HousingWire Daily Logan Mohtashami: How low do mortgage rates need to go for builders?
Jan 20, 2025
Logan Mohtashami, a lead analyst known for his deep insights into housing dynamics, shares compelling thoughts on the current state of the housing market. He discusses the recent decline in building permits amid rising housing starts and the critical impact of mortgage rates on builder confidence. The conversation dives into how political policies influence the construction labor force and the potential consequences for future home sales. Mohtashami also highlights the significance of mortgage applications and trends that could shape the market in 2024.
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Housing Starts and Builder Confidence
- Housing starts surged, while permits remain low, indicating completed units are rising.
- Builder confidence declined due to rising mortgage rates nearing 6%.
Builder Buy-Down Limits
- Builders benefited from buy-downs when rates initially rose.
- There's a tipping point where buy-downs become unsustainable for builders.
Mortgage Rates and Housing Impact
- 7.5% mortgage rates caused the first negative residential construction print, while 6-6.5% allows builders flexibility.
- Higher rates impact housing disproportionately, as seen with the economy growing while housing starts decline.