The affordable housing crisis in the United States drew the attention of the Council of Economic Advisers who said in its Economic Report to the President released this week that the nation has a shortage of millions of houses.
The report said that regulatory cuts could lead to more construction to stabilize prices, increase home ownership and fuel faster economic growth. It also details both a political risk and a messaging opportunity for President Donald Trump, whose public approval has slumped because of concerns about his tariffs, the Iran war and his unfulfilled promises to slash inflation and unleash stronger growth.
Beyond housing, the report weighed in on such topics as AI, healthcare, energy, and trade policy, among other things.
In March, President Donald Trump signed a pair of executive orders seeking to improving home affordability, a key issue for many voters going into November’s election to determine control of the House and Senate.
Housing Regulatory Burdens
The first order addresses how the federal government would reduce its own housing regulatory burdens and create incentives for best practices by state and local governments. The goal is making it easier for builders to construct more homes. The second order seeks to reduce the regulatory burdens tied to mortgages and to make it easier for small community banks to provide home loans.
“Layers of unnecessary regulatory barriers, slow permitting processes, and onerous mandates at all levels of government have delayed construction, restricted development, and driven up the costs of new housing,” a draft of the order stated. “These constraints have made housing less affordable for many Americans.”
The Iran war, meanwhile, has propelled the cost of buying homes upward, with average rates for 30-year mortgages jumping from just under 6% to 6.37%.
Trump also has argued in favor of keeping home prices high to protect values for existing owners.
“I don’t want to drive housing prices down,” Trump told his Cabinet earlier this year. “I want to drive housing prices up for people that own their homes, and they can be assured that’s what’s going to happen.”
The housing chapter of the report spells lays out a blueprint for how more home construction would help the middle class and the overall economy, setting up an argument that Trump could make to voters.
10 Million More Houses
The report was put together by staff at the White House Council of Economic Advisers and it finds there would be 10 million more houses in the country if “homebuilding and the growth of the single-family housing stock had continued at their historical pace instead of falling dramatically” following the 2008 global financial crisis.
The 2008 crisis largely was caused by a wave of defaults in the housing market, where prices had been fueled by questionable lending practices.
The analysis also notes that home prices are up 82% since 2000, while incomes are up just 12% — a mismatch that had been masked for a period by historically low mortgage rates.
“If homebuilding and the growth of the single-family housing stock had continued at their historical pace instead of falling dramatically after 2008, there would be 10 million or more additional single-family homes today,” the report notes.
The report also notes that various regulations on home construction, which it calls “the bureaucrat tax,” add more than $100,000 in costs to building, a cost that includes changing the building codes over the past decade, compliance costs, and zoning approval fees, among other expenses.
The report estimates that a reduction in those regulatory costs could help spur construction of as many as 13.2 million homes.
Green energy housing standards also were attacked in the report as a factor in increasing construction costs.
