Real estate investor Grant Cardone says competition for construction workers and materials could drive building costs higher, while slower homebuilding may push rents upward. But with mortgage rates above 7% and home sales weakening, current data do not confirm a nationwide surge in home prices.
Cardone’s comments came during a discussion of the US housing market with economist Peter Schiff. In a report published October 21, TheStreet said Cardone argued that reduced construction would mean higher rents. He also warned that building costs could “explode” as workers and materials are diverted to data-center projects over the next five years or longer.
The debate comes at a difficult time for prospective buyers. The average 30-year fixed mortgage rate eased to 7.41% from 7.50% in the week ending October 16, but mortgage applications fell 5.3%, while applications to purchase homes declined 7%. Those figures suggest the modest improvement in borrowing costs has not restored demand.
The pressure from mortgage rates above 7% has left many households struggling to qualify for home loans. At the same time, builders face higher material expenses and labor shortages. The result is a market in which affordability is deteriorating even as some sellers and developers are reducing prices to attract buyers.
Why Cardone Thinks Housing Costs Could Rise
Cardone’s argument centers on the relationship between construction activity and the availability of housing. If developers build fewer homes while population and household demand continue to require additional housing, supply could tighten further. That imbalance may support rents and keep prices elevated in areas where new construction cannot keep pace with demand.
The latest government figures show that US housing construction is already slowing. The Census Bureau reported that total housing starts fell 5.2% in September to a seasonally adjusted annual rate of 1.221 million units. Single-family starts declined 4.6% to 859,000, while permits for future single-family construction dropped 4% to 845,000. The September residential construction report also showed total housing starts were 7.4% below their year-earlier level.
Data-center development adds another potential source of pressure. These projects require specialized construction workers and substantial infrastructure investment. A September survey from the Associated General Contractors of America and NCCER found that 58% of contractors involved in data-center projects reported greater competition for skilled workers, while 49% said those projects had increased wage pressure. The construction workforce survey supports the concern about competition for labor, although it does not establish that data centers will cause home prices to rise nationwide.
The broader housing industry is also facing elevated financing and operating costs. The National Association of Home Builders’ October confidence index fell to 29, its lowest level since June 2012. Meanwhile, 43% of builders reported cutting prices, and 65% were offering sales incentives to attract buyers. The NAHB survey shows that builders are dealing with weak demand alongside rising expenses.
Those conditions create a tension in Cardone’s argument. Slower construction can constrain future supply, but weak demand can also limit what sellers are able to charge. Whether prices rise depends on the balance between available homes and buyers’ ability to pay.
What the Latest Housing Data Say About Home Prices
The latest sales figures do not point to an immediate nationwide boom. Pending home sales fell 7.3% in September to their lowest level since the National Association of Realtors began tracking the measure in 2001. Contract signings were also down 11.3% from a year earlier, according to MarketWatch’s report on the record-low reading.
That weakness matters because pending sales provide an early indication of future completed transactions. When fewer buyers sign contracts, sellers can face more pressure to negotiate, particularly in markets with rising inventory. The latest figures therefore suggest that high borrowing costs are limiting demand even as housing supply remains constrained in some areas.
The national picture can still differ sharply by region and price category. Markets with limited construction and strong population growth may experience tighter supply and firmer prices. In areas where builders have added too many homes or buyers have become scarce, prices may stagnate or fall. The national data alone cannot determine what will happen in an individual city.
For households deciding whether to buy, the difference between purchase prices and ongoing housing costs is especially important. A home that appears affordable at its listed price can become expensive once mortgage interest, insurance, taxes and maintenance are included. The current gap between rental payments and homeownership costs makes the decision more complicated, as shown by recent figures on the cost of buying a home versus renting.
Cardone’s comments are best understood as a warning about future supply and construction expenses, rather than a confirmed prediction that home prices everywhere are about to explode. His argument assumes that fewer new homes and higher building costs will eventually create additional upward pressure on housing expenses. The actual outcome will depend on mortgage rates, employment conditions, household formation and the pace of new construction.
For now, buyers and renters face a market caught between high costs and weakening demand. Reduced construction could make housing harder to find in some markets over time, but the latest sales and builder data show why a broad nationwide price surge cannot yet be taken for granted.