The housing chapter of the annual economic report, obtained by The Associated Press before its release, 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.
Put together by staff at the White House Council of Economic Advisers, 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” after the 2008 global financial crisis. That crisis was caused largely by a wave of defaults in the housing market, where prices had been fueled by problematic lending practices.
The analysis notes that home prices have risen 82% since 2000, while incomes are up just 12% — a mismatch that had been masked for a period by historically low mortgage rates. But when rates jumped with inflation in the aftermath of the pandemic, monthly mortgage costs also rose for buyers and affording a home, a signifier of middle class status, became a top concern for voters under 40.
The White House maintains that the executive orders in March, in addition to the plans to purchase mortgage-backed securities, show that the president is focused on housing issues.
The report says that various regulations on home construction, which it calls “the bureaucrat tax,” add more than $100,000 in costs to building. That cost includes changing the building codes over the past decade, compliance costs and zoning approval fees, among other expenses.
By the report’s estimates, a reduction in those regulatory costs could help spur construction of as many as 13.2 million homes. That could add on average 1.3 percentage points to annual economic growth over the next decade and support 2 million manufacturing and construction jobs, it argues.
Trump could decide to make federal funding to state and local governments contingent on reducing some of the regulations, according to an administration official, who insisted on anonymity to discuss the report before its release.
The report also attacks the green energy housing standards introduced during the Biden administration as a factor in increasing construction costs. Those steps gave preferences for more efficient air conditioning units and water heaters as well as higher standards for the related duct work.
But getting rid of some of those requirements could increase other costs for homeowners over the long run, such as utility bills.
The report relies on a 2021 analysis by National Association of Home Builders that says the standards could add up to $31,000 to the price of a new home, while it could take as many as 90 years for a homebuyer “to realize a payback on the added cost of the home.”
It is not clear how much savings would occur from rolling back Biden-era housing standards because of existing legal challenges regarding their enforcement and different practices by states. In March, a federal judge in Texas agreed with 15 states led by Republicans that said the standards for federally backed housing were unlawful.
