White House Sets Out Plan to Fix Housing Crunch

White House economists estimate the United States has a shortage of 10 million houses, according to a new report out Monday—and they say regulatory cuts could lead to more construction to stabilize prices, increase home ownership, and fuel faster economic growth. The analysis, part of the Economic Report of the President, outlines both a political risk and a messaging opportunity for President 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, the AP reports.

• 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, but he's been slow to take other steps that would show that high housing costs are a top priority for his administration.

• The White House has been trying to focus on housing and other affordability issues for months to get ready for what's expected to be a challenging midterm season for Republicans, but it has been thrown off course by a series of global issues. In January, a speech at the World Economic Forum in Davos, Switzerland, that had been billed as focusing on housing turned into a showdown for Trump over control of Greenland.
• Meanwhile, the Iran war has driven up the cost of buying homes, with average rates for 30-year mortgages jumping from just under 6% to 6.37%.
• Trump has also 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 annual economic report, obtained by the AP 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 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 changes to 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.
• 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.