least important but that can move the markets if it's really bad or good
03:13uh jobless claims happens every single thursday that's always key and jobless claims has been
03:17ticking up uh from the lows uh recently and then jobs friday which three months ago
03:24on jobs friday the 10-year yield was collapsing and i i remember tweeting it out that guys if it wasn't
03:32released tariffs and people think it's taking us to recession bond yields won't be this low
03:36right it's the only reason is people are going into recession mode so labor market if it's
03:41authentically breaking means rates can go lower for a longer period of time that's why we always keep
03:47an eye on jobs week in itself and the reports haven't been bad uh uh i mean that's that's just my
03:55interpretation that the labor market means more and the federal reserve has made comments about this
03:59for some time now and trying to get people on board on this it's been a little bit more
04:05difficult than i thought it would be but this is why jobs week is very important what's the labor
04:11trigger from your perspective what is what's the number that's going to make it um where where we'll
04:16see lower rates is it so here's here's an interesting fact by the way the the federal reserves librarian
04:23just followed me on twitter over the weekend so that's my highlight you know so i'm very happy
04:30about that because uh they had the st louis fed came out with a paper on their jobless claims and
04:34they look at the history of economic cycles and they say well jobless claims gets to 400 000
04:39labor market is pretty weak uh no there's a certain percentage where jobless claims rise from a low base
04:46and to me is if the four-week moving average is heading toward 323 000 that means authentically the
04:53labor market is breaking because once jobless claims break there is no equivocation the recession is here
04:58this thing breaks and it breaks hard um we haven't had any of the labor triggers yet whether jobless
05:04claims or residential construction workers i mean just construction workers in general a lot of people
05:10use other data lines but those two things have worked every time because it's usually at that point
05:17where growth gdp came out today was uh uh the atlanta fed's estimate is like 4.6 percent right so
05:24we had a very crazy first quarter we have very crazy second quarters you know uh the trade data is
05:31really impacting both gdp's numbers so you take it with a grain of salt but again the u.s is a
05:36consumption-based economy and consumption per the gdp is what the fed tracks and they said hey it's
05:42been good stable for the last few years that's why they're holding back until when the labor market
05:48breaks then they have all the cover in the world and they could say oh my god you know hey listen it's
05:53it's we have to do this now because labor over inflation dual mandate but right now it's just
05:58softening right softening not breaking it was getting softer softer but you know job growth
06:03stabilized wage growth stabilized so these are things we want to keep an eye on because we've
06:08done a lot of things to the economy this year right we cut spending um we fired federal workers
06:14if there's less money uh to the states they can't hire as much government workers then there's a trade war
06:20uh tap dance what's going to happen you know but now um if they do get some deals off i think a lot
06:27of people are less worried about a recession and even the federal reserve has said well if you get trade
06:32deals we could be more dovish again but again if the labor the labor market getting weaker is a valid
06:40premise for yields to go lower and stay lower where fed policy is today this is why i can't forecast below
06:475.75 rates the only way we even get to low sixes is through an economic scare it's so crazy we have
06:54thrown so much of the economy this economy is just is so strong and the honey badger labor market you're
07:00gonna have to think of a new uh name for the labor market if it starts weakening because it has been
07:06a honey badger labor market yeah i mean it's it's part of and we wrote this in the covid 19 recover
07:11per the labor side of the equation because baby boomers are leaving right nobody's dorian gray
07:18everyone ages and then they leave the workforce and then they die that's economics right if you cannot
07:25accept death then uh then you're you live in a fantasy land so as the baby boomers leave we have
07:31we have really good replacement workers i always thought that the best thing the u.s has is demographics
07:36are much different than other countries we have good replacement workers where china japan and europe
07:41doesn't have it we've been talking about this for well over 10 years i mean before you even knew me
07:46sarah this was my pounding the fist because they're replacement workers and consumers we have an edge
07:51where you can grow demand and then replace older workers and other countries really don't have that
07:56um so the labor force growth if it picks up more the unemployment rate has a better chance of going up
08:03higher but if the labor force growth contracts then the unemployment rate has a better chance of staying
08:09low because there's not that many people looking so this is the this is the this is something in this
08:14century where older countries just don't have enough people coming in uh so their unemployment rate
08:20can be lower than what they usually are compared to a young country that has a growing workforce and
08:25so many people looking you got to create jobs for everyone we're more on the mature stage but we do
08:30have no labor you know no no no economy has a dorian gray labor market if you don't know who dorian gray
08:37is all of you should be ashamed of yourself uh people just age and die and that's that's that was one of
08:43the big variables we've been talking i remember may it was in may in 2021 where we had a missed
08:48jobs reported everyone's like we're paying people to sit at home they're like no we're not job openings
08:54are going to get to 10 million and it's going to be everyone's going to be complaining about nobody
08:58wants to work and guess what happened job openings got the 10 million job growth picked up we got all
09:03the jobs back in 2022 labor force is still because people work and people just you got to work to make
09:09a living and that's what we do in america and we have that those gen zers that that's our saving grace
09:15well i mean honestly without the millennials and gen z man i mean first of all just to give you guys a
09:20scale millennials and gen z put together are bigger than the total population of japan right and what
09:2740 of japan's population will be dead by the end of the century and what other stat that we have for
09:33japan sarah wheeler it's it's the one that made people uh gasp actually at a live event japan sells
09:42more adult uh diapers than uh baby diapers right they're old they're a very old uh uh country and
09:51you know um for the first time japan is actually welcoming immigration boy that's that's how bad it
09:58is over there for them to actually want immigration uh uh because you know robots can't do all the jobs
10:04right and people age and if you don't have uh a growing uh or healthy uh immigrations uh or or
10:13you know having uh babies they don't really do do that so they need uh immigration to kick in so
10:19uh we're we're just a unique dynamic economy because we are the baddest economy in the history of planet
10:25earth so i mean a lot of those gen zers though i mean those are immigrants or babies of immigrants or
10:32you know grandchildren of immigrants i mean that's been one of our strengths if you look at the history
10:36if you look at the history of immigration in the u.s starting from 1820 basically majority of our
10:41labor force growth is all through immigration right because we have people come here they they get
10:46married they have kids and their kids get married and have kids and that transcends it over time so
10:51that that's our benefit uh you know really from 1820 on you if you look at the immigration data and
10:56that's majority of our labor force growth going out in the future you know so uh that that's always
11:01been one of our strengths where other economies are are just not going to be able to catch up
11:06china's not going to catch up you know their one baby policy is has uh it finally caught up to them
11:12japan's no way right in that sense uh and europe is old as well so we we've got it like we this is
11:18why i was laughing people say oh my god the dollar is going to collapse the u.s is going to go
11:22just go away so we're literally literally just move on man stop crying
11:29so we have uh there's so much to talk about on that front but i also wanted to bring up
11:35so we had a story last week that uh redfin came out that caused a lot of people to
11:40be asking about like what's happening with the housing market so i really and then they have
11:44another story today so i wanted to ask you about it because so many people have asked you what you
11:49think about this so last week redfin had a story that was picked up by lots of people including us
11:54the housing market and here's their uh headline the u.s housing market has nearly 500 000 more
12:00sellers than buyers the most on record that will likely cause home prices to fall so that's a big
12:07number people were really like what's going on i would love for you to unpack that logan modashami
12:12okay so everyone i want everyone you have my permission to take any redfin headline with a slight
12:20grain of salt going out in the future because there's nothing actually wrong with the data
12:25but this morning redfin came out again and said we have near 700 billion dollars of listed homes that
12:32are unsold the most ever in history sarah if it bleeds it leads redfin's got a new ownership
12:40right so now that's crafty i get it you know because if i'm answering questions and i i just looked at
12:48the data and they have a buyer sellers uh inventory gap or you know i just look at oh inventory is
12:53almost back to 2019 levels i mean for our data we're actually right there um so so we've just had
12:59you know biggest crash in home sales in 2022 this is the fourth calendar year of home sales being
13:04near all-time lows it was especially adjusted to the workforce and inventory grows right the whole
13:09concept what was the whole concept of team higher rates in 2021 sarah we needed more inventory so
13:15rates would cool down i mean i'm sorry we needed higher rates so that home sales would cool down
13:20so let for for those who do not know how blunt i am remember what i said in 2022 on record three times
13:28uh you remember the quote okay the quote was we need oh yes yes okay yes the team the team
13:36higher rates was that people don't realize when prices escalate out of control especially due to a
13:41shortage it's the worst thing when it's a shortage because there's really like not really deserve we
13:46just have too many people chasing to everyone was happy because more people were doing business
13:50however didn't realize that what was going on was going to be very detrimental to uh demand going out
13:56in the future so it is always me at this moment in time because why sarah wheeler people are here to make
14:04money right home sellers are not like they're going to sit there and go hey guys guys guys guys listen
14:12let's let's not let's not get a bidding war going because let's think of the future hell no everyone's
14:18going i'm going to make as much money as i possibly can and go on you know that's why i always laughed
14:23about you know the commission things people like oh my god if they don't have to pay commissions
14:26you know home sellers could cut prices oh what world do you all live in what amount of alcohol did
14:32you drink at that bar to come out here and say that like when does that ever happen no so uh
14:38i obviously wasn't a fan if i'm talking about the housing markets unhealthy late 2020 we need higher
14:45rates in all 2021 to very unhealthy to savagely unhealthy in 2022 and then rates came out but
14:50one of the things i remember about the cycle is that four to five percent mortgage rates weren't doing
14:55the damage that i thought it was and now that we're in 2025 imagine if rates never went above five
15:00percent you know we'd have a much different uh dynamic so when mortgage rates went to six percent
15:06i was like okay i'm finally seeing some of the things that you know to try to create balance and
15:11then rates went back down to five percent i was like oh i mean and and i was quoted uh i was like
15:16no you people don't understand we need higher rates to put home sellers home builders and investors
15:22on their bleep because this this can go on so think about what has occurred it's taken the fourth
15:31calendar year of the lowest home sales ever just to get inventory to the bottom end of the 2019 level
15:38which was the five decade low all right so the only way the only mechanism we had was higher rates
15:44and to do that so i am very happy in 2024 and 2025 because i look at it as on the economic side i don't
15:51i don't care how much money you need to make or they need to make or anything i just look on the
15:56economics so to get a balanced marketplace you need higher inventory why are the home builders at 2019
16:02home sale levels why are why is purchase application data for the new home sale market at pre and post
16:09because the builders are they got their heads handed to them and then they're like okay we got
16:14to pay down rates we got to pay down rates so they are a sense buyer's market in that construct right
16:20because their monthly supply has been you know well over six months for years now so they need to move
16:26product because they're efficient sellers the only way i could get anything any equilibrium is rates to
16:32stay high enough but redfin is using confusing headlines to get people to read and share and then you
16:39know how to me media is oh lordy do me for let's do this and and today they said all-time high said
16:47well guess what home prices like escalated out of control the nested equity portions are the highest
16:53level so naturally inventory even though it's not back to normal is at the the billions of dollars yeah
17:00but it's a catchy phrase to get people so i am i was like i was okay with whatever headline that last
17:08report but with today's headlines no so we got shots fired asterisk redfin is in the penalty box
17:17for sensationalizing headlines because i get it i got new management you get people in there
17:21i think i think in the article they wrote like redfin's like you guys better list your house
17:26better list your house home price is my fault you know you know so it's like now i'm like okay no
17:32no what's happened is what we've talked about higher rates weakness in demand 70 to 80 percent
17:38of sellers or buyers supplies a function of demand inventory can grow this is why we're not part of
17:45the mortgage rate lockdown this looks pretty normal to us but it got confusing when people say all time
17:51and then you look on x and just like twitter you're like oh dear lord it's like oh my god and i'm
17:58thinking and then after today's uh headline i'm like no no no no you get penalty box for that
18:04so i guess my question on the there's this many more sellers than buyers what is that really measuring
18:11how do you measure how many buyers there are yeah this is this is a good question i'm let me let me give
18:15you the nar's data on this if i wanted to try to make a comparable so the all-time low in the nar's
18:22inventory data was 860 000 right now we're at 1.45 million it's like over 590 000 more
18:30redfin was what 500 000 there's more sellers and buyers so if we wanted to create a construct
18:36now redfin has their own buyer seller equilibrium demand where they think this is where buyers should
18:41be i just look at it as higher rates weakness in demand inventory can grow 70 to 80 percent of home
18:47sellers or buyers 20 to 30 percent of those are not that inventory can stay if mortgage mortgage
18:52demand does not grow okay those homes could stay on the market for longer that's kind of how i looked
18:59at it but now that i've seen back-to-back headlines of all-time highs gotta be careful right so and i
19:07love daryl i love i love all all my people in redfin you know i i i was you know when when people were
19:13like taking redfin's data and creating their own charts on it and and totally misrepresentated i told
19:18you guys you're going to get sued out of your minds if they catch you so stop uh uh uh taking
19:25redfin's data and misinterpret it because it's funny a lot of the doomers just don't have the
19:30training to to to read home prices so naturally they thought home prices were falling like in the
19:34second half of every year and they're like oh home price is already down reading is a good thing
19:39reading is a good thing people the history of human civilization has always taught us we always say
19:44that in 2000 years ago parchment you get a horse you go guys you get your horse you go all the way
19:50to the ocean you get on a boat and you tell them the spanish armada is coming by the time it said
19:55spanish armada is already came now you have the internet and we have the internet everyone's an
20:00expert right so just i'm just giving everyone just everyone be a little bit just a little bit careful
20:06with redfin's headlines when they go all-time highs because it it naturally should be an all-time high
20:12the highest about home values ever inventory is up to 20 and we're near 2019 inventory levels the
20:18reason i have 2019 inventory levels is key because i am done with the low inventory talk once we get
20:25nars 1.5 we're already there on our own data lines for or with altos but 1.52 you will never hear me
20:33say the word low inventory that's a functioning marketplace there's enough days on markets monthly
20:37supply of course the northeast is is the only thing really holding the back uh that's much lower
20:43in parts of but any any any part of the u.s any city that is at 2019 you have enough inventory for
20:50for a functional buyer seller marketplace and i wanted to see this because price growth slows you're
20:56not going to get three percent mortgage rates anytime soon so housing has to heal by itself through
21:01duration but be careful that that headline today was like i'm like i'm it is so rare to get the twitter
21:09trolls to even agree with me even they were like what is that i mean to get them to even say and that
21:16headline sees us like new management so what what what level of inventory would be um because when you
21:24say back to 2019 levels it's not like 2019 had some like crazy amount of inventory at what point
21:30would you feel like oh this is concerning what is what is the concern part like what there's too much
21:37inventory which means that like home prices would crash okay so the only time post-world war ii
21:44that national home prices crashed was not so much inventory that active inventory got to 4 million in 2007
21:53right so 2007 and 11 home prices fell but what people forget is that a huge portion of the percentage
22:01of sales back then were distress so when you add distress sales into the equation and then you have
22:07underwater mortgage see the housing bubble was not very good because you had foreclosures and short
22:13sales and everything and i people go i saw some terrible instagram by the way the guy who sent me that
22:19instagram video of like their their banks are holding all the foreclosures back we have had so many
22:24economic cycles post-world war ii we've had so many recessions we've had so many foreclosures like none of
22:30them were a crisis except for one period and then i saw another twitter account said hey everyone's broke
22:37y'all oh my god there's airs like 18 trillion dollars of debt out there homeowners are broke i was like
22:43so i listed all the i was i was thinking i was thinking the best financial profiles in history
22:49of america homeowners like why is the u.s consuming goods and services still because the middle class
22:55and homeowners and we listed every single thing in history you want to know why the bearish american
23:00russians chinese and iranians have been wrong about the united states none of y'all read this is not a
23:06financial profile of broke you have no idea what broke looks like broke is i cannot pay for my food
23:12at the end of the day that's what broke people do somebody sitting on a million dollars of equity
23:18making 300 000 is not broke it's like well we're selling homes to poor people no you have you have
23:26no idea what poor people are if you're saying oh this poor person's buying this 800 000 house in the
23:31san fernando valley no they're not poor if you were able to buy a house with where prices and rates and
23:39taxes and insurance up you are making money so the whole conversation gets astray so this is why the
23:45chart daddy chart poppy brain candy whatever y'all want to call me comes in and cleans it all up
23:50so redfin gets a penalty flag for sensationalizing all-time highs for for of homes value of course
23:59there's 52 trillion dollars of of home values out there it's like 35 to 37 trillion dollars of nested
24:06equity so naturally inventory grows that number is going to grow so supply and demand equilibrium
24:11months of supply matter to me to my work i never saw six months as balance i've always seen four
24:19months as balance so if you're looking for distress monthly supply would actually have to be much higher
24:26with active inventory but i always look at that as a functioning marketplace like the more supply the
24:31more choices that's a positive for me so it's a little bit different but the one time that you to
24:36answer your question we had foreclosures bankruptcies all these things were rising four years before the
24:44great recession happened we're always going to see late cycle lending risk so in that context when you
24:49have distress sales monthly supply increasing that's a problem right that's what i would see that there's
24:56something wrong with a credit market system so we are just trying to get a balanced marketplace so
25:01buyers have a little bit more say because hey your rates aren't coming down and you have all this selling
25:06equity here the builders have shown you a model to get more home sales offering concessions if you
25:15want it there it is right so i that's why i always say that efficient sellers the builders are up here with
25:20their home sales their purchase application data is at a post pre-covid high we're all down here in
25:27the 1990s now the question is there's are there enough buyers into the system mortgage buyers where you do
25:33that so the supply and demand equilibrium works off that but we had to get back to 2019 inventory levels
25:38to create some kind of myth so i'm not worried about home prices nationally falling we have we have
25:44people throwing up numbers 25 35 40 percent all for years and years and years go look at these youtube
25:49people's oh the worst housing markets everyone's broke oh y'all are clowns seriously and we're sitting
25:58here in 2025 and every recession call has been wrong and every housing bubble cries price gets one because
26:03you are not serious people but i'm a serious person sometimes so when it comes to economics
26:12no i so appreciate that logan because i mean we see it all the time we we have to react to i know people are
26:19you got so many questions after some of those headlines where people are like is this bad what
26:25does this mean yeah it is it is interesting somebody like came to me on instagram and said why are these
26:30people selling their homes why are why why is this happening i thought they have a low rate no there is
26:35no mortgage rate lockdown mortgage see i always said see we have this debate is people keep on asking me
26:42why are people selling they have such a low rate no total housing costs we have sellers every single
26:51year people have to move they buy other homes but why are they paying seven percent no the total payment
26:58is what matters to them and i was like i and and and i sit here i say okay this this person makes 65 000
27:05he's worried about somebody who makes 350 000 who's just buying a bigger house for himself y'all don't
27:10have to worry about him don't worry because if they can't afford it they wouldn't put their own but
27:15they can afford it and this is how we have we have near five million total home sales again this year
27:20we had in 2023 and 2024 we get 5.4 to 5.8 million total home sales that's like roughly the range of the
27:26last decade the peak was near six million the builders are already at 2019 levels you you have demand
27:33there it's just for some people it's the affordability crisis is not as bad as it is for
27:39people that have less income and this is why home sales stopped crashing after when was it november 9th
27:482022 the infamous date and at that time we have flows like last year last year we had a few months june
27:55uh the summer months all the way up to october june to october we had sub four million which is really
28:01ready to have but we haven't it isn't like crashing but we did have that why is that happening because
28:07sellers are buyers and that's how we get five million so we are missing at peak is about a million
28:12mortgage buyers from the peak of last decade because there are people it's a it's it might not
28:18be affordable to you you might not understand why people sell their three percent mortgage by seven
28:24but for them it's their life choice and they can afford it because you can't you can't fudge it anymore
28:30qualified mortgage changed everything that's why i was worried about inventory falling for all those
28:35years i was like you don't have people just like flowing themselves oh i could buy this house anything
28:40so the the credit markets are so different we did that podcast i think last year where we try to explain
28:46what's going on so when we talk about the inventory data i brought this up uh yesterday just to give some
28:52people clarity the last time inventory grew except for uh uh this year and the previous year is in 2014
29:02the nar's total inventory peak you want to take the peak to peak levels peak was 2.24 million in 2014
29:10it went to 2.35 million right that was the last time here we're working from such low levels that
29:17you're going to get a natural increase in in progression but we need that we need to start
29:22a year at 29 we're good and whatever happens with the market it's functioning it's a function i cannot
29:28wait to like zip it with the low inventory because i'm not i'm not one of these people that say well
29:32there's three to four to five millions inventory i don't care all i care about is active listings
29:37because active listings is the functional marketplace out there so so for anybody that takes a
29:42reference you got you have my blessing we're gonna have a yellow card for reference headlines
29:49if they're gonna go all they're gonna go all-time highs again everything's and try to get people to
29:53catch we we know how that works but man i i i i cannot believe that it was the first day of my life
30:00that people on twitter x the trolling men with no real names and faces right yeah that seems that seems
30:06kind of weird i was like yeah that's a sign for sure logan we are out of time and thank you so much
30:12thanks for the good explanation um we will uh talk to you again soon as always and who knows between
30:17here and there what will happen it's just you know you never know these days like what do we say
30:24nothing is normal after 2020 right we've never had a normal year boy i don't know what i'm going
30:29to do with myself we have a normal year all right we'll talk to you soon thank you so much
30:42you