The housing inventory story for 2027

HousingWire

On today’s episode, Editor in Chief Sarah Wheeler talks with Lead Analyst Logan Mohtashami about mortgage rates and inventory trends going into 2027.  Related to this episode:  What’s next for housing: 7%, 8% or 9% mortgage rates? https://www.housingwire.com/articles/whats-next-for-housing-7-8-or-9-mortgage-rates/  HousingWire | YouTube⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠ https://www.youtube.com/channel/UCXDD_3y3LvU60vac7eki-6Q  More info about HousingWire https://lnk.bio/housingwire  Top 5 Trending:  eXp Realty and Newrez form Revenos Mortgage joint venture https://www.housingwire.com/articles/exp-newrez-revenos-mortgage-jv/  Leo Pareja says rising rates have already prompted a housing collapse https://www.housingwire.com/articles/pareja-collapse-already-happened/  FHA lending to nonpermanent residents has dropped in the wake of HUD’s rule change https://www.housingwire.com/articles/fha-residency-rule-change/  Trump forms panel to investigate Fed’s Lisa Cook over mortgage fraud claims https://www.housingwire.com/articles/trump-panel-investigate-lisa-cook/  HUD outlines 7 steps to update manufactured housing code https://www.housingwire.com/articles/hud-chassis-free-action-plan/  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 lead analyst Logan Motoshami to talk about mortgage

00:15rates and inventory trends going into 2027. Before we dive in, here are the top five trending

00:21stories on housingwire.com. First is eXp and Nurez form Revenos Mortgage Joint Venture,

00:27followed by Leo Pereja says rising rates have already prompted a housing crash.

00:32Then we have FHA lending to non-permanent residents has dropped in the wake of HUD's

00:37rule change and Trump forms panel to investigate Fed Governor Lisa Cook. Finally, we have HUD

00:43outlined seven steps to update manufactured housing code. Okay, we're ready to go. Logan,

00:49welcome back to the podcast. It is wonderful to be here. And look, there's light. That last podcast

00:55was like so dark and my voice was like, I was like, you know, I was like being held hostage

01:00in

01:01some dungeon or something and talking about rates. But we're back in back in the land of the living.

01:07No, that's good to know. That's good to know. Okay, so we're gonna let's start off talking about

01:11rates because obviously, we're recording this on Friday morning. Been a wild week where we ended up

01:17and what do you think? So the funny part is in the last podcast, we talked about October is going

01:22to

01:22be really key for the next 15 months and we really can't break over 5.35%. And, you know,

01:28there are talks about Trump due to something before the conflict or after. And then like literally an

01:33hour after our podcast, Trump made an announcement that, hey, we're not gonna attack. We promised not

01:38to attack Iran before the midterms. So the 10-year yield fell a little bit more than what it was

01:44that

01:44day. And it's roughly around there. But as always, we have to hold that line at 5.35%. We cannot

01:52allow the 10-year yield to close over. So I'm hoping that, you know, and it wasn't me.

01:58People are like, you told Besson, you can't close this. Listen, there's enough bond trader people

02:03there and say, homie, y'all break this line. It's gonna get ugly really fast. So considering

02:10everything that's gone on, we just got to get past October. And so far, the first week we survived.

02:17And we had a lot of hawkish Fed talk. We have French bond market going crazy. The pirates are

02:22blowing up the Saudi Arabians airfields, you know, Turkey and Syria want to come in. And Judy Shelton

02:31was named part of the treasury group. I'll touch that a little bit later. But we have all this stuff

02:38and the 10-year yield didn't break. So that was a really, really good week in terms of testing that

02:43and get ready for week two of October. We need all the help we can get. Okay. So I'm glad

02:49that on this

02:50Friday, we don't have any really crazy thing. Although we did have President Trump is setting up some sort

02:56of investigative committee that he wants Lisa Cook to come to the White House and appear at this

03:03committee about the mortgage fraud that he thinks she's committed so that he can fire her. It seems

03:09very uncertain at this point if that's going to happen. I don't think that that matters. You know,

03:13I know a lot of people think that, you know, the Fed independencies or, you know, the conflict and

03:19economic growth is really pushing it. Trump doesn't have the numbers anyway. Even if something

03:24happened with Lisa Cook, which I doubt, the entire Fed board, everyone is against cutting rates down to

03:32one percent like you want. So that to me in the bigger scale is a non-issue for the bond

03:38market

03:38here. There's other things that are pushing this. But yeah, I don't think this has anything to do

03:43with the Fed because he knows he's lost the numbers. This is Trump wants revenge. And kind of like with

03:47Powell and the reconstruction stuff, you know, they kind of said they weren't going to prosecute him.

03:56So this is how Trump operates. It's bully ball, you know. So there are more important things for

04:04the bond market and mortgage rates right now than that. Well, and also, as we pointed out,

04:08she's a dove. So it's hard to understand, you know, what's happening. I mean, she's one of the

04:14productivity doves, but all the doves turned to hawks. So the more important variables, economic growth

04:19picked up, labor data got better, inflation is above target, conflict happened. Those things are

04:24running the show here. But it does show why Powell stayed, you know, because they want to make sure

04:31the Fed stays independent. And, you know, after the midterm, Trump only has two years left. So, I mean,

04:39it's kind of meaningless at this point. He couldn't get enough people fired from the Fed to put his own

04:45people in. It would have been it would have been a really interesting dichotomy if Trump actually got

04:51enough people on the board, and then all this happened. Like, what would it have done? What would

04:55Kevin Warsh would have done with more people on his team? They couldn't, you know, cut rates in this

05:01environment. So, but that's a multi universe, alternate universe world. So we don't we don't do in those

05:09kind of hypotheticals anymore.

05:10We really have enough trouble going on right here. We don't have to we don't have to imagine an alternate

05:15universe. Okay, so interest rates, we did have, speaking of Fed governors, we did have some more

05:22hawkish talk. Yeah, all the hawks kind of said the same thing, you know, we need more rate hikes,

05:29depends on where and when they should happen. But so far, nobody has taken it to that next level of,

05:35you know, going past the two more rate hikes, getting all the insurance or rate cuts back from

05:42last year. And that's for right now. That's what it is. The market did price in a lot more than

05:47that.

05:47And the Fed's trying to walk people back. But so far, right now, the all that matters to that 10

05:52year yield at 5.35% that that is, you know, hold the line, think of gladiator, I did AI

05:58me gladiator

05:59fighting a giant orc creature that has a 10 year yield at 5.35%. So so far, week one, we

06:06won and we go

06:09more than anything else right now. All right, we will keep an eye on that. Okay, let's talk about

06:14the housing data. And let's specifically talk about inventory. So now that we're going into

06:212027. And you know what we have always tried to teach my job is to teach the supply and demand

06:25equilibrium of inventory, new listings data, active inventory, price cut percentages, weekly pending

06:31sales, 10 year yield spreads. This is what the tracker was designed to teach everyone on the

06:35national. Now, if you just read the tracker, since the end of 2022, when we put in it, you

06:41understood what was happening this entire time. But I think what happened in 2026 is that a lot of

06:47people were confused about the low inventory growth. So Sarah, when did the housing market shift?

06:54Mid June last year, mid June last year, that was based on the supply and demand equilibrium

06:59principle of rates getting below 6.64. And housing demand was going to pick up what happened after

07:06that housing demand are for looking data is all started to get positive, we had a nine month high

07:10in sales, the inventory growth slow down so much that the peak was in August of last year. And because

07:18the comps were going to be very difficult to show growth, it was been the slowest growth of inventory

07:25in years. But then mid June came and then July and mortgage rates got above that 6.64%. And the

07:34speed

07:35of that 1% increase from kind of 670 to 760, that really impacts demand. You can see it in

07:45our weekly

07:45pending home sales. And we've been here before too. This is not the first time. For four years, we have

07:50these channels. The inventory growth has not picked up as much as people thought. But I always say that

07:56inventory is at a higher level now, it was easier to grow inventory in bigger fashions when you're

08:03working from the lowest levels ever recorded history. And this is why we always tell people

08:07housing wire intelligence has all the data you need. And it's not just a national, you could do it

08:12for your own city zip code state, you get everything, you get the whole equilibrium of how it works.

08:17But now that rates are higher, noticeably higher, and demand is going to hit, higher rates can grow

08:23inventory. And being able to track this now toward the end, because the seasonality is going to come

08:29in soon. And because of that, you get to see how it looks like into 2027, which makes 2027 very

08:35interesting. Because wherever rates go, that inventory curve is going to go into the spring.

08:42So a lot matters with what mortgage rates do and the 10 year yield and the conflict. But

08:47now you can get an early indicator. If you, again, if you're up, if you don't have housing

08:53wire intelligence, you probably don't know what we're talking about. But you get an early indicator

08:56because we always look out three to six months. Like I was, you and I have talked about this. If

09:01somebody didn't tell you the housing market shifted mid June, and you had to wait six to nine

09:06months to tell you the data, why are you listening to those people? Like, what were they saying?

09:10There was a lot of crazy things the last six months of 2025. And I was like, not quite sure

09:16you guys are versed in it. And a really good example of why you should follow like a live

09:22tracker data. Somebody came to me and said, Oh, my God, I saw this article with all these

09:26red dots. Whatever you do in America, you never follow anybody who talks about housing showing

09:31red dots on a snapshot of like a Zillow thing. Or it's just you have no idea what it means.

09:37So they said, they said, Plano, Texas inventory has gone vertical or something.

09:42Don't think so. So then I showed the person, you know, kind of our inventory chart for years. I said,

09:47No, that doesn't look like I said what I said, Yeah, do not listen to people with red bubble charts

09:52on snapshots. There's you can't tell what's going on there. So our tracker data inventory, we line

09:59smooth out seasonalities, new listings, pending sales, you get the whole equilibrium. But I think

10:04I am so like excited about because I think in these kind of markets, the tracker data becomes

10:11more prolific and tells you a story because nobody really talked about inventory growth is really

10:16slowing down. You had some people talk about the escalation and Florida should go higher. But

10:21Florida had been down most of the year. Now you need to like, up your game. So you got to

10:26be really,

10:26really careful who you listen to. But if you have housing wire intelligence, you get everything

10:32in your own zip code and city. I'll teach the national stuff, right? But then you can do it in

10:36your own area. So that's what I'm really excited about going into the last three months of this year

10:43and prepping in for 2027 and seeing where we are because we're no longer have an extremely low bar

10:50anymore, right? You get these crazy percentages, like some, these, I don't know, it was a New York

10:55post or something said foreclosures are up 42%. You know, all these people are losing there. And then I

11:02always do our foreclosure chart. Why Sarah Wheeler? What's going to happen to me when I die?

11:07I'm going to put it on your, apparently I'm going to put it on your tombstone.

11:11Yes, but what's my name on my tombstone? Say it. Say it. Chart daddy. Chart daddy. I'm going to die

11:21with the chart daddy. And you're going to put that foreclosure chart. And man, that thing has scaled

11:25now. It's 21 years. We're going to make a big tombstone. Yeah. Yeah. So it's, it's fun. But

11:32so the denominator impact is just, it got very nerdy and technical. And you could see the inventory

11:39growth start to pick up, especially now with the, you know, usually you're at the seasonal decline

11:44period. So it's, it's a very exciting time to be able to track data like this to see, but what

11:49do we

11:50know now? 2023, 2024, 2025, 2026. We've got four years, almost four years of data. When mortgage rates

11:59just get below 6.64 to 6%, the supply and demand equilibrium changes. So next time, if people keep on

12:07saying home prices are about to crash, everyone's going to rush to sell their homes, these y'all got

12:14to, you got to take some pride on who you listen to out here. Cause now you have all this

12:18amount of

12:19data to prove that really wasn't a thing. In fact, inventory growth really slowed down this year. You

12:25need usually higher rates, but even with higher rates, the escalation of inventory doesn't really

12:30take off. So it's, it's exciting for me. And I think it'll be more exciting for people once they look

12:36at housing wire intelligence with their own city or zip code or area they farm out. And so you can

12:41have a, you can have, you want to be, you want to be at least three to six months ahead

12:45of everyone.

12:46You don't want to wait. And this way you can see what rate levels, what, what pricing levels,

12:51everything. So you become a more prolific realtor, at least a loan officer, you know what you're doing

12:55out there. But I thought 2026 was good in that to kind of showcase from June of 2025 all the

13:02way now

13:03to October. And it really took rates getting really above 7% back to the mid seven, seven and a

13:11half

13:11area to really, to get some movement. But it's, it's going to be very fascinating the last few

13:17months of this year and going into the spring of 2027. Okay. So I know, you know, obviously you just

13:22talked about like we're not going to have the levels of inventory that, you know, make home prices

13:27crash, but we have had more inventory, right. Coming off of a, uh, even healthier inventory at

13:33what level does an inventory increase start to help, uh, prices like, okay, first of all,

13:39they have to stop rising. That's the first thing. And then to get something that maybe helps on the

13:44affordability level, just come down a little bit. What, what level is that? So I disagree with the

13:50premise because I believe it's already happened. Okay. Now, a lot of people say that nominal home

13:55prices have to crash for affordability to get better, except if people just looked at the data

14:03from 1942 to 2026, you know, there was only one period of time where inventory crash sales. So

14:10active inventory and AR was 4 million. It's 1.6. When, what are you talking about? In, uh, January of

14:1720, uh, uh, 2007. Okay. So it's 1.6. We're going to get the next existing home sales report soon.

14:23Okay. Monthly supply was over 10 months. Monthly supply is under, under five months right now.

14:29So those two things can't really, you know, create crashes, but we've had, we've had a periods of

14:35times where active inventory was at 3 million and home prices were rising, right? So it doesn't

14:40necessarily, the active inventory has to come with demand crashing. And that's the, that's the

14:47educational part of a housing economics. We saw, um, uh, Greg Scheer posted up a bubble boy chart,

14:55Nick Gurley's venture capitalists purchase application data is down. Oh, this is a pricing

15:00reset. And I was like, homie, that's that, that's not what that chart says. What the chart says that

15:06yes, what happened during the housing bubble crash years, demand was falling, but the supply

15:11and demand equilibrium was going. That's how it works. We haven't had that brake shift.

15:15What has happened is you had the fastest crash in home sales ever, but it happened in 2022.

15:20And what do you want to say that, you know, if something was really breaking new listings,

15:25data would take off. The problem was new listings data actually started to go lower in the second

15:30half of 2022. So you had a demand hit, but you didn't have that surge of, uh, uh, sellers come

15:36to

15:36the market. So that was not a prolific way of using bubble boys chart in that to explain it. Why?

15:41Because credit channels run inventory channels. That's my little line on here. And here we are.

15:47Now it's the fourth year after the calendar sale crash and we're not even back to normal. So you

15:53can't use that premise, but my forecast this year was for slight decline, which means another year

15:59and home prices, correct? Yes. Slight decline. Another year of wages outpacing home prices. And that

16:05ladies and gentlemen, boys and girls, women and children of all ages, that has been the way that

16:10affordability gets better more than nominal home prices, resetting or crashing because we don't

16:16have much history of that occurring, but we do have what happened in 2024, 2025 and 2026, which will

16:23happen in 2027 as well. We'll have another year and affordability gets a little bit better

16:28on its own that way. Uh, um, but if you had a surge, a supply and demand equilibrium surge,

16:35like we did from 2005 to 2007, a vertical inventory, if you had a surge of new listings data,

16:41if you had a surge of foreclosure data, piling itself up into the system and then getting into that

16:46supply that, okay, there, you got something. None of that has been in the data for 16 years now.

16:56And all you had to do is read a book instead of burning it. So, and again, we track everything

17:03weekly. So if anything like that happened, you could get any, again, this is the national data.

17:09Of course, things were different in Florida. Things were different in Texas. Things were different in

17:13New Jersey. Things were different in Washington and Seattle right now. Um, but right now it's, it's very,

17:20very critical to have live, fresh tracking data, especially if, if hypothetically two ways of

17:28looking at it, mortgage rates start to really take off. The conflict gets worse. Trade war 2.0,

17:32all hell breaks loose, right? You keep your eye on that. But what if mortgage rates start to go a

17:37little bit lower, not to 6%, but to 6.75 or something like that. What, how does that, how does

17:43that work? Be ahead of the curve. And that's why I'm very excited. Cause I'm very excited last year.

17:48Cause I was like, okay, now it gets very interesting, but I don't think a lot of people

17:51have the proper data to track this stuff. So we strung this out all the way here, but now it's

17:55to reverse because rates are elevated. So now you have something to work with here. Everyone has

17:59something to work with. Cause we've, this is the last three years and 10 months. This is not

18:03the eighties, nineties, or 2000. We are working with live, fresh data and the ability to track this

18:09stuff. And so far the new listings data, it hasn't shown any stress in any of the data lines that

18:14we've

18:14seen post COVID really not since the early 2010s and 11s and 12s, but higher rates slow down in

18:23demand. Inventory can grow, right? There's no mortgage rate lockdown where nobody wants a list,

18:27but as long as new listings is very healthy, that supply demand equilibrium is still kind of intact.

18:33If new listings data crashes or goes down lower, that's a negative because that's less supply,

18:39less sellers, less demand. If new listings data surges for some reason, right? Those are

18:44stress sellers, most likely not sellers that are going to be buyers. So read the tracker,

18:49but also housing wire intelligence, do it for your own area, be your own chart daddy and chart mommy

18:54out there, right? And have Sarah Wheeler put your, you know, chart mommy tombstone thing with your

18:59own inventory charts out there. I can only do that service for so many people. Also I'm old. So like,

19:06maybe we should pick someone younger. Okay. We're all, we're all going to live much longer than we

19:11think Sarah. So that's, that's okay. I appreciate that optimism. Okay. The other thing that people

19:16can watch in their market and also that you always track is the price cut percentage. But it's important

19:23for people to look at that because normal is like 33% of all homes, you know, require, you know,

19:29take a price cut before they sell. That's normal because as you always point out, sellers are greedy.

19:34We want as much as we can. So if you're looking at that and really we're up a little bit

19:38over last

19:39year, but not much. This year, it was, it was interesting that the price cut percentages were

19:44always lower for most of the year. It's really now that rates get above 6.64, but then take that

19:51next leg higher 1%. I mean, we are 1% basically almost higher than that threshold. So that's

19:57material and the price cut percentages are increasing. This is why you want to see how this

20:01goes in October, November, December, and then you go straight into spring, right? You know, so you,

20:06you get to see the live fresh data and you get to look out, out here now, hypothetically,

20:12let's say if my forecast was right on the dot, 0.62% decline nationally, very rare to have national

20:18declines, but even at that, it wasn't, I wasn't correct because I didn't have mortgage rates

20:23getting up to 760. I didn't have, you know, the conflict being this kind of chaos out there. So

20:28it was only right for the, for the wrong reason. So far, all the pricing things are up one,

20:35one to 2% year over year. But again, it's close enough to show you that pricing is not strong

20:41in

20:41the historical sense. Whenever real, whenever real pricing is negative, that that's not a

20:46stronger pricing mechanism. We've had periods of times, 54 to 67, 1990 to 1996. We have periods of

20:54times where prices do nothing for years. It's very actually common. And then it changes, but I am so

21:01excited for 2027. And you really want to see how the last two and a half months go before we

21:07get

21:07into there and what, what happens with everything, right? We have conflict, we have trade wars, we have

21:13midterms, we have things that can materially change the housing market for the better or worse.

21:17And you want to be ahead of the curve, not wait three months for old stale data.

21:23I hate old stale data. All right. Well, when this comes out, it'll be Monday. I'll be in Chicago for

21:28MBA annual. So if you guys are going to be there, come say hi. And we will talk to you

21:33again soon,

21:33Logan. Pleasure, Sarah.

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