Why we shouldn’t expect a housing construction boom

HousingWire

On today’s episode, Editor in Chief Sarah Wheeler talks with Lead Analyst Logan Mohtashami about the Fed, new home construction and housing starts.   Related to this episode:   Housing permits near cycle lows even as housing starts beat estimates  https://www.housingwire.com/articles/june-starts-permits-cycle-lows/  HousingWire | YouTube⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠  https://www.youtube.com/channel/UCXDD_3y3LvU60vac7eki-6Q  More info about HousingWire  https://lnk.bio/housingwire   The Top 5:   UHM acquires AmeriTrust assets, expands non-QM footprint  https://www.housingwire.com/articles/uhm-acquires-ameritrust-assets/  Foreclosures climb 21% in first half of 2026, pushed by higher stress in FHA, VA mortgages  https://www.housingwire.com/articles/us-foreclosures-rise-2026-midyear-attom-report/  Despite ROAD Act passing, no construction boom is coming  https://www.housingwire.com/articles/despite-road-act-passing-no-construction-boom-is-coming/  The housing market’s inventory rebound is shifting power to buyers, but not everywhere  https://www.housingwire.com/articles/the-housing-markets-inventory-rebound-is-shifting-power-to-buyers-but-not-everywhere/  Awaiting the CFPB’s next act ahead of Vought’s departure  https://www.housingwire.com/articles/cfpb-vought-new-nomination/   Want more from Sarah? Don’t forget to subscribe!  https://www.housingwire.com/subscribe/   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

00:11Welcome, everyone. My guest today is lead analyst Logan Motoshami to talk about mortgage

00:15rates and construction data. First, here's a recap of the top five trending stories on

00:20housingmar.com. Leading the list is Union Home Mortgage Buys Ameritrust Assets, Expands

00:26Non-QM, followed by foreclosures climbed 21% in the first half of 2026 as FHA VA stress

00:34build. Then we have, despite Road to Housing Act passing, no construction boom is coming.

00:39And the housing market's inventory rebound is shifting power to buyers, but not everywhere.

00:44Finally, awaiting the CFPB's next act ahead of vote's departure. So much going on at

00:51housingmar.com, but let's get to today's topic. Logan, welcome back to the podcast.

00:55It is wonderful to be here. I'm in beautiful Lincoln City, Oregon. So giving you an economic

01:04update on housing construction and FedForward guidance, having a beachfront view for the

01:11first time in a while.

01:13That's amazing. Yeah, no, it looks beautiful in what I can see behind you there. Okay, so

01:17there's so many different topics. You've written several, I think you wrote an article every

01:22day this week, because there's so much going on. So where do you want to start?

01:27So first, let's talk about the week itself. Obviously, it's going to be Monday morning when

01:32this podcast comes out, and it's going to be one of those weekends again, right? Weekends

01:36are for war, but the week is for war now. So we have war seven days a week, almost a

01:42new part

01:42of this cycle here. Oil prices are $81, $82. Last time I checked, we're not back to the

01:50recent highs, which were about $94, $95. Interesting that China came out and so did Pakistan, asking

02:00the US and Iran to negotiate and talk again. A lot of damage is being done at this point

02:08for everyone participating in the Strait of Hormuz conflict. So it'll be interesting to

02:15see over the next few days if some kind of negotiation starts up again, and we just do

02:21this back and forth dance. But oil prices aren't over 100, and the Strait of Hormuz traffic

02:29is down. We had a lot of Federal Reserve be very hawkish this week. You remember the whole

02:34thing about no forward guidance talk? Beth Hammett goes on LinkedIn and gives a little mini LinkedIn

02:39dissertation on why she wants rates to be raised fast. Lori Logan of the Dallas Fed kind of did

02:46the same thing. So there's definitely that hawk versus dove battle still, and they didn't care

02:54about oil prices under 70 when it was, didn't care that the inflation data was softer. You're

03:01probably going to need to see, like, a lot of monthly prints to come in lower for them to be

03:09convinced, or the labor data gets softer, either one. But the labor, Beth Hammett says we're at full

03:16employment. So her view of labor is we have a very strong labor market at this point.

03:23Despite those hawks, you don't see any, I mean, you don't see a rate hike in the July meeting, right?

03:29I think you lost enough hawks to prevent a rate hike in July. So it's really hard to

03:40convince the American people that oil prices are down. And you made a big, you know, a big talking

03:48point of the hikes faster about that. And then the inflation report came in softer than anticipated,

03:56both CPI and PPI. So I think for, because it was like a split 50-50 on that, you probably,

04:03you just need to lose a few of the voting members to not hike. But this doesn't mean that the

04:09hawkish

04:10tone from the Federal Reserve changes. The weekly ADP data, it's not bad, but it's not as strong as it

04:19was

04:20in the past few weeks. And just remember how I look at it is that we had a lot of

04:24drama in 2025,

04:27Godzilla tariffs, government shutdown, all these things. And we had, you know, the slowest job

04:35growth ever in the 21st century outside of a recession. Now, you know, because some of those

04:42things have dissipated, the curve of negative to positive data just rises the recent report and,

04:50you know, retail sales were positive. So the Federal Reserve just looks at it as, as long as

04:57there's 33,000 jobs created per month and the unemployment rate is low and jobless claims are

05:02low, they're fine. So this is why I keep on bringing that talking point. In their minds, it's fine because

05:07they went from 8,000 jobs being created with no breath. And now they have more breath and jobless

05:14claims are low and the unemployment rate is low. So if there was more people looking for work,

05:19the unemployment rate is higher. They probably can't say, well, there's just more people looking

05:23for work with the nominal numbers being where they are. So the Fed just feels like last year was kind

05:31of

05:31those. Those were emergency rate cuts or not emergency rate cuts, but kind of insurance cuts.

05:38And because they were insurance cuts, they don't mind if two or three of those just go back up

05:45since they're not that far from their own neutral policy. But again, it's the labor to me,

05:49the labor data shifting changes the rate curve. Then, of course, the inflation data was hotter than

05:56anticipated. Then the conflict happened. So a lot of drama, right? We have a lot of drama going on.

06:03So it's a conflicting week-to-week headline talking points on the Fed and with all the data out there

06:11and the external or outside economic noise. Okay. Who is still the staunchest dev on the Federal

06:20Reserve? Oddly enough, it is Lisa Cook. What a strange, bizarro world we live in. The one person

06:28President Trump wants to fire is like the lone dove maybe out there. And she hasn't changed her view.

06:37She did talk about if inflation doesn't get better, then I don't mind hiking. But she's one of these

06:45productivity boom people where productivity will keep a lid on inflation. And it is interesting. It's Beth

06:55Hammock, who is the most hawkish person. But this is the world we live in. There's not like a slow

07:03sea out

07:05there. This thing is wavy and stormy and crazy. And our job is to try to make sense of it

07:12all. And to me, it's just

07:13that the labor market getting better while it might not have been considered better if there was a job

07:19market two years ago. But in the Federal Reserve's eyes, dissertation, break-evens, 33,000. Above that,

07:26we're okay. Breath of jobs. Jobless claims are low. It was low again this week. And the unemployment rate

07:31is low. That's how it's worked since the Peloponnesian War, right? You just got to go with it. And

07:37we're here to try to make sense of it all. Well, we also got a lot of construction data this

07:43week,

07:43right? So we had builders' confidence. We had permits, starts. Tell us what we learned from that.

07:48So as most of you probably have figured out, I'm not a big housing construction boom person. I have a

07:56hard time believing that a country that's aging and population growth slowing down, and now you have a

08:03push for less immigration, less migration happening, and now attempting to remove individuals

08:11from the country. With rental vacancies up, you know, and demand where it is, I just don't see the

08:19backdrop for this Marsha Dimes thing, you know, right? And the Road to Housing Act, it's not that

08:30it's a bad thing. I just think there's limits. And we put up a lot of data line in that

08:38article about

08:38why I think the road to, we have to have a little bit more of a realistic view of this

08:43plan.

08:45Because think about, you know, is supply really going to take off if demand doesn't go with it?

08:51This is why we do the supply and demand equilibrium conversation. Everyone keeps on, we just need to

08:55build more homes. We just build more homes. And then new home sales is where it's at. And we look

09:02at

09:02the builder's confidence and they're not excited. They don't look like people that are just going,

09:07oh, here we go, guys. Here we go. Yo, here we go. Yo, those housing permits are ready to go.

09:13So it's not like, it's not the backdrop that you would see a construction, like everybody keeps

09:19like, we need to just build more house. So, and that's how economics work, right? I mean, it's not,

09:25it's not, this is not a new thing, but we just keep on having people say, we're just, we need

09:31to build

09:31more homes. And then within an economic cycle, this is what happens. This is why I like to show

09:37the total completed units charts that apparently not a lot of people have seen this. And then now

09:42that I think about it, nobody shows this, nobody shows this data line ever. Like I'm trying to find

09:48anybody that does this. And I think it's confusing to a lot of people who are, who are in economics,

09:53but these are just the completed units for sale. Like the homes are available and it's not,

09:59it's not a lot really. I mean, typically when it gets above 120,000, the builders go no moss,

10:04but even the housing bubble crash period, it never even got above 200,000. So, so people just think

10:09like the builders build like millions of homes and they're just going to flood a market. They just

10:13don't even have the capacity for something like that. And their business model isn't really designed.

10:17So to me, it's just, we had housing start speed and then housing permits are pretty much near cycle

10:26low. So the, the second article, which was released today is just to try to explain that.

10:31Yeah, that's really good. Um, I do think it's interesting. You and I've been talking about

10:34this for years, literal years since 2020 about, do we have, you know, do we need to just build more

10:40homes? Is that going to be the, the answer to the affordability crisis that people have? And,

10:46and you have for, for many years said no, because even when in COVID, when it was like,

10:51clearly there's so much demand you were like, but, but if there was that much demand, the builders

10:56would be all over it. They have a great business model. They know when they can make money. If

11:01they're not building, it's because they don't think they can sell it. You know, the housing bubble

11:05years, we had a lot of construction. We built a lot of homes back then. Was housing more affordable?

11:14Like when we think of the housing bubble years, do we think affordability was great? Oh, you know,

11:20prices were taken off. Credit was taking off, but new home sales were taking off as well. And because

11:26new home sales were taking off the bills, like there is a demand. I just got to build them. So

11:30what, what happened was you had an 82% crash in new home sales from the peak of 1.4

11:36million down to

11:37a little bit under 300,000. And then the last decade, which, which I understand for those of you

11:42that did follow me in the last decade, my whole core principle back then in early 2010 and 2011 was

11:49like, we were going to have the weakest housing recovery ever recorded history. This has nothing

11:52to do with prices, housing starts, mortgage demand, housing demand, because we had so much supply,

12:00the builders in a sense, you know, were their competition had cheaper homes and a lot more

12:07supply. So the builders, I said, we're never going to get 1.5 million housing starts until years 2020 to

12:122024. That's what happened. We never got 1.5 million housing starts until years 2020. Cause the

12:17builders are dealing with cheaper homes out there. And you know, uh, uh, they just didn't have the

12:24sales demand curve, just like mortgage demand. Didn't have the sales. Wait, what do you mean by

12:28they were dealing with cheaper homes where they, they were not offering the cheaper homes. They

12:32were competing against the cheaper homes. There were too many cheaper existing homes. The builder's

12:36biggest competition is the existing home sales market. The existing home sales market has an

12:41unbelievable advantage because it's bigger. And geographically it's everywhere where the new home

12:46sales has to build a land it's constructed in an area, right? It's, it's, it's not, uh, it's not

12:52spread out like the existing home sales. Cause every neighborhood in America has a home for sale,

12:58basically pretty, pretty for the most part where they builders have to build in a certain area and

13:02all the costs that go into it. So naturally, you know, they, they're at a disadvantage because

13:08existing inventory and mortgage rates are low for everyone, right? This wasn't like the builders

13:13could offer 1% mortgage rates back then. Profit margins weren't as healthy as back then. So it

13:19took a long time for them to recover. COVID was different. Inventory hit an all time low. So when

13:24rates rose, the builders advantage, you know, they can offer lower rates. So part of that article I

13:30wrote, I said, guys, this is not like this sector doesn't have sub 6% mortgage rates. They have

13:36sub 6% mortgage rates for years. Now their home sales are at 2019 levels. So they already have

13:43that advantage and you're still housing permits are at, uh, uh, near cycle lows. So while the new home

13:51sales market has outperformed, clearly outperformed, uh, the, the marketplace and they're still, you

13:57know, selling homes, it's not like they're having a crash in new home sales. There's not like housing

14:02starts are having a waterfall dive or residential construction workers are falling like it has in

14:08previous cycles. Uh, but it's not the environment for them to go, here we go. Yo, let's get those,

14:15uh, uh, permits out there. Cause here comes the boom. So my job as an analyst is to bring out

14:21all

14:22the data and give you what I think the reality is. Uh, and I think it's easy just to fall

14:27back

14:28or like I always say, it's easy to sleep next to the bellies dragon, right? It's warm. It's,

14:33it's cozy. You know, you feel safe. The dragon likes you. So everybody just says we need to build

14:39more homes. It's just not as easy as people. And this is, this is me for 15 years. You know,

14:45this isn't something new. I mean, there's countless, uh, uh, articles that I've written and talked about

14:51events and stuff. And you and I have gone over this. So those two articles and all the charts in

14:56there is just to bring a sense of reality, uh, uh, that, you know, it's 2026. Now it is July,

15:032026. We wrote that article in June of 2021. And we said, guys, just simmer down y'all just temper

15:12this, you know, thing. And, uh, we'll see how the future is. Again, I, I, this is not, this is

15:18not

15:18like a direct shot at the road to housing act is a negative thing. Any, anything that helps with

15:24supply is, is a positive supply is the best way, best way to deal with inflation, right? Beth hammock.

15:31Um, because that supply is always going to be there. It has to be filled with, with a living

15:36person. But in this, in this regard, I think there's just needs to be a temperament, uh, or less

15:43enthusiasm on what this bill can do for the future. Well, and, um, we noted in your, um, in your

15:51article

15:51about the road to housing act wouldn't lead to like a whole bunch more housing that, you know,

15:56if you're talking about manufactured housing, that's a different story. There are a lot of,

16:00uh, changes that could come because of that, but we're, you know, when we're talking about

16:04traditional stick built, stick built housing, that's, that's not, um, it was not going to get

16:08a huge boost there. Sarah, we're not complicated people. We rent, we date, we mate, we get married

16:17three and a half years after marriage. We have kids and we buy single family homes. We like big

16:23single family homes, manufactured homes. I don't know. Apartments. Hmm. So if something's not,

16:31if something's not been part of the data line for decades and decades and decades, or how I like to

16:36say, since the Peloponnesian war, um, you know, the Spartans probably don't feel like apartment people,

16:43right? Spartans, you know, if they had single family homes that have single family homes, big

16:47backyards, they could do their training and fighting and stuff. But, um, it's just, it's just,

16:54there, there, there, there's a world of what is the reality is. And part of housing is wages and

16:59incomes. And the people that make the wages and incomes, the people that are buying the near 5

17:04million total home sales, they don't have a manufacturing appetite or apartments, you know,

17:13for the most part. So manufacturing, I mean, a multifamily construction, when we look at

17:17multifamily construction, you know, the, the two periods of times in history is where it really

17:21took off the late sixties. We, we had a loan program, the early eighties, we had a tax benefit.

17:26We had a multifamily tax credit in the last decade that boosted things. So I always highlight those

17:33things that, that have been positives. They give us growth, right? And then we take it away and then

17:38we're like, okay, we're here again. Um, so anything to help build homes positive. That's all, I'm always

17:46going to be a big believer. I'm just trying to bring some reality into like what people actually

17:50want. And then part of like, you know, coastal California, it's so expensive because the people,

17:55the incomes here, right. You know, look at San Francisco, it's AI boom. Cause people have the

18:01money and they're buying whatever they can and overbidding on homes because, you know, there's

18:08not that much product available, but it's the incomes that do it. So the people that make the

18:13money, I have always told you they buy single family homes. This is why single family construction

18:17has a bigger gap versus multifamily construction for a while. And, uh, it's just the world we live

18:24in. My job is just to try to make sense of it all. So we have an understanding because we're

18:28here.

18:28It's July, it's July, 2026 and housing permits are near cycle lows, just like very, very close to

18:36cycle lows. And there's a reason for that. There is a reason. Okay. Um, I, you say, you say it

18:42all

18:42the time, or as I always say, and then you had this like dragon belly thing. I've never heard that.

18:47Oh, you've never heard, you know, uh, it's it, you, you can be deceived easily by sleeping in next

18:55to the belly of a dragon. You think the dragon's your friend and you're just very warm and it's

19:00just kind of, you know, but you know, dragons and scorpions, man, you know, the history tells

19:06you, you got to be careful. Uh, one will sting you and kill you. And the other might just be

19:10hungry

19:11and don't have sheeps around and, uh, uh, take care of, uh, take care of that hunger. So, uh, even,

19:17even draggers, dragons need snicker bars, right? You know,

19:20listen, another great Logan illustration right there. Oh, wait, you know about my snicker commercial

19:27that I auditioned for that almost went. Yeah. Oh yeah. So you remember the story.

19:32We're not talking about the snickers commercial. There it goes, Sarah. See,

19:34I knew you were going to come out. I'm going to bring out my finger too out there.

19:38No snickers commercial on this. Yeah. Very, very, very, thankfully now, now that I think about it,

19:45that, that, you know, that commercial was on a veil and it was like one of two being chosen.

19:50Uh, but it was too racy back then in the 1990s. Yeah. You know? Yeah. If someone wants to ask

19:56you

19:56about that at a conference, you know, that's one thing anyway. Okay. Logan, thank you so much

20:01again for all the work this week and we will talk to you again soon. Pleasure Wheeler.

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