Episode summary
Housing construction looks soft for 2027
HousingWire Daily
· · 22 min · Hosts: Sarah Wheeler · Guests: Logan Mohtashami
Summary
Logan Mohtashami argues that the latest builder sentiment reading is a warning sign for housing construction, with sentiment back to the lows seen in 2012. He says the weakness is not just about demand, but about the way higher mortgage rates above 7% squeeze builders’ margins and make it harder to justify starting new projects. In his view, the big publicly traded builders have handled the environment better than smaller builders, but even they are constrained when borrowing costs stay elevated.
He also pushes back on the idea that lower rates automatically unlock a surge in supply. Instead, Logan says most inventory growth comes from the existing-home market, not from builders, and that higher rates have historically been more likely to lift inventory than lower rates. He argues the market is still stuck in a narrow range: rates near 6% support growth, while rates near 7% slow housing meaningfully.
On the rate outlook, Logan says mortgage rates could get under 7% for the holidays if the 10-year yield falls toward 4.85%, trade-war tensions ease, the AI trade does not re-accelerate, and labor data softens further. He says mortgage spreads remain manageable and that the housing market is working through a slow, long cycle rather than a boom-bust pattern.
Key takeaways
- Logan Mohtashami says builder sentiment has fallen back to 2012 lows, reflecting the pressure of mortgage rates above 7%.
- He argues that housing inventory growth comes mostly from the existing-home market, not from builders overbuilding.
- Logan says lower mortgage rates do not automatically create more active inventory; higher rates are more likely to do that.
- He expects mortgage rates can get under 7% for the holidays only if the 10-year yield falls to about 4.85% and several macro risks ease.
- Logan says mortgage spreads are not the main threat right now, because they have kept rates below 8% this year.
Notable quotes
“it's been trending lower for some time and it's back to the lows that we saw in 2012”
“higher mortgage rates above 7%. How long it stays up here, it it it's more of a profit margin story now”
“we're not going to be able to build our way out of this”
“lower rates do not bring out active inventory growth like people think”
“the 10-year yield has to be at 4.85% or lower”
How the episode opens
Welcome everyone. I'm joined by my podcast partner, Lead Analyst Logan Mohtashami, to talk about home building, builder sentiment, and the HousingWire Market Tracker data. Before we dive in, here are the top five articles on housingwire.com.
First, we have the latest tracker, can mortgage rates get under 7% for the holidays? Followed by Fannie Mae slashes 2027 mortgage forecast amid higher rates. Then we have voters seize the say in key state battles for housing affordability.
And eXp settles trafficking lawsuit on eve of trial. Here's what it means for the brokerage. Finally, we have Pulte signals review of LOBAs credit reports.
Logan, welcome to the podcast and here we are in person.
Yes, yes, it's wonderful to be here. Uh, we're in Dallas, of course, at the HousingWire office, but we have a builder summit uh, today. We'll be talking to builder CEOs and managers and what a uh, perfect day in a sense the builder survey came out and it's been trending lower for some time and it's back to the lows that we saw in 2012.
Yeah, that was really shocking. It's like, oh, builder sentiment down to 2012. Is that just due to rates?
You know, there's multiple things that with that survey that um, is is a little bit different. Uh, of course, new home sales, you know, it picked up in the last report. We're going to get that uh, the next report soon.
And it's still at 2019 levels, but I think the big publicly traded builders have an advantage over the smaller builders and because of that, that survey looks really bad. Um, even though new home sales haven't been able to break uh, uh, under 2022 levels, but I think, you know, it it does make this case that higher mortgage rates above 7%.
From the episode’s captions: roughly the first two minutes, lightly cleaned. Keep watching on YouTube →
Topics
- homebuilding outlook 2027
- builder sentiment
- housing market tracker
- mortgage rate outlook
- mortgage forecast
Companies and tickers mentioned
- FNMA
- PHM
- Fannie Mae
- eXp
- PulteGroup
Watch the episode
Watch “Housing construction looks soft for 2027” on YouTube
Summary, takeaways and quote selection by Octagon. Quotes are short excerpts; the full conversation is in the episode.
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