US Housing & Mortgage Markets
HOUSING SIGNAL April 25, 2026
A Fed leadership transition is colliding with a housing market stuck in slow motion: sales running 27% below pre-pandemic norms, a rent inflation data war between CPI and Zillow, and policy chaos making clean reads nearly impossible.
THE WARSH FACTOR: What a New Fed Chair Means for Mortgage Rates
The clearest near-term catalyst for housing sits outside the housing market itself. Jerome Powell's departure is now imminent — the DOJ closure of the Fed renovation probe clears the path for Kevin Warsh, potentially as chair by May. Mohtashami is direct about the stakes: his framework attributes 65%-75% of the range in 10-year yields and mortgage rates to Fed policy and how it guides markets. His 2026 forecast envelope — mortgage rates between 5.75% and 6.75%, the 10-year between 3.80% and 4.60% — was built before a mid-cycle chair swap became live. The question now is whether Warsh accelerates cuts (Trump's stated preference) or maintains Powell-era caution. Either way, this transition injects fresh uncertainty into rate-sensitive markets at precisely the moment buyers need clarity.
SALES STUCK, INVENTORY RISING — BUT UNEVENLY
McBride's March wrap paints a bleak demand picture. Existing home sales came in at 3.98 million SAAR, down 3.6% from February and off 1.0% year-over-year — the 5th consecutive month of YoY declines. To put that in context: March averaged 5.47 million SAAR in 2017–2019. The market is running roughly a million units per year below its pre-pandemic baseline.
Months-of-supply has climbed above pre-pandemic levels nationally, and McBride now flags the possibility of national price declines sometime in 2026 — notable given the median price is currently still up 1.4% YoY. That's a thin cushion against a supply-demand rebalance already in progress.
California illustrates the tension. Statewide sales fell 2.5% YoY for the third straight month. But here's the wrinkle: active listings actually fell below year-ago levels for the second consecutive month. The C.A.R. attributes this to the lock-in effect — homeowners holding low-rate mortgages won't list into a 6%+ rate environment. So California is experiencing declining sales and tightening effective supply simultaneously, a dynamic that suppresses transaction volume without providing price relief to buyers.
THE RENT INFLATION SPLIT: CPI vs. Zillow, and What It Means for Supply
Erdmann is tracking one of the more consequential data discrepancies in housing right now: CPI shelter is settling around 3% rent inflation while Zillow's comparable measure has spent recent months near flat. That's not a rounding error — it's a methodological and timing divergence with real policy implications.
The lag story (leases that adjust annually, survey capture delays) largely played out by mid-2025. So what explains CPI shelter's continued elevation? Erdmann doesn't resolve it, but frames the stakes: if Zillow is right and rent inflation is truly near zero, then construction may have finally reached a level capable of matching cyclically neutral household formation. If CPI is right, we still need at least a couple hundred thousand additional units annually to close the structural gap opened post-2008.
Immigration policy complicates this further. Trump's deportation and restriction policies are creating a measurable short-term household formation shock — fewer households forming — while the long-run supply gap (built over a decade of underbuilding) remains. The result is a disconnect between near-term softness in rental demand and the structural undersupply that has defined the post-2008 era.
POLICY NOISE AS A SIGNAL PROBLEM
Both Erdmann and Mohtashami are, in different ways, flagging the same meta-issue: the Trump policy environment is making housing data harder to read. Erdmann notes that short-term inflation chaos from tariffs (including the Iran situation now showing in inflation trends) obscures the neutral underlying trend. He poses the forecaster's dilemma squarely — do you assume the chaos is mostly optics ("a great deal of ruin in a nation"), or do you rebuild your models around persistent disruption? Mohtashami's rate framework similarly depends on Fed policy transmission working in familiar ways — a politicized Fed transition introduces model risk.
For buyers and sellers, this translates to an environment where waiting-for-clarity is itself a strategy — and one that shows up directly in the transaction volume numbers.
Closing synthesis: The March data confirms what's been true for three years: this is a low-velocity market where affordability constraints have locked out buyers and the lock-in effect has locked in sellers. The one genuine wildcard is the Warsh Fed — if markets price in faster cuts, the 10-year could test Mohtashami's lower bound and pull mortgage rates toward 5.75%, which would be a genuine demand catalyst. Until then, the market drifts: prices softening at the margins, sales historically depressed, and rent data sending contradictory signals about whether the supply crisis is over or still unresolved.
TL;DR - Fed transition is the rate wildcard: Warsh replacing Powell could shift mortgage rate expectations materially; Mohtashami's 2026 range of 5.75%–6.75% may need revision depending on the new chair's posture. - Sales remain historically depressed: March existing home sales hit 3.98M SAAR, down 27% from pre-pandemic norms, with McBride flagging potential national price declines in 2026. - CPI vs. Zillow rent split is unresolved: Erdmann's tracker shows CPI shelter at ~3% inflation while Zillow reads near flat — the gap determines whether the structural housing shortage is closing or still widening. - Policy chaos is degrading signal quality: Immigration shocks, tariff noise, and a Fed leadership change are making near-term housing data difficult to interpret cleanly, pushing analysts into wait-and-see mode.
Compiled from 3 sources · 3 items
- Kevin Erdmann (1)
- Logan Mohtashami (1)
- Bill McBride (1)