Episode summary
Can housing demand grow with higher rates?
HousingWire Daily
· · 18 min · Hosts: Sarah Wheeler · Guests: Logan Mohtashami
Summary
Logan Mohtashami argued that housing demand has held up better than expected even with mortgage rates back at 6.64%, though he said the key test is whether rates stay above that level long enough to affect weekly and monthly demand data. He said the biggest hit to demand this year was actually the snowstorm, not higher rates, and pointed to year-over-year purchase application trends, pending sales, and new listings as the best early signals to watch.
He said the market can still produce growth because affordability has improved as home-price growth slowed while wages kept rising, and because millions of households still buy homes every year as life events and household formation create demand. He rejected the idea that a big pool of buyers is waiting on the sidelines for much lower rates, calling that more of an urban legend than a pattern in the data.
On rates, Logan said the long-run path depends far more on Federal Reserve policy and the bond market than on wishful thinking about a quick drop to 3% or 4%. He told realtors and loan officers to frame mortgage-rate expectations around policy, inflation, labor data, and mortgage spreads, and said there is little historical basis for mortgage rates below 5.75% unless those conditions change materially.
Key takeaways
- Logan Mohtashami said 6.64% is the practical threshold to watch, but demand has not clearly broken yet.
- He said the biggest drag on demand this year was the snowstorm, not mortgage rates.
- Logan said purchase applications, pending sales, and new listings are the best forward-looking indicators of housing demand.
- He argued that affordability has improved enough, via slower home-price growth and wage gains, to support some sales growth even with higher rates.
- Logan said mortgage rates below 5.75% would likely require a meaningful change in Fed policy, inflation, or labor-market conditions.
Notable quotes
“The 10-year yield is lower but not by a lot but mortgage spreads mortgage spreads a good day for mortgage spreads and it's brought in rates down to 6.64”
“So, the question is can this actually hold up better with rates above 6.64%”
“we haven't had a lot of time above 6.64% but just going back in the last few years, what has happened in the last few years”
“what you want to see is new listings data has its normal seasonal curve. You don't want new listings data to to go lower”
“If the economy's firm, inflation is above target, and mortgage spreads are not back to normal, we don't have any history of mortgage rates getting below 5.75%”
How the episode opens
Welcome everyone. My guest today is lead analyst Logan to talk about housing demand with mortgage rates at nearly yearly highs. First, here are the top five trending stories on housingwire.com.
At the top is Compass files ethics complaints against Zillow in 26 states. Followed by for home builders and buyers private lender channels matter. Then we have the housing market spotlight the local markets behind this week's national story.
And Logan's article can the housing market still grow with mortgage rates over 6.64%? Finally, we have Zillow says conspiracy and Redfin Compass say Zillow's did this to itself. Okay, let's jump into today's topic.
Logan, welcome back to the podcast.
Wonderful to be here. It's inflation week. So so far we've kind of survived inflation week.
Uh the PPI report came out today and that was a whiff as well. Boy, I wonder what Christopher Waller's thinking right now. He was JUST ALL LIKE I'M GOING TO RAISE RATES IN JULY.
YOU GOT ONE more bad report we got to and then like both of them whiffed. So um The 10-year yield is lower but not by a lot but mortgage spreads mortgage spreads a good day for mortgage spreads and it's brought in rates down to 6.64 which is going to be the topic of the of the subject today but but so far it could have been worse but looks like we've made it through inflation week and then the PCE report is going to be toward the end of the month.
Okay, that 6.64% level on mortgage rates. That is the where you feel like below that is is good demand above that demand falls for uh demand falls. So what are you seeing right now in the numbers uh given that rate?
So, we haven't had a lot of time above 6.64% but just going back in the last few years, what has happened in the last few years?
From the episode’s captions: roughly the first two minutes, lightly cleaned. Keep watching on YouTube →
Topics
- mortgage rates
- housing demand
- homebuyers
- housing supply
- private lender channels
Companies and tickers mentioned
- ZG
- COMP
- Zillow
- Compass
Watch the episode
Watch “Can housing demand grow with higher rates?” on YouTube
Summary, takeaways and quote selection by Octagon. Quotes are short excerpts; the full conversation is in the episode.
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