Logan Mohtashami says a ‘trade war tap dance’ with Trump’s tariffs is unlikely

On this week’s episode of the RealTrending podcast, host Tracey Velt sits down with HousingWire Lead Analyst Logan Mohtashami to discuss his 2025 housing market forecast, interest rates, the potential impacts of Donald Trump’s tariffs and the possibility of a trade war.

This interview has been edited for length and clarity. To start the conversation, Mohtashami immediately dives into potential mortgage rate declines in 2025. 

Mohtashami: For mortgage rates, I channel the 10-year (Treasury) yield. Mortgage rates should be in a range between 5.75% to 7.25%. What was beneficial for housing this year should be the case next year.

If the economic data and labor market weaken and soften, the 10-year yield can go down. If mortgage spreads improve, that’s the double whammy effect. You get low-6% mortgage rates, which is good for demand.

Velt: Trump wants to raise tariffs to then bring companies back to the United States. Can you explain how that may affect mortgage rates?

Mohtashami: I do not believe Trump will go into a big trade war. Back in 2016, Trump said the same thing and he didn’t go into a “trade war tap dance.” It’s a calculated trade war, designed to create an atmosphere and get companies to come back.

Velt: Tell me about what Trump’s economic policy means for housing.

Mohtashami: President Trump needs the dollar and rates to go lower. The dollar is simply too strong for the U.S. to be any kind of exporting powerhouse. So, in that context, lower rates do benefit us.

Who he picks for the next Fed chairman will be important. If he picks someone that invokes lower rates, the trade war tariffs can pick up. Trump may extend tax cuts; he needs a little bit of a better backdrop to get the dollar and rates lower so he doesn’t have to offset them.

With rates elevated and housing starts at recession levels, the market can’t handle higher rates. So, he doesn’t want to deal with construction people losing their jobs and then no building is being done. And the best way to fight inflation is supply. You need more housing.

Velt: Let’s explore the rest of your housing market forecast. What do you predict for 2025?

Mohtashami: If mortgage rates get down toward 6%, we can grow home sales. We could add 321,000, 373,000 or 621,000 sales throughout the year. Sales can go negative if mortgage rates rise above 7%, like in 2024. When that happens, wages, household formation and nested equity grow, and down payment data improves. That can let us grow home sales next year. However, the spreads are getting better. So, I’m excited for 2025.

Velt: What should real estate professionals look for in the market to help guide their plan in 2025?

Mohtashami: Agents must tell their sellers and buyers that economics aren’t going to wait for you. It’s your job as an agent to get people ready and good to go. The market can turn on, rate-wise, very quickly.

To end the conversation, Mohtashami offers a few final points concerning the housing market in 2025.

Mohtashami: Focus on the economic data. Softer economic data is beneficial for housing. But in this case, we’re already seeing very firm pending contracts that we didn’t see the last two years, even with elevated rates. There’s a good potential for growth this year.