The Iran conflict's impact on housing demand

HousingWire

On today’s episode, Editor in Chief Sarah Wheeler talks with Lead Analyst Logan Mohtashami about the Iran conflict’s impact on housing demand.   Related to this episode:   How the Iran conflict is impacting housing demand  https://www.housingwire.com/articles/how-the-iran-conflict-is-impacting-housing-demand/   HousingWire | YouTube⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠  https://www.youtube.com/channel/UCXDD_3y3LvU60vac7eki-6Q   HousingWire Mortgage Banking Summit – October 1  https://events.housingwire.com/mortgage-banking-summit-2026?utm_source=housingwire&utm_medium=website&utm_campaign=hwd_podcast_0727   More info about HousingWire  https://lnk.bio/housingwire   Top 5 Trending:   Mortgage rates jump as Treasury buyback plan fails to cut costs  https://www.housingwire.com/articles/treasury-buybacks-mortgage-rates/   New home sales slipped again. Why builders are still holding back  https://www.housingwire.com/articles/new-home-sales-slipped-again-why-builders-are-still-holding-back/   The loan officer engineer: The $11,898 problem  https://www.housingwire.com/articles/loan-officer-engineer/   Everything we know about Real’s REMAX acquisition and the shift to tech-driven consolidation  https://www.housingwire.com/articles/everything-we-know-about-reals-remax-acquisition-and-the-shift-to-tech-driven-consolidation/   Better, Coinbase announce broad rollout of token-backed conforming mortgage product  https://www.housingwire.com/articles/better-coinbase-token-backed-conforming-mortgage-coinbase-one-credit/   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 my podcast partner in crime, lead analyst Logan

00:15Motoshami to talk about the Iran conflict's impact on housing demand. Before we dive in,

00:20here are the top five trending stories on HousingWire.com. First is mortgage rates jump

00:26as treasury buyback plan fails to cut costs, followed by Logan's article, new home sales

00:31dipped again, why builders are holding back. Then we have the loan officer engineer, the $11,898

00:39problem. And here's everything we know about the real REMAX group. Finally, we have better

00:45Coinbase announced broad rollout of token backed conforming mortgage product. Very interesting

00:50over there. Okay, we're ready to dive in. Logan, welcome back to the podcast.

00:54It is wonderful to be here. And I did not know you had those dancing skills, you know,

01:01at a bar like you did last night. Okay, we must qualify this. Logan in his very funny AI producing

01:10video phase, put I'd have to say it was a very funny video of you, me and Jerome Powell

01:18dancing to the what is love got to what is love that thing. Very, very funny. And I did,

01:23I have great moves in this AI video. I wish I could do that in real life. It was great.

01:28Well, you should have real anybody who knows us knows it's totally AI just because you and I had

01:34a beer in our hands and both you and I don't drink. So you know, but don't hang out with

01:39Jerome Powell at bars. Yes, but Jerome Powell is very happy because you know, we have Jackson

01:44hole this week and he's not the guy anymore. So it's, it's Kevin's turn. And that'll be a very,

01:52very interesting event when we hear what Kevin has to say about stuff.

01:56Oh my gosh. Yeah. No, I, uh, the happiest person has to be Jerome Powell. He's like,

02:00this is not my mess anymore. Right. Well, let's talk about the mess a little bit. And, um, mainly

02:06about the story that we just published about the effect of the Iran war, the conflict, um, still

02:12ongoing on the housing market, specifically housing demand. So what do you see here?

02:18So there was a lot of data actually this week, uh, uh, uh, the case Schiller home price index

02:23FHA surprised some people. There was 2.1% year over year growth on both. And just remember that

02:29that is a very lagging indicator, uh, uh, of pricing currently our data things have changed,

02:35uh, for those that were, who are able to read the tracker article, but, you know, we had new home

02:41sales fall, you know, uh, uh, uh, 10%. So we're, you know, I addressed that in yesterday's article,

02:47but now that we're here going into September, it made me think about, you know, when we went back

02:55and talked on CNBC's fast money episode, early March. And, you know, the, the main premise was

03:03because what, what happened back then was you and Sarah, what, what are you and I always try to tell

03:08people? People do not shop for homes during Christmas and new years. And, um, especially if

03:14they're both on a Wednesday and what's going to happen is I, we, I mean, I literally refused to

03:18write the tracker because I knew what was going to occur. We had a nine month high in sales in

03:24December. So naturally the progression of the holidays is going to impact the data. So January

03:29came, it was, it was a miss of estimates, but I was like, okay, they revised the number a little

03:34bit

03:35higher, but still people thought, Oh, lower rates aren't doing this thing. I said, that's not true.

03:38So we get a rebound in February, which is the natural rebound when you have something like that.

03:44And then I thought a lot of people just didn't adjust their reality to the snow storm.

03:50So back in March, you know, uh, some people were debating that is housing even growing with, uh,

03:59lower rates. And I was like, yeah, our weekly sales and everything, uh, mortgage purchase apps,

04:03everything was growing. So as long as the Iranian conflict doesn't push rates higher because it

04:09just started, we're good today, the purchase application data. So we have enough data now

04:15throughout the year just to show what happened. And it's basically the same principle that I've

04:19talked about for the last few years. Of course, housing affordability was worse a few years ago

04:24because prices were still, uh, running above, uh, wage growth, but housing affordability got a little

04:31bit better on its own as home price growth has slowed down. Wages are growing faster than home

04:37prices, but I still have this premise that when mortgage rates get above 6.64% housing demand slows

04:44down. Now the slowdown isn't very prevalent in the data, uh, right now, but it still slows down from

04:51a growth phase. And this is what we've done for the last few years. We get rates down to six,

04:56we grow a little bit and then rates shoot up above seven and then things slow down. It's,

05:02it's a little bit more complicated this year, but I think today that article was written just to give

05:06everyone visuals. Cause I think when people see numbers and, and charts, it makes it a lot easier

05:13to kind of digest, uh, uh, the data. Where do you think we would be if we didn't have the

05:18conflict

05:18on mortgage rates? Well, this is another interesting, uh, question. I don't believe it's 100%

05:25the conflict related. Again, my core premise, we do not have any history in the United States of

05:32America. If the fed funds rate policy is running to 3%, that mortgage rates get below 5.75%.

05:37We've been close to 6% a few times. That's when the bond market thinks the economy is slowing down.

05:45So number one, um, the labor data got better per the fed's own kind of mandate. They told everybody

05:52we're perfectly fine with job growth being very, very low and the bond market took that and the

05:59unemployment rate didn't go higher and jobless claims still stay low. And the jobs data was

06:03beating estimates. Even if you averaged it out, it's still, you know, this is why I always highlight

06:08break evens. So I thought that's number one. Second, the inflation data was getting a hotter than what

06:14people anticipated before the conflict. That's number two. Then the conflict happened. So the conflict

06:21complicated things because the longer it goes on, the federal reserve, the hawks, the hawks who are

06:27running the show basically said, we don't like this conflict. And as they got longer and longer and

06:34longer, especially the second time after there was a deal and then they, you know, went back against it,

06:40it just pushes yields higher because that's what yields are supposed to do. If the federal reserve,

06:45if I believe 65 to 75% of where mortgage rates, the 10 year yield could go as fed policy,

06:50they are guiding the market higher. There's nothing abnormal, like nominal growth is still up. You

06:55saw the AI story going. So everything looks normal in that sense. If you believe the fed really drives

07:02policy. So the conflict complicated everything, but I don't think it's the number one reason why rates

07:10got up, but it did impact the data once, once mortgage rates got above 6.64% and started to

07:18stay above there with sometimes you can see it in the data. It's just not a magnanimous move yet.

07:26And I think that's why that article is written with those charts. So people can visually see.

07:30I think when we look back on this year though, and I think the conflict is going to be one

07:34of the

07:35things that defines the housing market this year, because it, it just has lasted longer than anyone

07:40thought. And therefore we, we have had some ongoing conflict. Remember when we saw, when we thought

07:48we had a ceasefire or we did have a ceasefire for like, what was it a week? I don't even

07:53remember

07:53in before the 4th of July. And then we saw rates dip a little bit.

07:59Rates did dip, but you know when we wrote that article about where rates are,

08:04we said the base should be six and a half to 6.75 unless the conflict gets worse. So we're

08:10kind

08:10of just here. We're kind of in the upper edge because we're still, you know, this is going into

08:16September, but the duration is now long enough. Remember like we always say when rates go lower,

08:21it takes time to filter itself in the data. When rates go higher, it takes time to filter itself in

08:25the data. If rates had stayed under six and a quarter for the year, my forecast would have been wrong.

08:32I had 237,000 more existing home sales. If rates stay six and a quarter and under,

08:38that would have been too low based on what we had. I mean, year to date, we're still up 2

08:43.4%,

08:43but things are slowing down in the sense where we were showing growth, noticeable growth on all the

08:51tracking data. And then as rates got above 6.64, things kind of slow down just a little bit.

08:58And now that growth on our weekly pending sales data is slightly lower year over year. Purchase

09:04application data is a little bit of a funky survey, but we had 25 weeks of positive year

09:10over year growth. 10 of those weeks were a double digits year of growth. Now the last few weeks have

09:16been slightly negative year over year, but we also have to put the comp story. I think this is one

09:22of

09:22the more important things going on for the rest of the year. Because we have harder comps to show growth,

09:27we have to be careful on how to read the weekly data. Is it just a normal softening or are

09:33we going

09:33to get double digit year over year declines in purchase application data, even though the week

09:39to week data is still a flat or slightly positive just because the comps are higher. So it's a slow

09:45down. It's not the slowdown that we're accustomed to because rates haven't gone above 7% hug and mortgage

09:51spread. But clearly we are on a path for growth. And that was the whole premise in the CNBC interview

09:59in March that, hey, listen, we're fine here. We're good. Off we go. But the Iran conflict can make it

10:06a little bit more complicated if it raises rates. Well, let's talk about inflation because we also

10:12had inflation numbers today. How do you think that's impacting rates?

10:16You know, this gets into the really geeky side. I actually had to talk to one of our coworkers about

10:24this. If you look at the 10-year yield for the last month, we're just basically in a very short

10:28channel. The 10-year yield gets to 462 or 460. If there's any kind of negative news on inflation or

10:34better labor data, it just moves up. So the PCE inflation data was just a smidge higher on a month

10:43and year over year basis. That took the 10-year yield to go up five or six basic points. We

10:47are

10:47basically at levels where the hawks still have control. And then, you know, Kevin Warsh is going

10:52to talk for this meeting. Remember, a lot has been priced in. That was another thing of our premise.

11:00We've wrote articles. It's really hard to get mortgage rates above 7% unless the conflict gets worse and

11:06the Federal Reserve gets more hawkish. So we are sitting here today. We're still not above 7%,

11:10even though we've had a huge plethora of negative data for rates. But everything kind of looks right.

11:18Its question is like, what's the next stage? Does it go higher because the things get worse? Or are we

11:25going to get an end to this conflict and then we could just move back to some of the data?

11:29Because

11:30I always like to remind people, even when oil prices were heading lower and they were at $68 and

11:36oil was flowing, none of the hawks actually came out and said that was good. You know, Beth Havoc even

11:46made a case that, oh, now that we have lower oil prices, that's bad too because people are going to

11:50be

11:51spending more. So there's a lot that happened this year. I think the conflict gets so much of the

11:57headlines because it's around the world. Global bond yields are all higher outside of China and

12:03Switzerland, right? China's economy is struggling. Switzerland's inflation data is much different.

12:08But it was a global move higher. It looks about right. But the inflation data, again, we're still

12:14above 3% on a year-over-year basis. The month-to-month data is not screaming, you know, overheating

12:22inflation data anymore. And that's what the Fed is focused on. But we're up here. The hawks are in

12:27control. And I'm sure they're going to say that that data line justifies our hawkish take. We would

12:33like to raise rates because of it. So a September rate hike, more or less likely now.

12:39To get the last four votes, I think that jobs data matters to those four people. Beth Hammock would

12:45have raised rates last year. Neil Kashkari, you know, kind of follows the trend. So he'd be raising rates.

12:52Lori Logan wants to raise rates. I've got probably two other Fed people that I think would want to

12:58probably raise rates. But getting that other two votes, you're probably going to need the

13:02if the labor data came in stronger than anticipated. Remember, labor data can be very wild on a month-to

13:09-month

13:09basis. That might reaffirm because we've got a lot already priced into the marketplace already.

13:16This is why the Kevin Warsh talk at Jackson Hole will be interesting that, you know, you rarely get,

13:23I mean, I really, I don't even think there ever has been a time where the Fed chairman doesn't want

13:30to

13:30raise rates, but the committee votes to raise rates, you know? So again, it's Kevin. Everyone, nobody should

13:38have been shocked about this, but that's why his speech will be very interesting to the marketplace.

13:44So, you wrote a great article. I mentioned it in the intro about new home sales. And, you know, the

13:52news isn't

13:53good, but it's also not shocking. This is kind of the same channel we've been in for what, what did

13:57you say,

13:5810 years?

13:5810 years, yeah. It's a very, very fascinating period for the new home sales housing starts market. On one hand,

14:07a lot of

14:07people just assume that we're going into a recession because housing starts have been falling and permits have been

14:12falling. But the employment data looks a lot different than previous cycles because new home sales itself

14:19isn't crashing. It's literally been stuck in a channel for 10 years. If you take the COVID burst

14:27in sales away, and because of that, the builders, oddly enough, are slowly moving their total completed

14:34units of sales down. It's no longer rising. I think it was January of 2025 when that hit 134,000.

14:43That number

14:44probably got adjusted as well. But slowly, slowly, it's moving itself a little bit lower. So they can

14:51just hang out here as long as they can get some sales. My concern with the housing construction cycle

14:57and new home sales is that all this is still boosted by rate buy downs. And again, if you equate

15:05the new

15:05home sales level at 2019 to existing home sales, it's a million more existing home sales. That's,

15:10I mean, nobody's complaining about housing. What you're saying is if existing home sales could be

15:15at 2019 levels, we'd have a million more in existing. Yeah, you'd have a million more if more. I mean,

15:20the builders are four and a half to 5.75. They're sub 6% mortgage market. Well, they could sell

15:25homes.

15:27But profit margins are getting lower. The higher rates go, the more it costs them and not good for

15:37construction, right? Again, this is why I've always tried to emphasize the march of dimes. People that

15:43work in the industry for building, they've run a certain way for decades and decades. And I don't

15:48think people who have never worked in that industry or actually track it know how that operates. So

15:55this goes into the shortage debate. Well, if we really had a shortage, why aren't the builders?

16:00Like I was debating some guy, I told him, listen, you think we're 5 million short. Why don't you quit

16:06your job as a loan officer? Go out, get some money and build 5 million homes. You'd be a billionaire.

16:12You're the smartest guy in the world. You know what you're doing. All these. And then the person stopped,

16:19thought about it for a second, you know, like, wait a second. And I said, so do you think the

16:23builders are purposely holding housing construction back? Well, the person said, yes. Well, I said,

16:28demand doesn't warrant it right now, right? There's a supply and demand equilibrium. This is why I'm

16:32really excited to talk at our builder survey in Dallas when it comes out, because I have this whole,

16:40so much of my economic work is about housing construction and building and everything. But,

16:44I was able to talk to a builder group in Richmond earlier this year, but at this, it'll be really

16:52good giving back take on how I look at it. So, the new home sales, not going anywhere, hasn't gone

16:57anywhere for a while. Housing construction hasn't gone anywhere. Permits and starts are multi-year lows,

17:03and this is where it is. The concern is if rates do go higher and profit margins, then you start

17:09getting

17:10less construction, and then you got a layoff. So, we're kind of just keeping an eye on that side of

17:17the equation. Gosh, there's so much going on right now. I'm glad that we have you to parse it all

17:23through. And just to note, we have the Mortgage Banking Summit, which you will be our keynote speaker

17:29at. That's October 1st here in Dallas. And then you're coming back for the Home Building Summit.

17:34Home Building Summit. Yeah, a lot to go over. And one final thing about this week,

17:39the Case-Shiller Home Price Index and the FHFA Home Price Index was probably stronger than what

17:46some people thought. My interpretation of what I see out there, and trust me, I don't follow a lot

17:54of people. I mean, I just get headaches when I listen to people talk about economics and housing

17:58economics. It's just like, I think to myself, how do these people even have a driver's license?

18:02It's, you know. But what I saw this year is I saw a lot of people focus themselves on list

18:10pricing.

18:11And they kept on putting charts that list pricing was down. So, home prices are down

18:16already 3% or 4% or 5%. That's not kind of how it works. And I thought people just

18:22got confused by

18:23that narrative. And you had a lot of other people who are so-called housing analysts who were pushing

18:30that home price growth is decelerating at the fastest clip in years. But then they see the

18:36Case-Shiller and FHFA Home Price Index up 2.1% year over year. Redfin, you know, on August 18th,

18:44they said, oh, it's the highest, you know, growth in home prices we've had in 12 months. So, I think

18:50there's a lot of confusing denies. Just remember, when you guys read the tracker, we talk about the

18:54supply and demand equilibrium and the price cut percentage and where monthly supply and all that

18:59is. And so far this year, my forecast has been wrong. But I do believe what's happened in the

19:05last six to seven weeks, when higher rates, inventory goes up, price cut percentages are

19:11picking up a little bit. The velocity of the move isn't very big, but it should make sure that home

19:18prices, you know, are not going to accelerate from now. I know some people are, it's very, if home

19:25prices were going up to four or 5%, then one of my talking points about this year being positive goes

19:29away. That is 100% true. I do not believe that is happening. I think if you read the tracker

19:35data,

19:36you could see the inventory pick up a little bit, price cut percentage pick up a little bit. It'll keep

19:40a lid on home prices and we should have another year where wage growth outpaces home price growth this

19:47year. I saw this on social yesterday. Someone's making a huge deal about like 40% of houses are

19:54selling below price. You know, it's crashing, all this stuff. And I was like, if only they read our

19:58tracker and they knew that 33% of homes, you know, selling for less than what they were listed is

20:04totally normal. That's because sellers, what do you always say? Sellers are greedy. They want it.

20:08So that's not the sign of anything. We keep a close track on that every single week. And you can

20:14check

20:14that in your local market with housing wire intelligence. Like you can know exactly what's

20:20happening there. I think the thing is that you have so many different outlets that have different

20:26data points and one third of all homes always have price cuts for us. So that's not abnormal.

20:32The price cut percentage has picked up. Inventory is picked up. I mean, it's one of the reasons why

20:36my forecast is for a slight decline in home prices. And I've even wrote this for the last three or

20:41four

20:41months. I said, it's going to be really, really hard for my forecast to be right unless rates go up

20:47high. If they go lower, I'm going to be wrong. But I think it's like everything in social media.

20:54To gain attention, you're going to exaggerate a story. And it doesn't do anyone any good when

21:03institutions that are notable are, you know, inflaming the headlines by saying, you know,

21:08crazy things. But again, for those of you that read the tracker, you're already well ahead of

21:14everyone else. So, you know, you know exactly what I'm talking about. But I think in general,

21:19for people that are listening to the podcast, that article was written to give people visuals on what

21:25it is. If you had a, you know, like some people are saying, sales are crashing. This is going to

21:30be

21:30the worst, you know, you would see purchase application data go notice we lower. You would see our

21:35weekly pending sales data go notice we lower. And our total pending home sales data will actually

21:40follow through with that. I mean, our total pending home sales data is still positive.

21:43But our weekly data is pretty much the best way to give it a forward looking look, because this

21:47looks out 30 to 60 days. It's September, guys, the year is almost over. We're kind of winding this

21:52down. So you got to prep for 2027. But hopefully that article made sense and maybe cleared up some of

21:58the things. There was a lot of housing data and a lot of noise, of course, with everything going on

22:03with the conflict and then Kevin Walsh and the trade war with Canada and all this stuff. So

22:08again, Sarah, my bad. I apologize. I should say Little House in the Prairie every single

22:15day. But Matt, I am never, ever going to talk about Jack Bauer or Chloe ever again.

22:212026 is totally it for me.

22:24I totally agree with you. Logan, thank you so much. We will talk again soon.

22:29Pleasure.

22:34Thanks.

22:38You

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