So what is the base case scenario basically now that it feels like we're kind of held hostage here to the rising price of oil when it comes to rates?

Yeah.

So, you know, I think the most important story in the housing today is no more, no longer Fed.

It's really the bond market.

Right.

And so we, you know, with price mortgages off of long year treasuries and with those yields being pushed higher, we're really now being driven by what the bond market believes a long rate should be.

And so my basic scenario at the moment is higher for longer, but mostly in line with where we are today.

I mean, I think people are wondering if we're at some base level of activity that may not have much further to fall from here.

So are these temporary or are we seeing a broader shift?

Yeah, so when you look at the consumer at the moment, the headline still looks fairly resilient.

But I think what we're seeing, and that's not just in housing, but across consumer spending and consumer credit, is that there is a divided economy.

Some call it K-shaped.

It's a divided economy.

where higher income households are driving disproportionate share of spending, while lower income households are becoming more selective, especially as affordability pressures persist.

So we do think that affordability pressures are persistent.

What are the others? As you look at the second half of 2026, what are the two or three consumer credit or housing indicators that you're really looking at and encourage other lenders and market participants to pay attention to as well?

What kind of incentives are you hearing from builders? What's really resonating with buyers?

buyers?Yeah, you're right.

I mean, mortgage rate buydown is essentially the, the biggest incentive, you know, because it really lowers the mortgage payment.

It's all about making that mortgage payment work, uh, for buyers on a monthly basis, something they can, you know, live with on a monthly basis.

So, uh, essentially since mortgage rates, uh, surged in 2022, mortgage rate buydowns went from being less than 10%, like very low single digits share of, uh, uh, um, sales, uh, among, uh, newly built homes to now be- being 70 to 80%, sometimes even higher share of sales, uh, that are, uh, incentivized through these mortgage rate buydowns.

And a lot of them, like you said, are more than 100 basis points.

So if you think about mortgage rate being at a six and a half, um, you know, there are less than a 5.5% mortgage rates that folks are getting into.

Now, are there particular parts of the country where new construction looks especially attractive right now, either because of affordability or future growth?

So if I'm interested in buying a house in the summer of 2026, and I see that mortgage interest rates are not really that good anymore, should I wait? Do you expect a drop anytime soon, or should I just accept it and move forward with the rates I see?

Yeah, unfortunately, at this point, we are in, in the rate environment that is suggestive of higher for longer, and, and I'm sure a lot of consumers have heard of that expression.

But we no longer expect mortgage rates to come d- Significantly below 6%.

They may touch below 6% at times, but as they did in early March this year or late February this year.

But overall, we have a lot of risks that are driving overall borrowing rates higher, including mortgage rates.

And so it's a very dangerous game to say, "Okay, you should wait," which, you know, a lot of people have been doing for the last couple of years because the message was, "Mortgages will come down.

Mor- mortgages will come down." Well, now n- knowing that mortgages are not likely to come down more than, you know, maybe 10, 20 basis points, and home prices continue to increase at very slow but steady pace, I mean, they're still up on a year-over-year basis, it's, it's as good time as any, in my opinion.

Just to sum it up now, if someone were to ask you, "Selma, as a real estate economist, is this a good time to buy a house?" What would you tell that person?

... and then we'll talk about where we're going next.

Yeah.

It's interesting.

So I haven't thought that much about 2023, but, like, in retrospect it was a scary time.

Uh, you know, it was the surge in mortgage rates.

Uh, market, uh, housing market in many ways just started dropping off.

Um, some markets more [laughs] so than others.

Tell me what you mean by that.

With the shutdown ending, like do you re-change the Excel spreadsheet in 24 hours? Or how long out do you have to wait to get a totality view?

Well, I mean, we have pretty much data daily, so we, we track, uh, uh, mostly property, uh, h- pro-property market.

And so we track, uh, home transaction data.

So we've been having a finger on the pulse.

So we did see some slow-down, uh, particularly in areas, uh, where you needed, um, a government, uh, approval.

You know, think about, uh, flood insurance-

Right.

... markets that are going up are markets in Northeast, markets that are going down are markets in Southeast, and then you have a mixed picture sort of on, on the West Coast.

That's tough out there.

Yeah, it's very tough.

Well, first of all, thanks for having me.

I'm also happy (laughs) to be here today.

Um, y- you know, it's really, uh, a lot of this right now about mortgage rates, uh, and mortgage rates have retreated from recent highs.

They're now averaging between six and a quarter and 6.4 for 30-year fixed, and that is the lowest, uh, in about a year, which means that affordability is at its best now that it's been in, uh, over two and a half years.

Um, so affordability is improving.

I- is that bearing out in sort of what you see in terms of consumer behavior? What are young people doing if they're not buying homes and what's it going to take for them to once again consider home buying to be so integral to our notion of what the American dream is?