- 19 hours ago
On today’s episode, Editor in Chief Sarah Wheeler talks with Lead Analyst Logan Mohtashami about building permits, housing starts and homebuilder confidence.
Related to this episode:
Wary optimism sparks new-home outlook … but grind may linger
https://www.housingwire.com/articles/homebuilding-and-economic-outlook/
HousingWire | YouTube
https://www.youtube.com/channel/UCXDD_3y3LvU60vac7eki-6Q
More info about HousingWire
https://lnk.bio/housingwire
To learn more about Trust & Will click here.
http://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.
Related to this episode:
Wary optimism sparks new-home outlook … but grind may linger
https://www.housingwire.com/articles/homebuilding-and-economic-outlook/
HousingWire | YouTube
https://www.youtube.com/channel/UCXDD_3y3LvU60vac7eki-6Q
More info about HousingWire
https://lnk.bio/housingwire
To learn more about Trust & Will click here.
http://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.
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NewsTranscript
00:10Welcome, everyone. My guest today is lead analyst Logan Motoshami to talk about permits,
00:14starts, and builder confidence. Before we dive in, I want to say thank you to our sponsor,
00:20Trust & Will, for making this episode possible. Logan, welcome back to the podcast.
00:24It is wonderful to be here. It's Housing Starts Construction Day, and my premise for always that
00:34we'll never see a construction boom in this country again still stands correct, even though
00:41the headline data beat estimates. Housing starts to look like at a five, six-month high, but if you
00:48pull the data out a few years and even going back decades, there's something going on here that
00:54people aren't explaining correctly. Okay, so I feel like this is one of the persistent themes
00:59that everyone in America has an opinion on, which is like we just need to build more houses. If we
01:06built more houses, then that would solve the quote-unquote housing crisis. It's one of the
01:10reasons we had two home builders on at the Housing Economic Summit to talk about what home building,
01:16what that business looks like, the affordability, what they can do, what they can't do. But you've
01:21always come in and you're like, the builders are not the March of Dimes. They're not going to build
01:25just to have more inventory. That's against their business model.
01:28In the last decade, from 2010 to 2019, I would say, this is going to be the weakest housing recovery
01:36ever in the history of America. Now, back then, housing was more affordable. There was a lot of
01:41inventory, but the builders, in a sense, they were at a disadvantage because existing homes were so much
01:49cheaper and everyone had lower rates. So their sales curve, right, there were such low levels of
01:56sales. So people just thought they're just going to have a lot of leeway to grow. And because they
02:01had a very low bar, they can grow sales, but they were just constantly missing estimates left and
02:06right, 2013, 14, 15, and in 2018. So housing construction ended up being the weakest housing
02:13construction period in the history of America working from a very low bar as well.
02:17So from your perspective, were you surprised at this report?
02:20No. A lot of people read the headlines. So what I do on X is I take the charts,
02:28shocking in love, the chart daddy takes the charts, and I string it out for 10 years.
02:33And if you look at housing starts, they've literally been bouncing off the bottom around 1.3 million for
02:40many years now. And then they show a little bit of kick, and then they come kind of back down.
02:47Housing permits were getting very weak toward the end of 2025. They picked up a little. But if you
02:53take the aggregate data and going back, nothing's been happening, right? So new home sales, on the
03:01other hand, and how I try to explain it today was that if you look at new home sales, they
03:06peaked very
03:06early in COVID. They got up to over a million, which I thought couldn't be possible, but they did.
03:13And then it started going lower. But it was really in 2022 when new home sales started to really get
03:18hit hard because rates were going up to 7%. But then that's when housing permits and starts really
03:23started to fade. So we've gone nowhere for years with housing permits, housing starts. We've gone
03:31nowhere for years with new home sales, really. If you look at the last few years, they've just been
03:35kind of hovering back and forth in a little channel of sales. And then if you take it back to
03:402018, 19, we're just basically stuck. So all this discussion about we're going to build a lot of
03:47homes that we're going to do, you look at single family construction of housing starts, compare it
03:53now to what it was in the 60s, 70s, and 80s. You know, if you want to take away the
03:59housing bubble years,
04:00be my guess. That's a very valid premise. We just don't build homes like that because as a country
04:06gets older and the population growth is slowing down, the builders are competing against a mass
04:14market of housing. So they really need to have the demand curve really push them to buy land, get
04:22permits, and do homes. So I just fundamentally, and this goes all the way back to my earlier work
04:27when I first started, we're just never going to see a construction. And here we are in 2026.
04:33The headlines is like five months high, but string it out, string it out 10 years,
04:38go look at a chart, string it out 10 years, then go look at it compared to the 60s, 70s.
04:43And you're
04:43like, what's up here, right? We're not really building like a lot of people thought we should.
04:48I think the other thing is that you've mentioned before is like most of the building is concentrated in
04:52like Texas, Florida has 40%, between those two states, 40% of the new builds, right?
04:58I mean, so much of the building in the last, I would say, seven to 10 years, I think like
05:0460% of
05:05the total construction is really from the Sunbelt. So it's, I mean, at the peak, I believe. So
05:14what's, what, where's the inventory growth really at? Texas and Florida and those things. So this is
05:22why the whole March of Dimes thing was designed to, you know, try to explain people, the builders are
05:28here to make money. Right. Just like everybody else. It's like everybody else. And their total
05:35completed units of sale, like things that are ready are kind of at 120,000. And if you go back
05:42five
05:42decades, right, not a lot of people show that chart. But I like to show it to show people why
05:49on December 23rd, you know, 2024, we said the builders have a supply and demand problem because
05:55this, not the monthly supply, but this is perking up to a level that they really pull back. So here
06:02we
06:02are. The new home sales was like a multi-year high recently, but the builders just have a lot of
06:09units
06:09that they need to work off. So because of that, you don't get really any traction. Now, if rates go
06:14lower and demand picks up and new home sales start to break out, that's a whole different equation.
06:19We haven't been able to do that. So it's not shocking to me, but it's something that, you know,
06:25we've dealt with for a lot of years and going back to our article in June of 2021, where everybody
06:33was so
06:33gung-ho here comes the construction boom in America. And I was like, you kids are so adorable.
06:39I love it. You know, wait till rates rise. The whole thing is going to reverse. And here we are,
06:45right. It's, it's February, 2026. And if you look at the charts and you string it out 10 years,
06:53and then you string it out, you know, to the 50s, 60s, 70s, and you're like, whoa, there's something
06:58here. And I just think mature economies that are population growth is slowing down. That's
07:03building up. This group is not going to like put their heads down and push it higher.
07:09Well, we had in COVID, we had that sort of lapse where it was like, it took so long to
07:14get things.
07:15And so you had, you know, homes that they were, they were listed, they had been bought, but they
07:20hadn't even been, construction hadn't even started yet. And, or they couldn't finish because they were
07:25waiting on all that stuff. All of that's been cleared out. So now you do have this inventory
07:29that's out there. That's, that's different than it used to be in the last couple of years.
07:32It isn't a, like a terribly bad place for the builders, as long as they keep sales elevated,
07:39it would be more of a problem if new home sales really started to break lower. Then it becomes a
07:46whole different equation. But for now, things are at bay. And I think when you look at things at a
07:51bay,
07:51and this is why, you know, if you, if you read the headlines today, it's like multi-month high
07:55and housing stars, everything, but you take it back and you're like, something's not looking
08:00right here. But to me, it looks perfectly normal. So Logan, does, does this, did the permits to the
08:06starts to, is that affected seasonally? Like the other things that we look at, as far as like
08:10the holidays, the weather, and are, do you look at that when you're looking at, at these numbers?
08:15I mean, it's, of course, weather can, you know, in like prevent stuff from being built,
08:22you know, it could delay some projects, but I always thought it is when completed units of levels
08:29or sales are like under a hundred thousand and new home sales are growing, permits should be able to
08:37grow, right? Not a problem. So permits lead starts. Housing permits haven't gone anywhere for years.
08:44Housing starts haven't really gone for years. New home sales haven't gone anywhere for years.
08:49So I just kind of like, keep it as simple as that. Don't overthink it. If new home sales started
08:56to break much aggressively lower, housing starts and permits will fall. But we've literally have
09:02gone nowhere for years here. We just kind of bounce back and forth with new home sales,
09:08housing permits and starts. And anybody looks at those charts, like, you know, the last few years,
09:13you're like, not much is happening. And I think that's, that's going to be the case unless some
09:18something, unless something happens to where the builders go, Hey, listen, if I build this,
09:24am I going to get paid? Right. And that's, that was our June, 2021 article that when rates go higher,
09:33don't be surprised if there's no construction boom. If you want the government to pay the builders or
09:40whatever, you know, you need the government to get in. But if they're based on how they run their
09:45business for decades, this has been going on for decades, but every decade we get older as a
09:51country and we have all this inventory behind. And this is the whole premise of my, we're not going
09:56to see a housing construction boom because we're a mature economy. And the builders are this small
10:00force against this. There's over 147 million total housing units in America. The builders are now
10:07what 120,000 completed units. That's it. Right. It's this giant little speck of sand in this
10:14magnanimous beach. Right. And the builders just don't go, okay, we'll just build. And, you know,
10:21all of a sudden if total units go up higher, I mean, even during the housing bubble crash period,
10:27like the worst inventory period in history, the builders never even got to 200,000 completed units
10:34of sale. So the majority of all inventory in America comes from the existing home sales market.
10:40And like two weeks of our new listings data during the seasonal peak period amounts to more total units
10:47than the builders have ever completed in a calendar year going back decades. Right. You know, so,
10:54so this is, this is, this is just where we're at. We, we, we watch these monthly reports. They go
11:00up,
11:00they go down, but new home sales really hasn't broken out and new home sales really hasn't broken
11:06down. It's just, everything's at a channel right now with all the housing construction and new home
11:11sales data. I think this is one of the things that you've, I've really understood more as we've talked
11:16over the years. And then I I've lived in new build communities for the last 15 years, right? Different
11:22ones. And so when you say that as soon as a home is built and sold, that home is now
11:29competing with
11:30the next thing that the builder does and living in this community, like art, you know, you see it push
11:35out block by block and everything that's sold is now competition to the builder down the block building
11:42something. But I think the other thing is that like where it used to be that, you know, new builds
11:48were
11:48more expensive. Now that's not always the case. Now, sometimes that's the bargain. You know,
11:53there's always this premium because a brand new home has all the bells and whistles. And, you know,
11:59we have a lot of older home stock, like we have homes from the forties, fifties and sixties. And
12:04it's just, you know, unless it gets remodeled or redone, which, which is the case, a lot of times
12:10the builders always had this premium, that premium in a sense has gone down. I would still say
12:15for a lot of things on an apples to apples basis, they're probably are, are slightly more expensive,
12:21but things have changed here and the builders are adapting to their market environment. So
12:29always kind of remember you, you look at housing permits, permits are the thing that if that starts
12:35to break away, like we saw that in 2023, when mortgage rates got down to 6%, all of a sudden
12:41single
12:41family permits started to pick up, right? The builders were selling their homes. Well, also the
12:46builders completed units of sale, wasn't over 120,000 yet. So they're like, okay, all right,
12:51let's go. Right. We got, we got more profit margins. We could cut down rates. It's different now.
12:57Like the builder's confidence. I encourage everyone go look at the builder's confidence.
13:01It isn't at the lowest levels of the post COVID higher rates, but it's not screaming. Hey,
13:08hey guys, we're ready to go. I mean, the headline number was down this week. The future sales were
13:15down a smidge, everything. So the, again, think of them as businessmen, businessmen and women,
13:21and they're here to make money. So it's a tricky industry, but it'll be interesting to see what
13:28the government does and tries to, you know, get construction going. But again, I encourage everyone
13:33be a nerd, like the chart daddy, take a 10 year, 10 year, year, 10 year chart of housing permits,
13:40housing starts and new home sales. And then look at it. We've really got nowhere. And then go back
13:45to the sixties and seventies. We used to build a lot of homes like, well, we're a younger country,
13:50growing population. And, you know, uh, there wasn't, uh, there was less competition out here,
13:56but now more competition out there. So the builders are not the march of dimes, not the march of dimes.
14:03Logan, thank you so much for being on again. And we will talk again soon.
14:07Pleasure.
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