Episode summary
Inflation and new home sales
HousingWire Daily
· · 23 min · Hosts: Sarah Wheeler · Guests: Logan Mohtashami
Summary
Logan Mohtashami said the latest inflation report was tamer than expected and argued that the bigger driver for mortgage rates remains volatile mortgage spreads, not the inflation print itself. He described Friday’s trading as abnormal, said the recent move in spreads was extreme, and expects pricing to calm over the next few trading days. He also argued that the broader inflation backdrop is not showing “breakaway inflation” because shelter inflation, energy prices, and wage growth are all slowing.
On the Fed, Logan said labor data is still what forces policymakers to cut more than they want, while markets only expect two or three cuts this year. He dismissed the DOJ investigation into the Fed as a market-moving issue and said the next Fed chair will matter more for policy than the current controversy. He also said if job growth accelerates and unemployment falls, yields could move higher.
For housing, Logan said new home sales are trending near a three-year high and remain in a range that has held since 2018-2019. He said existing home sales have improved since mid-June 2025 because lower mortgage rates helped forward-looking demand, and he expects lower rates to support more sales into the spring.
On policy ideas, he was skeptical that 401(k) or 529 withdrawals for down payments would materially change housing demand. He said prepayment penalties may have some merit for mortgage market stability, but mortgage spreads have already moved much closer to normal on their own.
Key takeaways
- Logan Mohtashami said mortgage spreads, not the inflation headline, are driving day-to-day mortgage rate volatility.
- He argued CPI is unlikely to break out because shelter inflation, energy prices, and wage growth are all slowing.
- He said labor-market weakness is still what pushes the Fed to cut more than it wants, with markets pricing only two or three cuts this year.
- Mohtashami said new home sales are trending near a three-year high and existing home sales improved after mortgage rates fell toward 6%.
- He said prepayment penalties might modestly reduce mortgage-market volatility, but spreads have already normalized enough that the idea is less urgent than in 2023.
Notable quotes
“the growth rate of inflation is slowing on a year-over-year basis nothing too dramatic but uh uh the breakaway inflation”
“if you have those two things slowing down and wage growth slowing down, it's really hard for inflation to break out”
“the labor data runs the show. uh it's really hard for them to justify uh raising rates”
“new home sales is at 2019 levels. If if there was the same thing about the existing home sales market”
“when mortgage rates get down toward uh 6%, you could get a couple hundred thousand more home sales”
How the episode opens
Welcome everyone. My guest today is lead analyst Logan Motoshami to talk about inflation, new home sales, existing home sales, and prepayment penalties on mortgages to lower mortgage rates. As always, I want to thank our sponsor, Trust and Will, for making this episode possible. Logan, welcome back to the podcast. Sarah, I don't know how to say this, but I think I got my hair to be bigger than ever.
No, I was going to say that it's inches tall. — I had I had like a different uh person cut my hair and then it's just this is like the Great Wall of China now, man. It is just — It's it's up there.
Listen, this is first world world problems. Everyone would like to have that problem, but it it is really tall. — It is. It is. So, we we'll see how long this lasts, but uh should be interesting on stage. — Okay. Well, let's talk. We have so many things going on. Want to start with inflation or mortgage spreads?
Last Friday, you know, when I talk about mortgage spreads were very, very wild. It was abnormal trading on Friday. It was kind of a precursor to what we're seeing this week.
And this today, we had the inflation report. It was tamer than estimates. And then uh the 10-year yield fell a few basis points.
It's just back and forth. nothing really big, but pricing went up uh about six six basis points. Nothing nothing too dramatic, but it went up.
The mortgage spreads are very very volatile. Over the next few trading days, uh uh things should calm down a little bit. But if you're confused, I understand.
Uh but what happened Friday, that was abnormal. That was like double what a really unbelievable day would be like.
From the episode’s captions: roughly the first two minutes, lightly cleaned. Keep watching on YouTube →
Topics
- inflation
- new home sales
- existing home sales
- mortgage rates
- prepayment penalties
Watch the episode
Watch “Inflation and new home sales” on YouTube
Summary, takeaways and quote selection by Octagon. Quotes are short excerpts; the full conversation is in the episode.
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