HousingWire Daily Logan Mohtashami on why the Fed shouldn’t care if home prices fall
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Jul 25, 2025 
Logan Mohtashami, a Lead Analyst and housing market expert, shares his insights on the Federal Reserve's approach to home prices. He argues that the Fed should not fixate on falling home prices, as they rarely indicate deeper economic issues. The conversation navigates the Fed's focus on broader economic factors and its monetary policies, calling for a quicker shift to neutral interest rates. They also delve into how low mortgage rates and changing jobless claims impact the housing market, providing a nuanced understanding of economic trends.
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Fed Should Ignore Home Price Falls
- The Federal Reserve should not focus on falling home prices unless economic data weakens significantly.
- Nominal home price declines are rare except during major anomalies like 2008.
Fed Focuses on New Home Sales
- The Fed largely ignores existing home sales as it's mainly a commission-driven transfer market.
- The new home sales and residential construction sector impacts jobs and economic indicators more directly.
Labor Market Overrides Home Prices
- Inflation and labor market are key to Fed decisions, not just home price trends.
- Home price declines do not necessarily trigger consumption drops when labor markets remain strong.