The Scale of the Problem
White House economists estimate the United States has a shortage of 10 million houses, according to a report released Monday by the Economic Report of the President. The analysis, prepared by staff at the White House Council of Economic Advisers, found that the country would have 10 million more houses if homebuilding and single-family housing stock growth had continued at their historical pace instead of falling dramatically after the 2008 global financial crisis. Home prices have risen 82 percent since 2000, while incomes have increased just 12 percent, creating a widening gap that became acute when mortgage rates jumped with inflation following the pandemic.
Trump's Limited Action on Housing
President Donald Trump signed two executive orders in March directing federal agencies to reduce housing regulatory burdens and make it easier for smaller banks to provide mortgages. The White House maintains these orders, along with plans to purchase mortgage-backed securities, demonstrate the president's focus on housing issues. Trump has not yet taken other steps that would signal housing costs are a top priority for his administration. Earlier this year, Trump told his Cabinet "I don't want to drive housing prices down. I want to drive housing prices up for people that own their homes," revealing tension between addressing affordability and protecting existing homeowners' wealth.
Regulatory Costs as a Barrier
The report identifies regulations on home construction as "the bureaucrat tax," estimating they add more than $100,000 in costs to building a home. These costs include changing building codes over the past decade, compliance expenses, and zoning approval fees. The White House estimates that reducing regulatory costs could spur construction of as many as 13.2 million homes and add an average of 1.3 percentage points to annual economic growth over the next decade while supporting 2 million manufacturing and construction jobs. An administration official, speaking on condition of anonymity, indicated Trump could make federal funding to state and local governments contingent on reducing some regulations.
The Biden-Era Standards Debate
The report criticizes green energy housing standards introduced during the Biden administration, citing a 2021 builders' study that they could add up to $31,000 to a new home's price. These standards gave preferences for more efficient air conditioning units and water heaters and higher standards for related duct work. The analysis relies on a 2021 National Association of Home Builders study claiming the standards could add up to $31,000 to the price of a new home, with homebuyers potentially needing as many as 90 years to realize a payback on the added cost. A federal judge in Texas agreed with 15 states led by Republicans that the standards for federally backed housing were unlawful.
Mortgage Costs Rising Amid Broader Concerns
Average rates for 30-year mortgages have jumped from just under 6 percent to 6.37 percent, driven partly by the Iran war's impact on broader economic conditions. For voters under 40, affording a home has become a top concern as monthly mortgage costs rise. The housing shortage presents both a political risk and messaging opportunity for Trump, whose public approval has slumped because of concerns about tariffs, the Iran war, and unfulfilled promises to slash inflation and unleash stronger growth. The White House has been trying to focus on housing and affordability issues for months to prepare for what is expected to be a challenging midterm season for Republicans.
