The most important housing data to monitor for the rest of 2025

Market Implications

The housing market is at a critical inflection point where falling mortgage rates could reignite demand far more quickly than supply can respond, creating a challenging environment for buyers but a potentially lucrative one for specific equities. Analyst Logan Motoshami's data-driven outlook suggests that if the 10-year Treasury yield continues to fall, pushing mortgage rates toward the 6% threshold, a rapid absorption of already-declining inventory could create unexpected price strength. This dynamic presents a clear investment thesis favoring companies that can capitalize on a supply-constrained market.

Homebuilders such as Lennar (LEN), D.R. Horton (DHI), and PulteGroup (PHM) are uniquely positioned to benefit. Motoshami emphasizes that builders are "efficient sellers" who treat housing as a commodity, allowing them to make deals and move product without the emotional friction of the existing home market. As such, they can capture demand from buyers frustrated by the lack of resale options. Investors could consider long positions in individual builder stocks or ETFs like the SPDR S&P Homebuilders ETF (XHB), particularly on any market dips related to interest rate volatility. The core trade is a bet that the structural shortage in the existing homes market will channel demand toward the new homes sector, driving revenue and margin growth for builders who can deliver inventory.

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The U.S. housing market is balanced on a knife's edge, where a sustained drop in mortgage rates below 6.64% could trigger a rapid tightening of an already shrinking supply of homes for sale. This dynamic, visible only in high-frequency weekly data, suggests official market reports in the coming months may surprise to the upside, challenging the prevailing narrative of a slow and steady housing cooldown.

Key Insights

The 6% Mortgage Rate: The Magic Number That Unlocks Demand

"The housing data typically acts better only when rates get before 6.64 down to 6%... if you get 12 to 14 weeks of that, that would be a material change. You will see that eventually in the existing home sales data." - Logan Motoshami

The housing market's sensitivity to mortgage rates has become incredibly precise. According to Logan Motoshami, the range between 6.0% and 6.64% acts as a critical threshold for demand. When rates fall below this band, forward-looking indicators like purchase application data show a distinct and immediate improvement. He notes that in the three weeks prior to this discussion, with rates below 6.64%, purchase applications have posted positive weekly growth, confirming this thesis in real-time.

This isn't just a minor fluctuation; it's a leading indicator for the entire market. Motoshami points out that a sustained period of 12 to 14 weeks of positive weekly purchase application data would signal a material shift in the market, one that would inevitably translate into stronger existing home sales prints 30 to 90 days later. This framework provides a clear, data-based signal for investors to monitor. Rather than waiting for lagging monthly reports from the National Association of Realtors (NAR), tracking weekly purchase application data against this rate threshold offers a significant analytical edge.

The Unseasonal Inventory Squeeze: Why Supply May Have Already Peaked

"It is going to be interesting for me to see what happens with our inventory data... especially if rates fall. Because when rates fall, same model as always, 70 to 80% of home sellers are buyers... the inventory has a hard time growing in that environment." - Logan Motoshami

While higher rates in 2023 and early 2024 successfully boosted housing inventory and created a more balanced market, that trend is now reversing. Motoshami highlights a crucial, unseasonal development: active inventory began falling in August. Historically, inventory levels in his proprietary tracker data don't peak until September or October. This early decline suggests the supply relief may be short-lived, creating a precarious setup for the remainder of the year.

The core dynamic at play is the dual role of sellers. Since 70-80% of sellers are also buyers, a drop in mortgage rates that encourages them to list their homes simultaneously adds them to the pool of buyers, creating a neutral or even negative effect on net inventory. If rates continue to fall toward 6%, this effect will intensify, as new first-time buyers also enter the market to compete for the same limited supply. This inventory paradox is the primary risk to forecasts calling for significant price weakness, as renewed demand could quickly collide with shrinking supply, putting upward pressure on prices once again.

The Price Forecast Conundrum: A Battle Between Slowing Growth and Resurgent Demand

"For my price forecast to work, I need our data to be negative in September and October. But my concern for my forecast is if rates go lower and we're already seeing inventory fall, what does that do? Because I lost my forecast last year because of this." - Logan Motoshami

Motoshami’s forecast for 2025 calls for modest home price growth of 1.77% based on the Case-Shiller index, a model that requires price weakness in the latter part of the year to prove accurate. However, he openly acknowledges the significant risk that falling rates and tightening inventory could undermine this forecast, just as it did in the previous year when prices finished much stronger than he anticipated. This tension highlights the fragile equilibrium of the current market.

The key takeaway is that nominal home prices are historically "slow and sticky" to the downside unless there is a wave of distressed sales, which is not currently present in the data. While some metrics like median sales price may show negative year-over-year prints in September and October due to base effects from a strong 2024, the underlying supply and demand dynamics could prevent a sustained downturn. Investors should be wary of headline-grabbing crash predictions and instead focus on the interplay between mortgage rates and inventory levels, which will ultimately determine the trajectory of prices.

The Great Divide: Why You Must Never Mix New and Existing Home Sales Data

"We do not, under no circumstances ever mix the new home sales market... The supply and demand equilibrium for the existing home sales market is different." - Logan Motoshami

In a crucial clarification, Motoshami issues a stern warning against a common analytical error: conflating the new and existing home sales markets. He argues that treating them as one and the same leads to deeply flawed conclusions, such as claims that home prices are crashing by over 20%. The two markets operate on fundamentally different principles. The new home market is driven by builders, whom he calls "efficient sellers" that treat homes as a commodity to be moved. They adjust prices, offer incentives, and manage their production pipeline to meet demand and avoid carrying excess inventory.

In stark contrast, the existing home sales market is defined by the "human element." Homeowners are not under the same pressure as builders; they have high price expectations and can choose to delist their homes or wait for their desired price. This difference is starkly illustrated by the data: at times, the monthly supply of new homes has been 8 to 10 months, while the supply of existing homes remained historically tight at under 4 months. This divergence explains why homebuilder stocks can perform exceptionally well even when the broader resale market is sluggish. For investors, the lesson is clear: analyze each market on its own terms to avoid critical misinterpretations of price and supply trends.

Notable Quotes

Logan Motoshami: "If you're a data nerd person, you're living in a lovely time. But over the last few years we've always said the housing data typically acts better only when rates get before 6.64 down to 6%."

Logan Motoshami: "The builders are what I call efficient sellers. Where the existing home sales market has still a human element into it and they can take a very long time. Where the builders can't necessarily say, oh my God, I got eight homes here, let me delist them."

Logan Motoshami: "If there's stress in the housing market, new listings will go vertical. If you want to listen to people that talked about this rushing to sell their house and all that stuff, but had no data to verify it. Okay, that's fine... But if you're serious, if you really care about this stuff, chart Daddy's here 24/7, never sleeps."