Podcast: Economics vs. Politics

On the latest episode of NAHB’s podcast, Housing Developments, CEO Jim Tobin and COO Paul Lopez are joined by Chief Economist Dr. Robert Dietz to discuss proposed policy during this election cycle, what to expect from the Federal Reserve and how quickly that could impact the housing market.

“I wish we would see more focus on the supply side,” Dietz noted. “When you’re a policymaker, you want to reach for that Band-Aid — that thing that will make renters and home buyers feel better — and that’s demand side.”

Downpayment assistance and home buyer tax credits accomplish that, but the issue remains that there is not enough housing available to meet demand. Tackling burdensome regulations is necessary to be able to increase supply and make those demand-side tools useful.

“It connects to the broader inflation fight, because there’s too much cost in the system,” Dietz added. “On regulatory policy, the watchword should be ‘Do no harm’ — try to find a way to break back or roll back housing regulations that add cost.”

Shelter has grown to 70% of inflation costs over the past year because of a lack of affordable, attainable housing in both the for-sale and for-rent markets. Given the cooling the labor market and the current inflation data, Dietz noted that the Federal Reserve may begin gradually cutting rates as early as September, as NAHB had originally predicted earlier this year.

“We’re going to get one or two rate cuts this year,” Dietz stated. “We’re likely to get four or five in the next year.”

“So, for builder loans, that could be a 200 or 250 basis point reduction in loans — so from a 13% annualized rate down to 11%,” he added. “That’s going to help supply.”

Tobin drills down on how this could impact the presidential campaigns. Not knowing who will be president until after the election is also contributing to buyers’ hesitation to jump into the market as they wait to see what might happen with rates.

“It’s still a good time to buy a house,” Tobin noted. “We know that rates are still historically low. But the idea is if you are in the market to buy a house, don’t hesitate. Because it’s going to get more competitive as rates fall, and you’re better in getting in and [refinancing] as that market starts to come back.”

As supply increases, so will the demand on materials. The 2025 International Builders' Show, taking place in Las Vegas from Feb. 25-27, 2025, is a great opportunity for builders to meet with suppliers and learn about innovative building techniques to help their businesses going forward. Registration opens Sept. 3.

The team also enjoyed a successful Association Management Conference (AMC) event in Salt Lake City and the opportunity to network across the Federation. The next AMC will be held in Atlanta in August 2025.

Listen to the full episode below, and subscribe to Housing Development through your favorite podcast provider or watch all the episodes on YouTube.