Housing inventory growth has slowed down. Can the White House help with supply?

HousingWire

On today’s episode, Editor in Chief Sarah Wheeler talks with Lead Analyst Logan Mohtashami about housing inventory and the Trump administration’s efforts to boost supply.   Related to this episode:   Why did the growth rate of housing inventory drop by half this year?  https://www.housingwire.com/articles/housing-inventory-growth-2025/  HousingWire | YouTube⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠  https://www.youtube.com/channel/UCXDD_3y3LvU60vac7eki-6Q  More info about HousingWire  https://lnk.bio/housingwire   To learn more about Trust & Will visit trustandwill.com   The HousingWire Daily podcast brings the full picture of the most compelling stories in the housing market reported across HousingWire. Each morning, listen to editor in chief Sarah Wheeler talk to leading industry voices and get a deeper look behind the scenes of the top mortgage and real estate.

Transcript

00:00Welcome, everyone. My guest today is lead analyst Logan Motoshami to talk about inventory growth

00:11and the Trump administration's efforts to boost supply. First, I want to thank our sponsor,

00:16Trust in Will, for making this episode possible. Logan, welcome back to the podcast.

00:21It is wonderful to be here, and we have officially retired the weekend tracker for 2025. You know,

00:31you and I have talked about this for many years. The last two weeks of December,

00:37a lot of things should just be discounted. Why? Because it's holidays, weather, not a lot of

00:42things happen during that period of times. And over the past few years, we've seen people make

00:47these really big macro housing takes on a period of time where activity is low. And before I even

00:54could come on the show, we're seeing this happen again with, guess who? Redfin's data once again.

01:03So I'm going to explain this on as simple as I can. When we went at the start of the year, we said

01:11housing demand, because the forward-looking data is doing better, even with elevated rates,

01:18the months of June to October, the reports for July to November, because the year-over-year comps,

01:24this is where I know a lot of people just aren't trained to look at housing data. The year-over-year

01:27comps are so low that we should be flat to positive. Okay? So this was February, March. That's what

01:32occurred. But November and December data, you know, the year-over-year comps are going to be

01:36harder, sales price and demand. During that period of time, mortgage rates went lower. Don't make

01:44this any complicated as it is. Mortgage rates went lower. Forward-looking demand picked up. We hit a

01:48nine-month high in sales. During that period of time, Redfin came out and said it was the biggest

01:53buyer, seller's gap in history. The prices never fell like some people thought. Highest cancellation

01:59rates ever. Delistings highest ever. All this stuff, nine-month high in existing home sales. Pricing

02:06firmed up just a little bit. You have to be careful of who you listen to, because before we even started

02:12the show, people are taking the weekly sales. You have a positive demand curve. Then you go into the

02:17last two weeks of December, you should just discount everything. That's why I wouldn't even write this

02:22last tracker article, because it's the last two weeks of December. But we had one week. I said,

02:27let's just get the last one in. So just be mindful out there, because before we even got to this

02:33podcast, there was already bad takes. It's interesting to me that I think there are

02:37people, I'm not saying Redfin, but other people we know, like trolling people will wait for this

02:41sort of data to show and be like, look, demand has fallen through or this is all. And it's like,

02:47no, it's Christmas and people are not looking at houses right now. There were some really,

02:52really bad takes on the existing home sales. I mean, we went to another level of bad

02:57bleep that people were talking about, like, you know, home sales hit the lowest levels ever that

03:02report and either seasonal, non-season. I'm just like, oh my God, we, this is why it should be

03:08mandatory that people read books instead of burning them. You just take a dot plot of existing home

03:13sales going back to 1968. Just follow the seasonal trends right there. If it's, if sales are rising,

03:19it rises. If it falls, it falls. Do not make it any more complicated than that. Wow. It,

03:25it, it, it was egregiously bad over the weekend and this morning, but in any case, it's the last

03:30weekend, uh, tracker of the year. We'll start it up again on, uh, on January 10th. Usually the first

03:36week is not that, uh, of the year. Isn't that great. Usually things start getting off on the

03:41second week, but here we are. So we can go over what we've seen this year. Absolutely. And first of all,

03:47we have to say happy birthday, happy anniversary to the three-year, uh, mark of the, of the birth

03:53of the housing market tracker. Thanks to you, Logan Motor Shami. We'd talked about it and I was like,

03:59okay, let's, let's think about this. We'll do a rollout. You're like, no, I just wrote it. You

04:03need to publish it. And I was like, but wait, we need a plan. You're like, nope, I have the data. I

04:07want to get it out there. And so we did, even though I think it was right after Christmas.

04:11It was so painful because we had to wait legally until some things got sorted out before we could

04:17do the tracker. And I sat there and I'm like, because it's late 2022, right? This is why I

04:23always say any human being can forecast, but very few people could actually show a working model with

04:29live data. And what happened in late 2022 is that forward-looking data started to get better

04:36and people ignored it. We didn't have the tracker then. I was like, oh my God, just please.

04:41Let me get it. Let me get it. Because what's going to happen is that if the market, if existing

04:46home sales finally get down to 4 million, and then forward-looking data gets better, the whole

04:50supply and demand equilibrium changes, but we have to wait to the end of the year to get it up. But

04:56now we've got a full year of 2025. We've had some very interesting housing takes and it's basically

05:04looks kind of similar to what we've seen in the last few years. Inventories growth is rising.

05:11Inventory growth has really slowed down from the year. I don't know how many people were telling

05:17you this. That's why I always say, find out who was telling you that starting mid-June.

05:22Because you can test it now, right? We have people that had forecasted the biggest and second biggest

05:26nominal national home price crash in post-World War II and stayed negative the whole way because

05:32either they don't have a working model that works or they're doom-porting, right? But here,

05:37inventory growth started to slow down. It's not that everyone's delisting. I think the delisting

05:45story gets overplayed as well. There's natural listings. There's millions of people that buy

05:48and sell homes. So here we are, June, market's changing a little bit, okay? Then rates went

05:54lower, right? The growth rate of inventory went from like 33% down to 13.54%. I know the NAR has

06:027.5% year over year. Just remember, the NAR is different than ours because we just tracked

06:06what the raw inventory is. We don't have any pending contracts. So inventory growth slowed,

06:13rates went lower, demand picked up, nine-month high in sales, just $200,000. That's it.

06:18So that's really kind of what happened. You don't have to make these magnanimous,

06:22great macro housing, crazy takes out there. If you just follow the tracker, connect the dots,

06:29be the detective, not the troll, voila, the end of 2025, right? All in there, everything kind of

06:36looked right, but you have to show people the data so they don't get confused because there was

06:40really bad takes over the weekend and this morning.

06:43So let's talk about what the inventory, you know, first of all, the fact that we had all

06:47that inventory come online compared to last year, early in the year, and now it's slowed down. But

06:52what does that tell you about, you know, where are we with the supply-demand equilibrium and what does

06:56that say about the market?

06:57So early in the year was really good, right? And part of that is trying to explain purchase

07:03application. There are some really smart people who just don't understand purchase application. I

07:07totally get it. It's confusing. But most sellers are homebuyers. So when they list their house,

07:12if they're going to sell and buy with another mortgage, a lot of times they fill out an

07:16application, right? So that can explain why our year over year new listings growth was picking up

07:21and purchase application data was picking up. Very low base, right? Historically low base of data.

07:26So the percentages can be good. Then kind of mid-June, that rate of growth, that growth rate was really

07:36slowing down. So we weren't seeing the same kind of impact out there. New listings data peaked

07:41at the May 23rd. Then it, you know, does this little seasonal decline. It's going a little

07:47bit lower than what we've seen last year. And then all of a sudden rates went below 6.64 and then

07:54demand picks up. So that supply and demand equilibrium, you put them together, can explain

08:00why the growth rate of inventory went from 33% down to 13.54%. Still very positive year. Like I love this

08:08year. I was, you and I've talked about, I love 2025 because it's a more functioning marketplace,

08:13but it was all there for the data to read. And I don't know what to tell you. We, we show this to

08:21you all so you can get a visual of it, but the tracker pretty much did a really good job of trying

08:28to explain the supply and demand equilibrium and why the Case-Shiller index, you know, I work off the

08:33Case-Shiller index. It started to firm up, you know, in the last few months, nothing spectacular,

08:38nothing great, but just firmed up a little bit. So when you connect the dots, 2025 really makes a lot

08:43of sense. There was just so much noise because of Redfin's data that I think a lot of people just

08:49got confused and they thought what the second half of 2022 was going to be, or 2025 was going to be what

08:55we saw in 2022. Really nominal, noticeable declines in home prices, which is very rare, but that did

09:03happen in 2022. Well, home sales were crashing in 2022. That's why we want to teach this stuff.

09:09An educated society will not get duped anymore, right? So that's why Redfin's data doesn't look

09:15anything like the 2022 data, even though you have these unusual headlines. And here we are, it's at the

09:21end of the year, it's the last two weeks. I really didn't even want to write this last week, but

09:26we go into it, we prep, we get ready because after the, starting the second week of January,

09:31game's on again. And we do this over and over and over again. And that's what live, fresh data that

09:38looks current to out. And that explains 2025 data very, very correctly. So let's talk about those extra

09:46200,000. What, what you think is like that, what we saw with purchase apps with demand led to about

09:53200,000 extra homes since, since June, right? The last 20 weeks of purchase application data has that

10:0020 weeks of positive double digit year over year growth. But unlike earlier in the year, the week

10:06to week data was, was more positive than we saw early. And that's all it is, is 200,000. I mean,

10:11we're working for the lowest part. It doesn't take much to move the needle. So that's how we do,

10:15do it on this part. So inventory, obviously huge story and, and so good for the housing market to

10:20have that come online. We've seen also just in the last week, a ton of, you know, continued action

10:26from the white house, from the Trump administration last week, Trump was on, you know, part of his

10:32address. He talked about housing. What do you see, if anything, can he, can he do there? Okay. So this

10:36is, this is, this becomes a, another interesting talking point. When we talk about building homes,

10:42a lot of people say that, that, well, the, the, the government tries to prop up housing,

10:50so they'll never build enough to, you know, bring home prices down. The builders do not like provide

10:57millions and millions of homes, you know, within a calendar year because they build off of a contract.

11:03So a lot of people think that there's all these, you know, active inventory homes for sale,

11:09the builders only historically, they kind of really peak around 120,000 completed units because

11:16they take a contract in. And then by the time the house is done finishing, they do the loan process

11:22for the person and the person buys the house. So they're not the avenue, nor have they ever been

11:28the avenue of a lot of active inventory for sale. So I think that's the confusing part that people

11:34think that the builders are just going to sit there and just build, they build off of what they think

11:38they can sell. I believe president Trump is going to make some, you know, zoning changes or maybe some

11:46incentives. Of course, he's talked about the 50 year mortgage, portable mortgages, 50 year mortgage.

11:51I'm not a fan of portable mortgages. I don't think it works because these, these loans are already

11:55securitized. You can't go back and redo the contracts of them. But in terms of supply, anything you can build

12:03is a positive, right? Because supply is the best way to deal with inflation. The velocity of something

12:08like that is somewhat limited out there. We don't build homes within like a very fast amount of time.

12:16And the builders just say, okay, listen, if I'm going to bring, you know, 600, 700,000 homes

12:23available for sale, most of these better be in contract. And that's why the total completed units

12:29for sale is, I mean, we have over 147 million housing units in America. Like the builders are

12:35just like a fraction of that. Our new listings data, just basically in the seasonal peak period,

12:42just two weeks of that is more than any of the builders can, can really produce. So I, I think

12:49people get confused about that because they think there's going to be millions of homes sitting there

12:53and that's just not how the builders operate their, uh, business. I think it's especially, um,

12:59so we, we hosted, um, focus on excellence, which was a conference for home builders, right? Top home

13:05builders. We got to sit with them, talk to them. And one of the things that just struck me so much

13:10is like, they have this land. And once you use that land, it's gone. Like you can't build on it. So,

13:16so they have these, you know, 20, 30, 40 year plans for when they're going to develop different,

13:21you know, parcels of land so that it gets, you know, makes them the most money is, is,

13:26is the most advantageous. So it's a very, you know, to incentivize them to be like,

13:31yes, this thing you've been holding onto for 20 years, now is the right thing to do it because

13:35this administration says this or whatever. Like there's a lot more going on behind the scenes

13:40than just like, Oh, just build some more houses, you know? You know, this is, this is the big

13:46argument I always have versus the yes in my backyard people that what, what they're implying

13:54actually has never existed in history. Like the builders just like flood build homes. So you can

14:02have all these lots and these plans and everything, but they typically only look at, okay, well, X amount

14:09of demand is here. Okay. So by the end of this quarter, I have X amount of completed units for sale,

14:16or if you're doing it for apartments and rents, you go, okay, I build this. This is the cost of

14:20this. This is how much I could rent for. Okay. So there's that demand factor in terms of production.

14:27We don't do what we, a lot of people think the supply drives this and then the demand will follow

14:33it out there. You know, uh, there are a lot of places that have built a lot of homes, especially

14:38in the South, but majority of the inventory in America really comes from the existing stock because

14:44that's the biggest, that's the existing home sales market is the biggest avenue of supply.

14:49Actually. So well over 90%. So there's a lot of confusion about this and in trying to explain it

14:55is just, um, post-World War II, there's never been a period in time where we built so many homes that

15:01home prices fall. Like we're in this conversation that we have to build enough for prices. That's just

15:06not how it works. Um, um, and the only time we actually really saw authentic price declines that

15:14people will say, well, that'll bring affordability down was major distress sellers and inventory and

15:19the housing crashes, stuff like that. So it's, it's a complicated subject, but I think what, what the

15:25president, what, when he eventually announces, just remember this has limits, but it's still a

15:30positive, right? Supply is the best way to deal with inflation. But, um, I I've, I've always been

15:37in this camp. I'm never a construction boom person. I mean, we wrote that article in 2021 said,

15:42everyone's going to be so disappointed. We sit here today, housing permits at recession levels

15:46starts are at recession levels. The multifamily boom that we had briefly during COVID that's,

15:51that's already ended. So there's limits to what you can do. And still the existing home sales market

15:57is really the biggest supply driver out there because that's where the most of the stock of

16:03homes are out there. The, the, the home builders are just a fraction of, uh, what it is.

16:10Especially if you think about it, which you've described it this, uh, so many times is like,

16:13as soon as that new home is built and sold, it is now, you know, the next transaction it's,

16:19it is now an existing home. It got built, it got bought, someone moves in, it's now an existing home.

16:25So there's a reason why it's like the, the giant gorilla, right?

16:30I mean, the builder's biggest competition is the existing home sales market always,

16:36and they dwarf them. So their job is to, okay, I've got this contract. I build this house.

16:43I sell a home as a commodity and that person is there that's gone. So that home is a supply that

16:49somebody takes in, but there has to be a demand for that supply. This is why housing permits are at

16:54recession levels. This is one of the reasons we wrote that article in 2021, telling people,

16:58guys, as soon as rates go up, you're this construction boom, you're all talking about,

17:02it's going to fade. So, uh, uh, but still, no matter what happens, it should be a little bit

17:08better on the regulation side. I'm just very mindful of the financing and, uh, uh, aspect of

17:17building. And this is why if you go back decades and decades, I mean, go back six decades,

17:22you can see this, the builders, whenever demand falls, all right, we're done. And they really

17:29do not get above 120,000, but unlike the sixties, seventies, eighties, and nineties and 2000 and

17:36last, well, there, there's a lot of homes out there, right? There's 147 million total housing

17:43units out there. And the builders are just, you know, so, uh, limits to what that can do,

17:48but any, anything that provides product, production, any, anything can help, especially

17:53with rents like apartments and stuff like that. Those are good. And we see it, we see rental

17:58vacancies are up. Uh, the rent growth rate of rent inflation is, has come down. Uh, in some cases,

18:05it's a even negative positive, right? Uh, and, and you have to remember if we didn't have mom and pop

18:11investors providing rental supply out there, you know, inflation would be worse and rents would be

18:17worse, but, um, there's, there's, there's things you can do, but there is no real quick fix to

18:24something like this. Uh, um, but weakness in demand, higher rates actually created more inventory for

18:31the existing home sales market that has brought price growth down. It wasn't the builders really

18:36out there. Cause you can see the complete units. One of the things I've realized is not a lot of people

18:40has ever seen the completed units for sale for the home builders. I mean, just like, you know,

18:44they've never seen it before and they go, what is that? I go, that's the builder. It's like, that's

18:48it. I mean, when I say this at conferences, people just are shocked. I go, don't be, it's always been

18:54this way. Right. So, because they name that it's like 120,000 units, right? That's it. They're

19:00completely. Yeah. Yeah. So I, I like to provide this chart. Not a lot of people know even where to get

19:05this chart, but we show the charts of completed units of sale going back to the sixties and we're like

19:09this, this is your millions of homes that are going to be open and available for sale for

19:14everyone. So I think that, that that's, that's why we have the fight club rules. We don't mix them

19:19two together, right? It's a completely different process. The new home sales. Wait, is it fight

19:24club or is it ghostbusters? I thought we don't, we don't have the strings. Fight club rules were

19:30designed to say we never, okay. We never talk about fight club, but we never mix the new home sales

19:36sector and the existing home sales together. Fight club rule number two, you can't do that.

19:40You get completely confused and lost out there because these are two different, they're two

19:44different creatures altogether. The existing home seller is a seller. That's going to be a buyer.

19:48Most of the time, the builders just build a home as a commodity to make as much money and then move

19:52on. Right. There's no attachment here. You just build it. Community plans land off, you know,

19:57all these things go into where this is just, Hey, I'm a seller. I'm going to buyer. And there we go.

20:02That's why there's a lot more active inventory out there than what the builders completed units of

20:08sale. And just keep it simple, completed units of sale, those that are in construction and those

20:14that haven't even started construction yet. It's part of the plans, but they haven't done anything

20:17yet. So that's, that's the new home sales sector. That's the new home sales sector. Well,

20:21Logan, thank you so much for being on right before Christmas. And we will talk to you again. We have an

20:27unplugged session coming up on Friday and next week we are going to have your, uh, we're going

20:32to publish your forecast and then do a podcast on your 2026 forecast. Much, uh, you know, much

20:39look forward to. Yes. And, uh, uh, by the time this podcast comes out Tuesday, we're finally going to

20:45get a new home sales report. It has been so long. I feel like the lady in Titanic. It's been 84 years

20:51since I've seen a new home sales report. And it was just like the last report was so interesting

20:55because it was a three year high and I, that, that number should get revised, but we, we just

21:00been in dark and limbo for new home sales and housing starts for so long. I don't know what

21:04to do with myself. Well, we will look forward to that. Thank you so much for being on.

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