Walker Webcast: A Discussion with PulteGroup’s Ryan Marshall About Housing Affordability, Shortages and Tariff Impacts

U.S. housing has been a large topic of discussion, specifically the lack of housing and the high costs of what is available. With the topic so prevalent, Walker & Dunlop Chairman and CEO Willy Walker had Ryan R. Marshall, CEO of home-building company PulteGroup, on the Nov. 13, 2024 Walker Webcast.

In addition to discussing PulteGroup’s growth since Marshall took the leadership reins in 2016, guest and host focused on the following:

Why Aren’t We Building More Homes?

“There were a lot of things about the most recent presidential election that were tough to watch,” he acknowledged. “But one of the things I was encouraged about was that both campaigns talked about the need for more housing. It’s the first time I can remember as an adult that there’s been that level of conversation about housing supply and affordability, and I think that’s a net positive for the country.”

There’s little doubt that the United States is experiencing a severe housing crunch on the single-family and multifamily side. Depending on the economist who is talking, the housing deficit ranges from 2 million to 7 million. Marshall said he thinks the housing deficit is 3 million.

Unfortunately, builders can’t just go and build more homes for the following reasons:

• NIMBYISM. “Everybody loves the idea of growing the economy and growing more jobs until it comes to putting new developments next door or across the street from where you currently live,” Marshall said. “All of a sudden, we become anti-growth.” He added that unless the “not in my backyard” mentality is dealt with, the country will be chronically undersupplied in housing.

• Zoning and land entitlements. While Marshall was cheered that housing was a hot topic on the federal level, “we’ve got to get that to trickle down to the state, and more importantly, the city and municipality level.” Zoning and entitlements are controlled by city councils. It also depends on schools, infrastructure, sewers, and water. “There are a number of constraints that make it tough to bring on a whole bunch more than what we’re currently building now,” Marshall said. What is currently being delivered is about 1.5 million homes annually, which doesn’t make up the deficit.

What’s Going on with Tech and Modular Housing?

In 2015, Katerra, a modular construction company, relied on combining design, manufacturing and construction in the factory and then moving a home to the site. Katerra also filed for bankruptcy in 2021, partly due to the pandemic but also due to construction costs and delayed projects.

Since then, modular building hasn’t been part of housing construction. Marshall said that there haven’t been gains in labor productivity, either. “We’re still basically at a factor of one with labor productivity, where if you look at every other major industry, there’s been progress in labor efficiency,” he said. “We need to continue to put investment toward that.”

He said that PulteGroup invests in some areas, including PropTech funds for certain technologies. The company also invests in innovative companies. One such company is Rheia, an HVAC company that builds systems that distribute heat and air through tubes in walls rather than large pipes in unconditioned spaces in attics.

“We also have two of our own off-site manufacturing plants, where we’re building floor cassettes, wall panels and trusses that use technology, 3D modeling and robots.” Still, Marshall acknowledged that there haven’t been major breakthroughs in the industry.

Are Tariffs a Concern?

While the attention is on tariffs against China, Walker told viewers that the Biden administration had placed high tariffs on Canadian lumber. He asked Marshall how much that tariff was impacting the housing industry.

“Going back 18 months ago, random lengths pricing for lumber was at an all-time high,” Marshall said. “I don’t think I ever remember seeing prices that high in my career, and it was painful.” These days, prices have come down. “Lumber prices aren’t at all-time lows, but they’re pretty manageable,” Marshall said. The lower prices have helped lower PulteGroup’s housing costs.

In terms of proposed tariffs for China, Marshall acknowledged the impact of the global economy. “The good news is that most of what’s in our homes is domestically sourced or domestically produced,” he said. On the other hand, some household items with components come from China or other countries that could be impacted by tariffs. “We’re paying attention to it,” Marshall said.

On-demand replays of the Nov. 13 Walker Webcast are available through the Walker Webcast channels on YouTube, Spotify and Apple. Subscribe to get invites, replays and articles for new Walker Webcast episodes every week.