Why we shouldn’t expect a housing construction boom

Speaker A: Welcome everyone. My guest today is lead analyst Logan Motashami to talk about mortgage rates and construction data. First, here's a recap of the top five trending stories on HousingWire.com leading the list is Union Home Mortgage buys Ameritrust assets expands non QM followed by foreclosures climbed 21% in the first half of 2026 as FHA VA stress build. Then we have despite road to Housing act passing, no construction boom is coming and the housing market's inventory rebound rebound is shifting power to buyers, but not everywhere. Finally, awaiting the CFPB's next act ahead of votes departure. We have so much going on over@housingwire.com but we're ready to dive into today's topic. Logan, welcome back to the podcast.

Speaker B: It is wonderful to be here. I'm in beautiful Lincoln City, Oregon, giving you a, uh, economic update on housing construction and Fed forward guidance. Uh, having a beachfront view for the first time in a while.

Speaker A: That's amazing. Yeah, no, it looks, it looks beautiful in the, what I can see behind you there. Okay, so there's so many different topics. You've written several. I think you wrote an article every day this week because there's so much going on. So where do you want to start?

Speaker B: So first let's talk about the week itself. Obviously it's going to be Monday morning when this podcast comes out and it's going to be one of those weekends again, right? Weekends are for war, but the week is for war now. So we have war seven days a week. Almost a new part of this, uh, cycle here. Oil prices are 81, $82 last time I checked. We're not back to the recent highs which were about 94, 95. Interesting that China came out and so did Pakistan, asking the US and Iran to negotiate and talk again. A lot of damage is being done at this point for everyone participating in the Strait of Hormuz conflict. So it'll be interesting to see over the next few days if some kind of negotiation starts up again and we just do this back and forth dance. But oil prices aren't over one and the straight of Hormuz traffic is down. We had a lot of Federal Reserve be very hawkish this week. You remember the whole thing about no forward guidance talk. Beth Hammock goes on LinkedIn and gives a little mini LinkedIn dissertation on why she wants rates to be raised fast. Lori Logan of the Dallas Fed kind of did the same thing. So there's definitely that hawk versus Dove, uh, battle still. And you know didn't care about oil prices under 70 when it was. Didn't care that the inflation data was softer. You're probably going to need to see like a lot of monthly prints to come in lower for them to be convinced or the labor data gets softer. Either one. Beth Hammock says we're at full employment. So, uh, her view of labor is we have a very strong labor market at this point.

Speaker A: Despite those hawks, you don't see any. I mean, you don't see a rate hike in the July meeting, right?

Speaker B: I think you lost enough hawks to prevent a rate hike in July. So it's really hard to convince the American people that oil prices are down. And you made a big talking point of the hikes faster about that. And then, then the inflation report came in softer than anticipated, both CPI and PPI. So I think because it was like a split 50, 50 on that, probably you just need to lose a few of the voting members to not hike. But this doesn't mean that the hawkish tone from the Federal Reserve changes the weekly ADP data. Uh, it's not bad, but it's not as strong as it was in the past few weeks. And just remember, how I look at it is that we had a lot of drama in 2025. Godzilla, tariffs, government shutdown, all these things. And we had, uh, the slowest job growth ever in the 21st century outside of a recession. Now because some of those things have dissipated, the curve of negative to positive data just rises. The recent report, and, you know, retail sales were positive. So the Federal Reserve just looks at it as, as long as there's 33,000 jobs created per month and the unemployment rate is low and jobless claims are low, they're fine. So this is why I keep on bringing that talking point in their minds. It's fine because they went from 8,000 jobs being created with no breath, and now they have more breath and jobless claims are low and the unemployment rate is low. So if there was more people looking for work, the unemployment rate is higher. They probably can't say, well, there's just more people looking for work with the nominal numbers being where they are. So the Fed just feels like last year those were emergency rate cuts, or not emergency rate cuts, but kind of insurance cuts. And because they were insurance cuts, they don't mind if two or three of those just go back up, since they're not that far from their own neutral policy. To me, the labor data shifting changes the rate curve. Then of course, the inflation data was hotter than anticipated. Then the conflict happened. A lot of drama. Right? We have a lot of drama going on. So it's, it's a conflicting week to week, uh, uh, headline talking points on the Fed and with all the data out there and the external or outside economic, uh, noise.

Speaker A: Okay, who is still the staunchest dove on the Federal Reserve?

Speaker B: Oddly enough, it is Lisa Cook. What. What a strange bizarro world we live in. The one person President Trump wants to fire is like the lone dove May there. And, uh, she hasn't changed her view. I mean, she did talk about, you know, if inflation doesn't get better, then, you know, I don't mind hiking. But she's, uh, one of these productivity boom people where productivity will keep a lid on inflation. And it is interesting, it's Beth Hammock who's the most hawkish person. But this is the world we live in. There's not a, like a slow sea out there. This thing is wavy and stormy and crazy. And uh, our job is to try to make sense of it all. And to me it's just that the labor market getting better. While it might not have been considered better if there was a job market two years ago, but in the Federal Reserve's eyes, dissertation break evens 33,000. Above that, we're okay. Breath of jobs. Jobless claims are low. It was low again this week. And the unemployment rate is low. That's how it's worked since the Peloponnesia War. Right. You just got to kind of go with it. And, uh, we're here to try to make sense of it all.

Speaker A: Well, we also got a lot of construction data this week. Right. So we had builders confidence, we had permits starts. Tell us what we learned from that.

Speaker B: So, as most of you probably have figured out, I'm not a big housing construction boom person.

Speaker A: Right.

Speaker B: I have a hard time believing that a country that's aging in population growth slowing down, and now you have a push for less immigration, less migration happening, and now it attempting to remove individuals from the country with rental vacancies up, uh, you know, and demand where it is. I just don't see the backdrop for this Marshall Dimes thing and the Road to Housing Act. Uh, it's not that I, it's a bad thing. I just think there's limits. And we put up a lot of data line in that article about why. I think we have to have a little bit more of a realistic view of this plan. Because think about, you know, is supply really going to take off if demand doesn't go with it? This is why we do this. Supply and demand equilibrium. M conversation. Everyone keeps on, we just need to build more homes. If we just build more homes and then new home sales is where it's at. And we look at the builder's confidence and they're not excited. They don't look like people that are just going, oh, here we go, guys, here we go, yo. Here we go, yo. Those housing permits are ready to go. So it's not like, it's not the backdrop that you would see a construction. Like, everybody keeps, like, we need to just build more house. So. And that's how economics work, right? I mean, it's not. This is not a new thing, but we just keep on having people say, we're just, we need to build more homes. And then within an economic cycle, this is what happens. This is why I like to show the total completed units charts that apparently not a lot of people have seen this. And then now that I think about it, nobody shows this. Nobody shows this data line ever. Like, I'm trying to find anybody that does this, and I think it's confusing to a lot of people who are in economics. But these are just the completed units for sale. Like, the homes are available, and it's not. It's not a lot, really. I mean, typically when it gets above 120,000, the builders go, no, Moss. But even the housing bubble crash, period, it never even got above 200,000. So people just think like, the builders build, like millions of homes and they're just going to flood a market. They just don't even have the capacity for something like that. And their business model isn't really designed. So to me, it's just, we had housing start speed, and then housing permits are pretty much near cycle low. So the second article, which was released today, is just to try to explain that.

Speaker A: No, that's really good. I do think it's interesting. You and I have been talking about this for years, literal years, since 2020, about, do we need to just build more homes? Is that going to be the answer to the affordability crisis that people have? And you have for many years said no. Because even when in Covid when it was like, clearly, there's so much demand, you were like, there was that much demand, the builders would be all over it. They have a great business model. They know when they can make money. If they're not building, it's because they don't think they can sell it.

Speaker B: You know, the housing bubble years, we had a lot of construction. We built a lot of homes back then. Was housing more affordable? When we think of the housing bubble years, do we think affordability was great? Oh, you know, prices were taking off, credit was taking off, but new home sales were taking off as well. And uh, because new home sales were taking off the builders, like there is a demand. I just got to build them. What happened was you had an 82% crash in new home sales from the peak of 1.4 million down to a little bit under 300,000. And then the last decade, which I understand, for those of you that did follow me in the last decade, my whole core principle back then in early 2010 and 2011 was that we were going to have the weakest housing recovery ever recorded history. This has nothing to do with prices. Housing starts, mortgage demand, housing demand. Because we had so much supply, the builders, in a sense, you know, their competition had cheaper homes and a lot more supply. So the builders, I said we're never going to get 1.5 million housing starts until years 2020 to 2024. That's what happened. We never got 1.5 million housing starts until Years 2020. Because the builders are dealing with cheaper homes out there. And you know, they just didn't have the sales demand curve, just like mortgage demand didn't have the sales demand curve.

Speaker A: Wait, what do you mean by they were dealing with cheaper homes? They were not offering the cheaper homes, they were competing against the cheaper homes.

Speaker B: There were too many cheaper existing homes. The builder's big is the existing home sales market. The existing home sales market has an unbelievable advantage because it's bigger and geographically it's everywhere. Where the new home sales has to build a land, it's constructed in an area, right? It's not spread out like the existing home sales. Because every neighborhood in America has a home for sale, basically, for the most part. Where the builders have to build in a certain area and all the costs that go into it. So naturally they're at a disadvantage because existing inventory and mortgage rates are low for everyone. Right? This wasn't like the builders could offer 1% mortgage rates back then. Profit margins were, weren't as healthy as back then. So it took a long time for them to recover. Covid was different. Inventory hit an all time low. So when rates rose, the builders advantage, you know, they can offer lower rates. So part of that article I wrote, I said guys, this is not like this sector doesn't have sub 6% mortgage rates. They have at sub 6% mortgage rates for years now. Their home sales are at 2019 levels, right? So they already have that Advantage and you're still housing permit are at uh, near cycle lows. So while the new home sales market has outperformed, clearly outperformed the marketplace and they're still, you know, selling homes, it's not like they're having a crash in new home sales. There's not like housing starts are having a waterfall dive or residential construction workers are falling like it has in previous cycles. But it's not the environment for them to go, here we go, yo, let's get those uh, uh, permits out there because here comes the boom. So my job as an analyst is to bring out all the data and give you what I think the reality is. And I think it's easy just to fall back or like I would say it's easy to sleep next to the belly's dragon, right? It's warm, it's cozy, you know, you feel safe, the dragon likes you. So everybody just says we need to build more homes. It's just not as easy as people. And this is, uh, this is me for 15 years. You know, this isn't something new. I mean there's countless articles that I've written and talked about at events and stuff and you and I have gone over this. So those two articles and all the charts in there is just to bring a sense of reality that, you know, it's 2026 now. It is July 20, 2026. We wrote that article in June of 2021 and we said, guys, simmer down. Y' all just temper this, you know, thing and uh, we'll see how the future is again. This is not like a direct shot that the Road to Housing act is a negative thing. Anything that helps with supply is a positive. Supply is the best way to deal with inflation, right? Beth Hammock. Because that supply is always going to be there. It has to be filled with a living person. But in this regard, I think there's just needs to be a temperament or less enthusiasm on what this bill can do for future.

Speaker A: We noted in your article about the Road to Housing act wouldn't lead to like a whole bunch more housing that, you know, if you're talking about manufactured housing, that's a different story. There are a lot of changes that could come because of that. But we're, you know, if you're talking about traditional stick built housing, that's not going to get a huge boost there.

Speaker B: Sarah we're not complicated people. We rent, we date, we mate, we get married three and a half years after marriage, we have kids and we buy single family homes. We like Big single family homes, manufacturing homes, I don't know, apartments. So if something's not been part of the data line for decades and decades and decades, or how I like to say, since the Peloponnesian War, you know, the Spartans probably don't feel like apartment people, right? Spartans, you know, if they had single family homes that have single family hards, big backyards, they could do their training and fighting and stuff. But. But it's just there's a world of what is the reality is part of housing is wages and incomes. And the people that make the wages and incomes, the people that are buying the near 5 million total home sales, they don't have a manufacturing appetite or apartments, you know, for the most part. So multifamily construction, when we look at multifamily construction, you know, the two periods of times in histories where it really took off, the late 60s we had a loan program. The early 80s we had a tax benefit, we had a multifamily tax credit in the last decade that boosted things. So I always highlight those things that have been positives. They give us growth, right? And then we take it away and then we're like, okay, we're here again. Um, so, ah, anything to help build homes. Positive. I'm always going to be a big believer. I'm just trying to bring some reality into like what people actually want. Then part of like, you know, coastal California, it's so expensive because the people, the incomes here, right? You know, look at San Francisco. AI boom. Because people have the money, right? They're buying whatever they can and overbidding on homes because, you know, there's not that much product available. But it's the incomes that do it. So the people that make the money, I have always told you, they buy single family homes. This is why single family construction has a bigger gap versus multi family construction for a while. And uh, it's just the world we live in. My job is to try to make sense of it all so we have an understanding because we're here. It's July 2026 and housing permits are near cycle lows, just like very, very close to cycle lows. And there's a reason for that?

Speaker A: There is a reason. Um, you say, you say it all the time, or as I always say, and then you had this like dragon belly thing. I've never heard that.

Speaker B: Oh, you've never heard you can be deceived easily by sleeping next to a belly of a dragon. You think the dragon's your friend and you're just very warm and it's just kind of, you know, dragons and scorpions, man. History tells you you got to be careful. Uh, one will sting you and kill you, and the other might just be hungry and don't have sheeps around and, uh, take care of that hunger. So. Even dragons need Snicker bars, right?

Speaker A: You know, listen, great, Logan. Illustration.

Speaker B: Oh, wait, you know about my Snicker commercial that I auditioned for that almost went.

Speaker A: Yeah, we're not talking about talking about the Snickers commercial.

Speaker B: There goes Sarah. See, I knew you were going to come out. I'm going to bring out my finger too, out there.

Speaker A: No Snickers commercial on this.

Speaker B: Thankfully. Now, now that I think about it, even though that commercial was on a veil and it was like one of two being chosen, but it was too racy back then in the 1990s, you know, I'm glad that didn't. Didn't play.

Speaker A: Yeah. If someone wants to ask you about that at a conference, you know, that's one thing. Anyway. Okay, Logan, thank you so much again for all the work this week, and we will talk to you again soon.

Speaker B: Pleasure.

Speaker A: Wheeler, thanks for listening to Housing Wire Daily. If you haven't already, we'd love for you to take a minute to rate the show and leave a comment. And make sure to tune in tomorrow for more news and insight.