Fed day preview and the latest Tracker data

HousingWire

On today’s episode, Editor in Chief Sarah Wheeler and Lead Analyst Logan Mohtashami give a Fed day preview and discuss what the latest Housing Market Tracker data shows on spreads, inventory and more.  Related to this episode:  Slightly lower mortgage rates finally pause slide in housing demand https://www.housingwire.com/articles/mortgage-rates-demand-stabilizes/  HousingWire | YouTube⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠ https://www.youtube.com/channel/UCXDD_3y3LvU60vac7eki-6Q  More info about HousingWire https://lnk.bio/housingwire  Top 5 Trending:  4 real estate giants team up to create new, shared listings platform https://www.housingwire.com/articles/open-real-estate-data-initiative/  FICO freezes $10 mortgage score bundle price https://www.housingwire.com/articles/fico-holds-10-mortgage-score-pricing/  Housing leaders weigh in on Trump’s scaled-back EO https://www.housingwire.com/articles/trump-eo-mortgage-insurance-title-refi-costs/  Slightly lower mortgage rates finally pause slide in housing demand https://www.housingwire.com/articles/mortgage-rates-demand-stabilizes/  Appraisers warn of risks as more real estate listings go private https://www.housingwire.com/articles/uad-36-mls-photo-privacy/  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

00:11Welcome, everyone. I'm joined today by lead analyst Logan Motoshami for a Fed preview and

00:16to talk about what the latest housing market tracker data shows us on spreads, inventory,

00:21and more. Before we dive in, here are the top five trending stories on housingwire.com.

00:27First, we have four real estate giants team up to create new shared listings platform,

00:33followed by FICO Freeza's $10 mortgage score bundle price. Then we have housing leaders

00:39weigh in on Trump's scaled back executive order and slightly lower mortgage rates finally pause

00:45slide in housing demand. And lastly, appraisers warn of risks as more real estate listings go

00:51private. Okay, we're ready to jump in. Logan, welcome back to the podcast.

00:55It is wonderful to be here. I think you and I both watched the same movie over the weekend.

01:01Oh my gosh, you can see everything. It was wild.

01:05And I never thought anybody on planet Earth can outdo Elizabeth Holmes on her own documentary thing,

01:13but her boyfriend, holy Toledo. I mean, I literally just left the movie theater thinking of

01:19pudding or how Harley Quinn used to talk to the Joker. And I was like, you know, these two are

01:25perfect for each other. Like Harley Quinn and the Joker are perfect for each other. So

01:29That was a crazy movie. It was a very, it was like three hours of being uncomfortable.

01:34Yeah, just you got a bunch of awkward people. Just whatever it was. I'll stick to my charts and the

01:4110-year yield and oil prices and stuff. But wow. Okay, well, let's talk about what is happening

01:47this week. We have so much to get to. Let's start with the Anthropic S1, right? Dropped before their

01:53hopeful IPO. What do you make of it?

01:56I just think of Skynet. Every time I read any of these things and what the risk is,

02:00I just think of Skynet or, you know, shall we play a game? It's just whatever. I'm just like,

02:05I've given up caring about how bad things could get with some of these warnings that they give. But

02:12in any case, it didn't really like move the markets. I know the last I checked, I'm just

02:21basically looking at, you know, core weave stock price to see how sentiment is. And last I saw it

02:26was slightly positive. It was down bigger early in the day, but nothing, nothing too drastic on that

02:32front. So we've got the big pricing move already. So it would have to be something material.

02:40You know, if credit spreads widen even more for future debt financing, we'll cross that bridge

02:49when we get there. But this morning, not too much happening. I mean, Brent crude is above $117

02:54still, and the 10-year yield is under 5%. So October is a victory. The concern I had was that

03:03the 10-year yield closes above 5.35%. We get massive bond markets selling. Oil prices get up to yearly

03:11highs before the midterms, which is happening. The economic data, the PMI service and manufacturing

03:19data were both hot, still, you know, still growing, you know, you just get a big push of selling kind

03:25of somewhat what we had in 2023 when Jerome Powell went, oddly enough, this is the, we're having a Fed

03:31meeting this week where he went very, very hawkish and the 10-year yield just escalated out of control.

03:36But now the markets basically assume that, you know, there's not going to be any rate hike in

03:42October. So, so far that AI news this morning hasn't done much.

03:47Okay, well, that's good. Let's talk about, of course, Fed Week Preview. Here it is, Fed Week.

03:54By the time this comes out, this will be like the next day. This will come out on Tuesday. Fed

03:59meets on Wednesday. What do you expect?

04:03Obviously, they're not going to hike. The market is really, really priced in. No rate hike. It's

04:07going to be pushed in December. It gets into the, you know, how does Kevin Walsh defend not hiking

04:14rates? You know, he's obviously going to try to keep the Q&As as short as possible. I thought he

04:21did

04:21a really good job last time of just making his point clear and going with it. You know, I joked

04:29around on X today that, you know, we're talking about no rate hike, but the 10-year yield must have

04:35gotten their attention. Even though they publicly haven't said anything about it, you know, if this

04:41was 2024, Lori Lorgan of the Dallas Fed would have made a comment. Beth Hammock said, hey, listen,

04:47this is about federal debt and a bunch of other reasons, you know. In any case, I'm probably sure

04:54that in the back of their minds, they're thinking like anchorman. Boy, this escalated really quickly

04:59because the last thing for them is that we've always had the bond yields move lower and you get

05:07a little bit of economic growth on the housing side, but they were always a little bit mindful

05:14of, you know, rates rising now with the housing market where it is. But I think that getting up

05:21to 5.35% in the term premium rising, I think that they, even them, even though they might not

05:26publicly

05:27admit it, that was probably, you know, getting a little bit too close to being uncomfortable

05:32for them. But when you say them, who is them? I just think for the Federal Reserve members,

05:38right? You know, you know, I mean, you know, when you take Neil Kashkari and Beth Hammock and all the

05:45hawks, they just kind of were, and even Lori Logan, another hawk says, we really just want to take the

05:51insurance rate cuts from last year back. Remember, they did not really want to cut rates last year,

05:57but kind of the labor market forced them to. They're not talking anything more than that. And

06:03the market was pricing more than that. And then you could get an escalation out there, which forces

06:09them. So I don't, I, if I needed to justify why they want it to hold, it's that. They don't

06:16want

06:16the markets to get too ahead of themselves, especially if, if hypothetically, if the conflict

06:24ends, there's agreements and then oil and diesel prices can go lower, right? You know, they made so

06:30much of their hawkish tone about oil and diesel and inflation and everything. But, you know, by the

06:35time December comes, something's going to change either for the good or the worst, you know? And then

06:42they could cross that bridge, you can get there. So if they can't justify really, Kevin Warsh can't to a

06:49degree, but that's what I would explain to people why they're not going to hike this week.

06:55Listen, Warsh has had no easy meetings since he became a Fed chair. And this is another one of them.

07:02And we're right in the middle of a pretty dicey situation. So what he says is going to be really

07:07important, how he says it, you know, everything that he does there. What, what do you expect him to

07:13say? You know, you know, the old Kevin Warsh would have done an emergency rate hike, would have done

07:18a 50 basis point emergency rate hike, if he could, obviously he's one person, he can't. All the things

07:23that Kevin Warsh used to stand for, tariffs are bad, commodity inflation is bad, you know,

07:31there's so much wealth in the US that, you know, that's, that's what's really causing inflation as

07:36well. We have to get rid of QE. There's, there's, there's a lot of reasons why I am hashtag anyone,

07:41but Kevin Warsh, but for this period of time, he's the chairman, he's got to lead him.

07:46He got, he got on board with everyone else. Remember, Kevin followed this and took, took the

07:52lead. You know, he couldn't have Beth Hammock and Lori Logan basically run the Fed from the side.

07:57So I think he's just going to be very short and brief and kind of talk about, you know,

08:02you know, things that they're mindful of the economy. I wonder if they're going to bring up the AI,

08:07if that's going to be a concern for them, if that growth slows down and does it just slow down

08:12the

08:12economy to the point where, well, maybe not, not, not, not a concern, but maybe that's what they want

08:17to see. They want to see the AI story, create some disinflation, not be very inflationary.

08:23I do think his comments around exactly that could, could move, move the tenure a little bit.

08:31Depends on what he says.

08:32Yeah. It's, it's just, it's October, this October has been nuts. So, um, uh, you know,

08:39if you would have told anybody, Hey, listen, oil's at 117 Israel and America are talking about bombing

08:46Iran and, you know, there's possible assassination attempts on us people and, and, uh, the ISM

08:53manufacturing data and service data were both over 55. I mean, you would have probably thought the 10

08:58year yield could be at five and a half, you know, 5.71, you know, but that AI thing and

09:05that technical

09:05level held again, the term premium is, is a big reason why the 10 year yield is up here, which

09:10means

09:11that, you know, more compensation to hold a bond yield. So that's kind of wind itself a little bit

09:17lower. Uh, so it, it, it'll be, it'll be interesting what he says about AI because he's always this AI

09:22productivity job, kind of like Lisa Cook. Uh, but you know, what's happening with the data centers and the

09:28build out and all this money being spent in and deficit spending and all these things are,

09:31are keeping the economy moving. Well, we always jump on, uh, we do the podcast late that day so

09:38that we can, you can hear all of, um, his remarks and the, in the presser, and then we jump

09:43on. So

09:43everybody, uh, wait for that. That'll be our Thursday show when we, when we talk about that.

09:48But of course you always jump on and provide insights to our housing, our intelligence platform.

09:55People are subscribed to that. You do that throughout the day and you always write something

09:58up if something changes. So, uh, we will be watching. Yeah. These daily updates are like,

10:04sometimes it's seven to eight updates a day. You know, you just, we're just running, you're trying

10:08to figure out what's really pushing the yields here or there and what, what is it? And the structural

10:13dynamics shifted in October where I think a lot of people would have said, Oh, we're heading

10:17towards 6% of the tenure and everything. But someone said, hold the line right here, you know,

10:25and that five 35 held and like other key technical levels that we've brought up here on the podcast

10:31for, for many years now, uh, when that thing holds for bond traders, they all look at each other and

10:36go the other way. And they did go the other way. Well, let's talk about the housing data that we

10:41got,

10:41um, over the weekend, right. Your tracker, which finally, finally we're seeing some demand hit

10:48because of mortgage rates, which is crazy. It's been such a crazy year. Yeah. You know,

10:52it's so interesting when you look at this, look at this entire year and just compare it to the last

10:58three years and nine months. Now, obviously this last week we saw for the first time pending

11:03weekly sales grew, right? We, the, the bleeding stopped. We had five weeks of just a straight decline,

11:10which is very common when rates get above 7%, especially when rates move above 7% in a very,

11:15very fast fashion, right? The velocity of the move really, uh, uh, impacts the purchase application

11:22data and also the weekly sales when it gets above 7%. Uh, it'll be very interesting to see the purchase

11:28application data this week, which will, you know, take the last week of lower mortgage rates. I'm,

11:33you know, I'm thinking you might see a positive week to week data here, but all this is, is that,

11:38you know, we had many, many weeks of declines and the bleeding just stopped. It's nothing

11:43materially big. We always say you need about 12 weeks of positive forward looking data to have a

11:48material change. You kind of need 12 weeks of, uh, uh, of negative data to make a material change

11:54because all we've done in the last three years and 10 months is rates gets from under 6% demand

11:59grows rates get above 7% demand falls. We go nowhere. Uh, and right now, all the growth that we

12:05had

12:05early in the year, all that's being taken away with rates of up 7%, but, um, I always go back

12:11to

12:112023. There's so many things we could talk about November of 2022, all the way to, uh, December of

12:172023, but in 2023 mortgage rates hit 8%. We haven't hit 8% uh, uh, this year, but that's when

12:25the fed

12:26cried uncle. And then we had a massive bond rally. Uh, but that bond rally was working with mortgage

12:32spreads being elevated. So instead of mortgage rates being seven and a half getting to six and a

12:38quarter, we went from 8% to about 6.64. We had some positive weekly data, you know, in November

12:46and December, but it wasn't anything too material. We had a couple of hundred thousand more home sales

12:51just because of that from 8% all the way down to 6.64. But a lot of that is

12:56seasonal. You know,

12:57I try to take the seasonality of, of housing data out of the 10 year yield move sometimes. Uh, so

13:03it

13:03doesn't take much to just stabilize things. Uh, so if you can, if you can just get down towards six

13:10and at 6.75 or somewhere around there, just like we saw toward the end of 23, you can see

13:15some

13:15stabilization, but right now like 730, you know, somewhere around there. So, uh, it's a much

13:21different backdrop, but the benefit this year versus 2023 is 2023 at six mortgage rates go from

13:26six to 8%, but home prices grew 6% that year. You get, gain no benefits for affordability. We're

13:33here, you know, prices are still up maybe one to 2%. Uh, uh, it'll slow itself down toward the end

13:39of the year. So it could be flat. I might not get my negative 0.62% forecast call correct,

13:45but good

13:45enough to where another year of wages outpacing home prices. So, uh, I, it really gets more, uh,

13:53interesting for me with the tracker and how I track things about what mortgage rate level can

13:58actually get more growth because affordability is getting slightly better on its own without the

14:02rate variable in it. So maybe you can explain this, um, when you look at the mortgage spread

14:08chart, right? So mortgage spreads, um, they've gotten worse than last year's, uh, well, since this

14:14year's lows, but there's a reason for that. And they're still trending near cycle low. So tell us,

14:19tell us why you think they went up recently. Sometimes when you have the 10 year yield move

14:25very low fast, you know, spreads will get worse because spreads are spreads job is to compress

14:32volatility. Right. And, um, now of course they've gotten worse from the lows of this year and we went

14:39into a rate hike cycle, right? So if this was a more aggressive rate hike cycle coming from a very

14:45low

14:45level, the spreads have the potential to get worse. However, we never cut rates to get us out of a

14:52recession. We just try to get to neutral policy. So the 10 year yield wasn't too out of line. Um,

14:58uh,

14:58and mortgage spreads have gotten, uh, slightly worse from where we were, uh, a few weeks ago,

15:04but we're still near multi-year lows. And that's the whole difference, right? Because in 2023,

15:11let me give you guys all a great example. In 2023, the 10 year yield went from 5% all

15:16the way down to

15:17like, you know, three, three 80. That was a hoarder line. We created the hoarder line toward the end of

15:232023. Hoarder is 3.80. I don't believe the 10 year yield can go below 3.80% with neutral

15:30policy

15:31doesn't get us there. So we hold the door, right? All that did was get mortgage rates from 8%

15:36down to

15:37like 6.65 around there. Now, if we had a similar move, right? If the 10 year yield went from

15:44535,

15:46you know, to, uh, uh, um, uh, you could get it down to 450. We can get rates, uh, uh,

15:54uh, below 6.64,

15:56uh, uh, in that category, cause the spreads are much better than where that wasn't, uh, uh, uh, we needed

16:03the 10 year yield to get down to 380 to have anything of like that. So the spreads give you

16:09right now a 70 basis point improvement on the 10 year yield, uh, move, move. So you, if you had

16:15any

16:15kind of positive move from here, you can get rates under 7%, uh, uh, easily where we wouldn't even

16:22be

16:22close to seven and a quarter if we had 2023 spreads or even the worst levels of 2024. So, so

16:28the spreads,

16:28even though they've increased or still near multi-year lows, and that has kept rates near

16:337% rather than being above 8%. That's why we hug a mortgage spread. Somebody said I should be like,

16:39I should, for Halloween, I should just have a chain and a sign, carry on, you know,

16:44hug a mortgage spread and walk around and ask people for hugs.

16:49I can see that. I can see that. No, you always make a point in the tracker to, to talk

16:53about like,

16:54historically mortgage spreads have ranged from 1.60% to 1.80%. They've been creeping up, right?

17:01As you just said. So now they're up at 2.23%. But like you said, if we had the worst

17:06spreads,

17:07mortgage spreads of 2023 with a 10 year old at this level, 8.21% rates right now. That's crazy.

17:14Think, yeah. Think about all the drama that we have been through in 2026 that Lord, forgive me.

17:19I am never going to talk about the show 24 ever again. You're not allowed ever, ever. No, no. And

17:24to think that the spreads are still here, even though the Federal Reserve went on a rate height

17:29cycle and Beth Hammock is running around telling everybody we have to raise rates, raise rates,

17:33rate. You know, in previous cycles, the spreads would have gotten worse, noticeably worse and stay

17:40there. Where here we can kind of work ourselves a little bit lower out there and get them back under

17:462%. And if you get under, I mean, if you get under 2% again, which is not that long

17:52ago, and you just

17:53get, you know, a 10 to 15 basis point move lower, you have sub 7% mortgage rates where that

17:58had no

17:59chance of happening in 2023 or 2024. Last year, you know, toward the end of the year, you could have

18:06done it with spreads improving like it did. But yeah, we're kind of not that far from getting

18:12things stabilized, but that's all due to the spreads being where they are right now.

18:17Well, walk us through like what you think are, you know, like new listings, price cut percentage,

18:22what of that data stood out to you based on everything you've already said about, you know,

18:26this is where the mortgage rates went, this is where demand went?

18:29Nothing has changed with the new listings data. And we always try to make this clear. If you are

18:34listening to anybody on YouTube, X, Instagram, Facebook, and they're not showing you their own new

18:40listings data and taking it back to where it was historically a trouble, then you got duped by

18:46a bunch of really untalented, uneducated, unathletic men in this country. That's a terrible

18:51combination for a fake housing analyst. So new listings data was slightly down year over year.

18:57I'm keeping an eye on that. What I don't want to see is new listings data start to make noticeable

19:01year over year declines. But so far, it's been very stable this year. Again, during the housing bubble

19:09crash years in 2005, six, seven, and eight, all that foreclosure credit data was building up.

19:15And then they fell into our new listings data. And the new listings data was, you know, we're talking

19:21about 374, 355,000 this week, back in 2010 and 2011. These were all forced credit sellers that were

19:29not going to be buyers. Very, very unhealthy housing market. That has not changed. Active inventory picked

19:35up. We probably have a few more weeks before we see the decline there. The percentage increase is

19:41not a lot on a year-over-year basis. Just remember, we're closer to normal. Higher rates do create more

19:46inventory, right? And you could see it here on the active inventory side. But just, you know, if people

19:52were thinking about big escalation, it's the closer you get to normal, the harder it is. The weekly pending

19:57sales data picked up just a little. The price cut percentages is slightly higher than what they were

20:03last year. So kind of fairly stable in that sense. Nothing too drastic. But I don't know if I have

20:12enough time in the year with, you know, just a little bit more than two months to get my price

20:16forecast correct. But Kay Schiller and these things are going to come out soon. They're probably going to

20:20still show year-over-year growth that data line lags. But the price cut percentage, you can see,

20:25the increase, we were down 1% year-over-year. And when rates got about 7%, we're up basically 1

20:31%

20:31on a year-over-year basis. And that's what the tracker was created, to keep everyone in line

20:36to what's really happening. And then with HousingWire Intelligence, you could do it for your own city,

20:41state, zip code. Again, my job is just to teach it. You guys could do it yourself. Be your own

20:47chart daddy and chart mommy to your local neighborhood. Well, and when you look at the tracker,

20:53you can see some of those charts are the ones from Intelligence. And it's really cool because

20:56you can set, even when you're reading the story, you can decide what kind of look back you want to

21:01do and slice and dice a little bit. Slice and dice and have fun with it. Be a nerd like

21:07me,

21:07you know, have no life and just play around with charts all the time. I was telling somebody,

21:11you know what, everybody's talking about using Claude. I've never used Claude before.

21:15Oh, you know, and then, and then Mike Simon said, no, you wouldn't need to use Claude to make AI

21:21videos of yourself. And then I was like, Mike, here we look at this. I got tattoos. I got a

21:25devil's

21:26horn. You know, I'm in a Miami club dancing, you know, speaking Spanish. And people are just like,

21:32Lord, Lord should not have given you an AI app to make videos because you cannot stop.

21:38It is dangerous. Let me just say also extremely entertaining, but very dangerous. Logan,

21:44as always, thank you so much for being on and we will talk again soon.

21:48Pleasure.

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