Episode summary
How long will housing demand hold up with higher rates?
HousingWire Daily
· · 20 min · Hosts: Sarah Wheeler · Guests: Logan Mohtashami
Summary
Housing demand is still holding up, but Logan Mohtashami argued that the growth rate is clearly slowing as mortgage rates stay above his 6.64% threshold. He said purchase applications were only up 0.2% year over year and pending sales were just slightly positive, which he sees as a meaningful deceleration from earlier this year even if the market is not yet negative. He also noted that seasonality matters and that this year’s comparisons are getting harder because rates were lower a year ago.
Mohtashami said the bigger picture is a tug-of-war between elevated rates and improving affordability from wage growth, but that the current environment is still materially different from a true 7% mortgage-rate backdrop. He argued that mortgage spreads have already improved a lot and probably have limited room left to get better, so they are no longer the main source of upside.
On supply, he said new listings remain normal and inventory growth is modest at 0.56% year over year. He pushed back on the idea that lower rates automatically cause a flood of listings, saying that only distressed-credit periods have produced that kind of surge. Price cuts are still slightly below last year, but he sees that dynamic becoming more important if elevated rates continue to slow demand and lengthen days on market.
Key takeaways
- Logan Mohtashami said purchase applications were up just 0.2% year over year, signaling that housing demand is still positive but losing momentum.
- Mohtashami argued that 6.64% is a key mortgage-rate line in the sand; above it, demand growth has tended to fade in prior years.
- He said mortgage spreads are under 2% and likely have limited room for further improvement, so they should not be expected to drive a big late-2026 housing boost.
- Mohtashami said new listings are behaving normally and that lower rates do not automatically create a seller rush.
- He said slightly lower price-reduction rates versus last year suggest prices are holding up for now, but that could change if demand keeps slowing.
Notable quotes
“How is housing handling high rates? Because we are over 6.64. That's our kind of line in the sand for the last few years”
“If we take the purchase application side of the tracker article, we had 6% week-to-week growth. That's actually a pretty good week-to-week growth”
“now we're also going to be dealing with harder comps than you know, we had because last year at this time rates started to go lower”
“We're under 2%. Normal is 160 to 180. So, we do have some potential to go lower, but not not by much, right”
How the episode opens
Welcome everyone. I'm joined today by my podcast partner lead analyst Logan Mohtashami to talk about how the housing market is doing with higher rates. First, here are the top five trending articles from housingwire.com.
First, this week's tracker, home sales are positive but higher rates are slowing demand. Plus, two by Logan, why home builders aren't building any more homes, and don't fall for a fake foreclosure crisis. Great trifecta there, Logan.
Then we have NAR home buyer commission settlement hearing set, and New York outflows reshape housing demand in Texas and Florida. Logan, welcome back to the podcast.
It is wonderful to be here. Of course, it's Monday morning, and weekends were for war, but not this weekend. This weekend we called off a ceasefire or back and forth, and ah, this is getting so old, you know?
It's one of these things, come on, and you know, the of course oil prices fell like 7 8% and, you know, if we can get in a trading range between 67 and 82, I think that's perfectly acceptable for the Fed. But the 10-year yield only went down like four basis points, so uh it's Fed week this week, of course, but you know, this is just getting tiresome at this point. You know, just like, ah, what are you going to do?
What are we going to talk again? And it's just like, figure something out, or, you know, you can't operate a country with every week being, you know, what what what's going on in this in this uh manner, but uh uh we had a very interesting tracker, and uh today we're going to talk about it again. How is housing handling high rates?
Because we are over 6.64. That's our kind of line in the sand for the last few years and uh I thought it was a very interesting tracker that you really need to be like uh nerdy savvy to read it correctly.
From the episode’s captions: roughly the first two minutes, lightly cleaned. Keep watching on YouTube →
Topics
- mortgage rates
- housing demand
- home sales
- rate impact on demand
- mortgage affordability
Watch the episode
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Summary, takeaways and quote selection by Octagon. Quotes are short excerpts; the full conversation is in the episode.
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