The impact of higher rates on housing data

Name: The impact of higher rates on housing data
Uploaded: 2026-10-06T08:00:56+00:00
Duration: 25 min 35 s
Channel: HousingWire

00:11Welcome, everyone. I'm joined today by lead analyst Logan Motoshami to talk about rates

00:15and how our tracker data is responding to those rates. Before we dive in, here are the top five

00:20trending articles on housingwire.com. First, we have the tracker, what's next for housing,

00:257%, 8%, or 9% rates. Followed by Two Harbors countersues UWM over hedging bet, alleged merger

00:33breach. Then we have Refkin takes aim at CRMLS as Compass escalates MLS fight. And Better ends fight

00:42over a guard led bid to oust directors, restores his leadership. Finally, we have Lawfare is the

00:48new norm. MLS leaders brace for more legal battles. Wow, lots going on over there, but we are ready to

00:55dive in. So, Logan, welcome back to the podcast. It is wonderful to be here. Kind of a quiet weekend

01:03we had. Nothing too dramatic on the news front. Oil prices didn't escalate or go down much Monday

01:14morning, but the 10-year yield is now at yearly highs and one of the most elevated levels in the

01:24last 25 years. So, it's been an interesting aftermath of what Jobs Friday was. It was a very

01:32interesting week, but now we're going into a calendar week that does not have a lot of economic

01:38data, but does have Fed governors speaking. And at least I thought, and some other market people

01:44thought, that maybe Kevin Warsh might have called the doves and said, hey, listen, try to calm this

01:50down. So, it'll be really interesting to see what other Fed members say about how the market is now

01:57pricing more than what the Federal Reserve had been talking about in terms of how many rate hikes they

02:03want. And this kind of happened in 2023, except it was for the other reason. In 2023, the bond market

02:11thought we're in a recession and the 10-year yield was at 3.37. And it's like, this is not

02:17where the 10-year

02:18yield should be with where Fed policy is going, but the bond market can't overdo it to the upside

02:23and to the downside. So, I think it'll be very interesting this week to see what the Fed governors

02:26say. I think it was very disappointing. You know, we're doing this on Monday morning, Monday, you know,

02:31right at noon, where it's like, ah, the bond, you know, 10-year yield is up, mortgage rates are up,

02:37just disappointing all the way around. It is, but it's also, you know, nominal growth is up. You know,

02:44the ISM index, the employment aspect of that index says is in positive territory. Prices are hot. So,

02:52you know, we can't necessarily blame anything, but, you know, good growth, low unemployment rates,

02:59low jobless claims. We did a trade war. We're going into trade war 2.0. Trump didn't take the

03:06handoff that the Supreme Court could have given to him. And then we had a conflict. And, you know,

03:12this is where we're at right now. So, I think it's better to have it with the unemployment rate

03:19low and jobless claims low. I know wage growth is down to 3%. So, we finally got there. One of

03:26the

03:26things I've harped on is that the Federal Reserve really likes to see wage growth at 3% and under

03:30because it can prevent, or it's better to hit 2% inflation if that's the case. But

03:36this is the world we live in because of the current situations and what we've done

03:41in the last 12 months to take us here. So, the tracker this last weekend was really

03:47fascinating because you look at all the economic data always, and mortgage rates are a big part of

03:52that. And so, you were like, 7, 8, or 9, where are we going? What are we doing? And I

03:57thought it was

03:57really good. You know, with this discussion, because it's getting talked about a lot, I don't like to

04:03throw up a percentage just because it sounds nice, like 9% sounds nice, 8%. We want to create a

04:11pathway to get there. This is why I always care about how someone, their model or how they get to

04:18their final answer to their equation. But here we said the same thing for the last few weeks.

04:24If the 10-year yields could get to 540, you could get 8% mortgage rates if mortgage spreads got

04:29worse.

04:29Well, we're at 535, and we're not there 8% wise because the spreads haven't gotten worse. Now,

04:38one thing about mortgage spreads, because the 10-year yield and rates have gone up so much so fast that

04:43even when the 10-year yield, let's just do a hypothetical. Let's say the conflict is officially

04:49over and everyone just says, okay, we're all done with this. And bond yields go down fast and

04:56oil prices go down fast. The 10-year yield spreads might get worse and kind of negate to a degree

05:03some of that. And that happened February of this year when the 10-year yield was breaking under 4%.

05:08It happened so fast that the spreads actually were getting worse before the conflict even started.

05:13So obviously that 540, 8% mortgage rate didn't work. Of course, we go over to the 9%. We talked

05:20about that last week in the podcast. And then what would it take to get to 7% where we're

05:26past the

05:276%. This is why when you and I did that podcast a few weeks ago, I'm like, do not talk

05:30about 6%.

05:31It's that we are so far from that discussion. But it kind of outlaid that part. That was one aspect

05:38of the tracker. The whole tracker is very interesting now because of where mortgage rates are at.

05:43You know, the other thing that you always point out is you're like, you look at mortgage rates,

05:47you look at mortgage spreads, and you're like, given where the 10-year yield is today,

05:52if we had the worst spreads of these different years, here's what we would have. And we'd be

05:57way over 8% depending on how many of the last three years you want to take the spreads from.

06:03Sarah, I did not have any intention of talking about how important the spreads are because mortgage

06:11rates are here. This is the back end of the spreads because in 2023, 2024, and 2025, all last three

06:19years, mortgage rates are above 8%. You know, you're closer to 9% with the worst levels of the spreads

06:24in 2023. But the other aspects of the spreads that are really, really important, this is like a huge,

06:32huge story. This is why I would say the housing market, 2026, 2077, 2028 is all about spreads.

06:38It would be much more difficult to just get to 7.25 if mortgage spreads got worse again. I mean,

06:46you could have the 10-year yield go down a lot and not even get to 7.25. That's the

06:50marketplace we'd

06:51had the last few years up until now that the spreads are getting closer to normal, except now

06:57we have all this, the conflict and everything else to deal with, which has protected rates from

07:04getting higher. But you can't, the slow dance is what really drives everything. The spreads is just

07:08a difference. So when the 10-year yield broke about 4.60 and then 4.80, and then you're really

07:13accelerating out. I mean, you could make a case about 6.40 on the 10-year yield, you know, the

07:18next

07:19breakout level on that. But man, it could have been a lot worse. I mean, that's, you know, we got

07:25to

07:25focus on the good things and what we can control. So let's look at how those higher rates are

07:30impacting the rest of the tracker as far as demand and inventory. What do you see?

07:35So one of the reasons we wanted to get the tracker up as soon as possible toward the end of

07:402022,

07:42which I was not allowed to because for legal reasons, but I always thought it created a pathway

07:47in a story to have the data tell you the story of what's going on. So 2022 had the fastest

07:53crash in

07:54home sales ever, everything in one year. Like in the peak in 2005 during the housing bubble,

07:58it took three years to get down to the lows of 2020 in 2008. But here it all happened in

08:04one year.

08:05So the last three years and 10 months, what is the tracker data have shown us? Number one,

08:11inventory was at the lowest levels of a recorded history. There's no such thing as a mortgage rate

08:15lockdown. Higher rates can suppress mortgage demand. When you suppress mortgage demand,

08:19inventory can grow. Okay. We're not quite back to normal levels, but we're close enough where

08:24it's a very healthy market in terms of buyers versus sellers now. But whenever mortgage rates

08:30get down near 6%, remember our line in the sand is 6.64. It's been the same for the last

08:35year. It's

08:35been really consistent, actually, the whole housing data the last three years and 10 months. But

08:39when you get down to 6%, the supply and demand equilibrium changes and the housing demand data

08:45gets better. It's the duration that's always been the problem and the duration held for a very,

08:49very long time this time. And even with mortgage rates rising toward 6.64, housing demand was still

08:55growing. But now we're at 7.6% around here. Housing demand does not do well when rates are above

09:026.64

09:03and then shoot up above 7. But the velocity of the move, right, the speed of the move in the

09:09last

09:09three to four weeks, or really since kind of July, you know, we took that next move off of the

09:18conflict

09:18and then just shot up. That really impacts demand. So if you could see this in the weekly pending

09:24sales data where for years now, it always been trending at a certain base because rates usually

09:29are lower at this time of the year. But now you get to see the hit. So all the growth

09:33that we had

09:34in our weekly pending sales data, and then all of a sudden it was slowing down, then it was flat.

09:40You have now back-to-back weeks of authentic weakness. And this is what's been the case for housing

09:46for the last three years and 10 months, right? Rates get towards 6%. It grows. Rates shoot

09:52above 7%. It doesn't grow. We go nowhere. So the question is, are rates going to stay elevated enough

10:00to even take all the growth that we would have had in sales in 2026? Because especially when you

10:08exclude the snow data out of the equation, housing demand was going to have its first couple hundred

10:13thousand home sale growth year in many years. But this level, I've not seen the data do good.

10:21We've not been able to hold these levels for a very long time, but we're in a different ballgame

10:27now, right? We have an ongoing conflict. The economy is growing on a year-over-year basis very well.

10:33Jobless claims are low, and the unemployment rate is at 4.2%, technically 4.18%. So it's going to be

10:39fascinating to see the rest of this year because this isn't like the Federal Reserve is like, okay,

10:45we're done with neutral policy. That's it. They are in a rate hike cycle, right? And the history of

10:51rate hike cycles are not good for mortgage rates. The only saving grace you had is that we never cut

10:56rates to stimulate economy. We're just trying to get to neutral, and we're now doing the back and forth

11:01that the Federal Reserve does at times to try to find that neutral rate. Or do you want to get

11:08more hawkish to slow the economy down? It becomes much more interesting with the Federal Reserve now

11:14and the economic data while this conflict still is going on. And it's the month of October. He said

11:19October is going to be, you know, when Trump said, we're not going to get a deal until after

11:24the midterms. Well, this means until then, things could get chaotic, and they did.

11:29You know, I feel like housing demand actually held up pretty well this year for a good part of the

11:35year

11:35until what, the last month or five weeks? I mean, still, I mean, it held up better than it could

11:41have. But now it's just hard to see how that's going to happen. I was very impressed on how even

11:48with rates getting above 6.64 and heading toward, because the duration was slow with rates. So it was

11:54just holding up. There wasn't much movement. But the speed of going from 7 to 7.60, just the velocity

12:00of

12:00that, just that move itself would have been impactful in a very short amount of time.

12:07But we're up here now, right? And that's why you want to keep an eye of the tracker. This is

12:13why

12:13Housing Wire Intelligence was created for everyone. Every market is different. You know, my job is to

12:18talk about the national stuff, but the weekly pending sales, the price cut percentages, everything

12:23in inventory, which inventory was a really good story. There was a lot of confusion on that number.

12:31But it gives everyone a real time, because remember, we want to teach the pathway, how to get there. We

12:37don't want to do a theory without a model out there. We want to give people what the data is

12:42fresh,

12:42because this looks out 30 to 60 days or two to three months, really. By the time we were, when

12:48our

12:48stuff gets reported into the traditional data lines, it's already too old. So we want to get

12:52ahead of the curve. Let's talk about new listings, because this is always like, you can see a lot of

12:59what's happening in the market with new listings, right? Of course, that affects inventory. But in

13:03a market where you're having a rapid increase in rates, what is the fear there? What are you seeing

13:10in the data? So number one, the new listings data has always been our key just to see if you

13:19ever see

13:19seller stress into the marketplace. And I just don't think 99% of the people on Planet Earth know

13:26what it is, because they don't track it. So I always like to do this. Like on social media, I'll

13:33bring

13:34out what the data was during the housing bubble crash years. And we always said that normal new

13:38listings for us is about 80 to 100,000 during the seasonal peak up here. We had our best new

13:43listings day, the most healthy new listings day in 2026. When new listing was very negative was the

13:49second half of 2022, and mortgage rates went from three to seven and a half percent. And then new

13:54listings data started to decline on a year over year basis, already working from low levels. It wasn't

13:59like it was elevated. So the problem with that is most sellers or homebuyers supplies a function of

14:04demand. So you lost that buyer, then you're revolving your entire market around first time

14:09homebuyers and investors. That's not going to work, right? You need a healthy level of new listings

14:13data. Some of the concerns I would have is that if rates stay elevated or go higher, do sellers just

14:21go, I'm just going to wait until this conflict is over and wait until I'm not going to even bother

14:25with it. So far, that has not occurred. That is a very healthy sign that the people that are putting

14:31their homes on the market, even though these are historically low numbers, it's still a functioning

14:37marketplace. During the housing bubble crash years, that number was running at 250,000 to 400,000 per

14:43week for a year. So this last week, when I showed the numbers, it was really crazy because this is

14:48the

14:48seasonal decline period of new listings data. And we had like 380,000 new listings in 2011 here,

14:57like 340,000 in 2010, just for the calendar week. So you would, in a sense, need five weeks

15:05of new listings data today to even match what was going on back then. So there is no seller stress

15:11that we see. And that's part of the reason why active inventory, you know, historically is still

15:16not back to normal, but it's such a healthier housing market. So, so far, so good on the new listings

15:22data side, but it's something I'm going to keep an eye out because if that starts to decline on a

15:27year

15:27over-year basis, that is future demand that is going away. So we want to keep that, you know,

15:34in even keel for not only the rest of this year, but especially going into spring of 2027.

15:40So last week, I talked to Bill Kilmer. He was at our Mortgage Banking Summit. He's a chief lobbyist

15:45for Mortgage Bankers Association. And we talked about like, how does housing react based on what

15:52happens in the midterms? So we already have Trump saying nothing's going to happen until after the

15:56midterms. But the part I didn't get to ask him about, it's not really, you know, he was talking

16:02from a political standpoint, but from the bond market standpoint, if you had what's, you know,

16:08so-called a blue wave, does that, does that have the ability to maybe calm this down because they

16:13think, hey, we're going to get this war ended at some point because, you know, whether there's a deal

16:20or does this put more pressure to get it over, do you think that that makes it a better mortgage

16:25rate environment? I don't care if it's a blue wave, red wave, purple, green, the conflict has

16:32to come to an end and both parties have to agree to it. And that's, this is why, what was

16:41it, six months

16:42ago, you know, when we said, the concern I have is, I don't know if he knows how to get

16:47out of this.

16:48You know, if he doesn't get what he wants. See, Trump's so used to bully ball. He's just so used

16:53to just, I'm just going to kill a few of their leaders and just, you know, start blowing stuff

16:56and they'll, they'll cave. This is different. This is not a tariff. This is not picking on a

17:02contractor in New York or whatever, right? So the theory is that if the Democrats take the House or

17:10the Senate, you know, if there's more of them, there'll be more of an inclination to end this

17:16conflict or, or, you know, wrap it up. I think part of the concern is these discussions that,

17:25you know, whether it's Trump's psychological tactical warfare thing, that as soon as the

17:32midterms are over and we don't get what we want exactly, we're going to extend this to another.

17:37Because right now they're, the Iranians economy is really getting hit, right? They're getting some

17:41of this oil through and getting some money through it, but it really is not. So the longer this goes,

17:46they'll eventually give in. It's obviously didn't pull well. Again, the history of inflation surges

17:53politically, whoever is running gets, gets hit the most. So I will want to see evidence that it's

18:01actually done because the bond market took that first bite in when the MOU deal was saw and the

18:0710 year yield went lower and oil price, and then it just shot right back up. So these old tactics

18:12that

18:13used to try to calm the markets down just don't work. And we're getting, we're getting more oil

18:17through. I think the fear is things don't get resolved after the midterms. And then it just

18:22escalates into another phase. And it's just, I don't know what we'll see, but I thought the bond

18:30market correctly got more volatile when Trump said, we're not going to, we're not going to get anything

18:35done until after the midterm. So here we are the month of October and we got to just deal with

18:39all this.

18:40Yeah. And we know that, I mean, even if people get elected in the midterms, I mean, they don't take

18:45office until January. So it's not like an immediate, but I didn't know if maybe you thought the bond

18:49market would look at that and be like, okay, we see something happening.

18:52The bond market got fooled once. It's not getting fooled again. And that's why it's one of the reasons

18:58why we're still here, even with the oil flowing and oil prices. And just remember, we had, we had

19:02elevated oil prices from 2011 to 2014. We had an expanding economy, even though wage growth was weaker,

19:08the labor market was weaker and growth was weaker. So the US economy can take this as a whole,

19:15especially with the domestic investment you're getting out here. But I think part of the other

19:20thing when we talked about the tracker is the inventory data. Now the inventory data got some

19:25people confused out here. When you read it, what did you see? What stuck out to you?

19:32Didn't seem like a lot of inventory week to week. It is more than last year. It is up over

19:36last year,

19:37but it still doesn't seem like a whole lot. So I think this is one of the discussions that

19:41I'm trying to have with people. The closer you get to normal, the harder it gets to get these big

19:49percentage increases on inventory. And the tracker is really beautiful and you're tracking that.

19:55This is why, I remember in 2025, the first six months, I was like, this is really good inventory

20:00growth. This is great. This is like the best thing. This is going to be one of the most untold,

20:04happy stories on housing that nobody's going to care about. But I thought that was really good.

20:07We needed to get there. But here it's a little bit different. Even with much easier comps,

20:13because inventory, the peak in inventory last year was August and the seasonal declines. We're at the

20:18point where you do some seasonal declines. The rate of change, that's what I want people to focus

20:23on. The rate of change, change with higher rates. Okay. So that is a meaningful move that even

20:29in October, you can have increases. The number itself was like less than 7,000. The percentage

20:35on a year over year basis is less than 5%. So it is not big, but you want to focus

20:40on the week to

20:41week data to see how the supply and demand equilibrium works. And just like last year,

20:45where we said the housing market shifted mid June, right? We're going to have easy comps to not show

20:51much growth all the way to mid. Now we have easy comps to show growth. But I think people are

20:57expecting the same kind of big numbers. When you're working from low levels, it's easier to

21:05show that kind of big percentage increases. So you just want to focus on the week to week data. But

21:12some people are like, why isn't it more? Well, it's also A, it's the seasonal period of time where

21:17you're going lower. And B, we're at elevated levels compared to where we used to be. And that's part of

21:23the problem when you have a very low base effect. When you're working from the lowest levels ever

21:28recorded in history, right? Getting to 2023, 2024, 2025 levels is not much. It doesn't take much

21:36just to get back to normal. But once you get closer to normal, you're going to have to really start

21:40to

21:40earn it. And even if I take the NAR data, which is different than ours, their normal active listings

21:46between two to two and a half millions. That's it. Last print was 1.62 million. So we're getting

21:52toward the seasonal end of the inventory data. There's a few more reports for the NAR. For ours,

21:57usually, you could even go up toward the end of October. And then you start prepping for 2027.

22:03But just remember, now you're going to get into harder comps to show growth in the second half of

22:142027 from what's happening right now. So it really depends on the supply and demand equilibrium with rates

22:20and how the demand goes. So it'll be a very good test if we can stay above 7% for

22:26a long time to see how

22:27the housing market reacts to that. Of course, my price forecast has been wrong all year. I was looking

22:32for slightly negative year-over-year data. But I have a better chance of that maybe getting right now,

22:37even though all the price indexes have been positive on a year-over-year basis for the existing home sales

22:41market.

22:41We don't have a ton of economic news this week, not like it's been for the last couple weeks.

22:45So I know we do have some Fed speeches. What are you looking at?

22:50You know, Lori Logan tried to fight back on more aggressive rate hikes. Now,

22:55we might need more aggressive rate hikes if you really wanted to. I mean, the Fed has a very blunt

23:02instrument to impact what's happening. A few rate hikes isn't going to impact AI, nor is it going to

23:08help the straight. But Apollo management came out there and said that the rent disinflation that we've

23:16been dealing with, which was positive for CPI, is slowly starting to fade out. So 2027 can be one

23:24of these things where rents actually grow a little bit more than what they had in the last few years,

23:29and that's not good for inflation. I would make the argument that wage growth being at 3%

23:35really prevents, you know, shelter inflation from really taking off. But

23:40I want to see what they all say. Every Fed governor to where, because right now the Fed governors would

23:45have to be very careful in their language. It's one thing when the 10-year yield is going up from

23:50430 all the way to 480 or even to 5%. But when you are here, there is, you can make

23:57a case for the

23:5810-year yield to go to 641 just technically, and the Fed gets very hawkish on that. But right now,

24:04I think what Lori Logan and the Fed doves last week, Jefferson and Williams try to do is try to

24:10get the market back to just getting the insurance rate cuts from last year back. That's what I want

24:16to see this week. That to me is the big story. Of course, if any conflict news happens, that runs

24:21the show. But that's my key thing is what are the hawks and doves saying now, now that the 10

24:27-year

24:28yield is up here, now that the market is pricing. Because you saw some of the market rate hike

24:36percentages decrease a lot when Jefferson came out and the jobs data came out. But

24:41October, man, October, Halloween, crazy stuff, conflict, 10-year yield. I mean, this is going

24:48to get spooky, people. So this is why you all need to chart daddy and Sarah Wheeler and one of

24:54the top

24:54Business News podcast in America to try to make sense of it all.

24:58Absolutely. And you are keeping us updated on HousingWare Intelligence. You're putting insights

25:03on there multiple times a day as the market changes. And of course, you write stuff for us

25:07all the time. So Logan, thank you so much. We will be keeping a close eye on this. I'll talk

25:12to you

25:12again soon. Yep. And Puffy here says, hi. He says, hello, everyone. I hope everyone's good.

25:18Halloween's his favorite time of the year.

25:20He has such a great cat. He's so good looking. Okay. Thanks, Logan. Bye.

The impact of higher rates on housing data

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