By coinnews 
00:00 Speaker A
April pending home sales fell 6.3% month over month, the worst monthly drop since 2022. It could be a tough sign for the housing market, especially as spring is typically peak home buying season. Here with more on what this data means for the housing market, we’ve got Logan Muduswami, who is the, uh, who is looking across all of this action here. You are the housing wire lead analyst as well. We want to make sure the folks know that here. Logan, just want to get your reaction to the number.
00:42 Logan Muduswami
Well, we’re not the biggest fans of the NAR’s pending home sales data month to month. Last month was a big beat, this month was a big miss. Not much is really going on for some times. However, this year, the positive housing story is inventory is growing, price growth is slowing down. Purchase application data for the MBA is now up 17 straight weeks in a row with year-over-year growth the last four weeks double digits. All this with elevated rates. When you’re working from record low levels of sales, but record bad affordability, what you’re seeing this year is a net positive for the future, because if mortgage rates just get down to 6%, President Trump and Basset and all to get what they want, then existing home sales has the capacity to grow some real numbers for growth from this data line. New home sales just recently had the highest print it’s had since 2022 as well.
02:09 Speaker A
Despite these numbers, you’ve seen a few optimistic signs in the data. What are those positive signs?
02:20 Logan Muduswami
We’re about to have like a few months from June to October where very, very low comps. Last year existing home sales were trending under 4 million. We’re going to see some growth on the year-over-year data. Take it in context, we’re working from record low levels, but the fact that this year that purchase application data has been positive every single week for 17 weeks with elevated rates, not 6%. Well, 6% rates are going to be that big of a story. It just shows that housing has the capacity to grow. We don’t have monetary policy right now that is pro housing growth, but if you could just get the 10-year yield down a little bit, spreads is getting a little bit better, sales can grow in America. And if you look at existing home sales going back to 1968, this is what traditionally happens. Rates go up, sales tend to bottom out right before the recession. When the recession comes, rates tend to go lower, sales tend to grow. The backdrop is more healthier now because price growth is cooling down and inventory is up. That’s the main story for 2025.
03:51 Speaker A
And so, given that this all comes back to the mortgage rates, 15 and 30 year, is there a sweet spot that you’re looking for on those levels that would really encourage more activity?
04:12 Logan Muduswami
Part of 2025. Nobody had purchase application data having a positive year with rates near 7%. But what we’ve seen in our data line, we track housing a little bit different, live fresh weekly contract data. We’ve always seen housing data get better when rates get down towards 6%. We’ve never been able to hold that for any kind of duration. You don’t need three, you don’t need four, you don’t need five, but just getting back down there, working from very low levels, you can grow sales. But the fact that inventory is up now, especially from the lows of 2022, means that whenever rates do fall, you don’t have to worry about home prices escalating out of control, or anything in that negative. That was a very unhealthy to a savagely unhealthy housing market in 2022. Now, this year, it’s much better. It’s better not just for next year, it’s better for the next 10 years for the housing market.
05:28 Speaker A
I want to get into some generational statistics. According to a realtor.com survey, nearly a quarter of millennials are still planning to buy a home within the next six months here. What do you think needs to take place in order for that to continue to be a reality for millennials?
05:55 Logan Muduswami
Millennials have been the highest percentage of home buyers for the last 13 years outside of two years. Whenever rates elevate, they finance more than 90% of their homes. Um, the baby boomers tend to take their spot. Gen X has been a very solid home buyer for many years now. Mortgage rates go lower, you get more financing of of of housing, that tends to push up the millennials. And remember, this is the biggest housing demographic patch in history. So, the fact that, you know, rates have been so elevated with prices just shows that they are very sensitive to the rate factor. So again, doesn’t take much, you just get rates down towards six, you could get a little bit more growth in home sales when you’re working from this low levels. It’s it’s not shocking to see that kind of development, but again, they are a very, very extreme big demographic patch in America.
07:08 Speaker A
Logan Muduswami, who is the housing wire lead analyst. Great to have you here with us today, Logan.
07:20 Logan Muduswami
Pleasure.