The National Association of Home Builders (NAHB) called on Congress today to support policies that will allow home builders to construct more homes and apartments to help ease the nation’s housing affordability crisis and provide better, more affordable housing opportunities for all American households.
Testifying on behalf of NAHB during a House Small Business Committee hearing focusing on the economic landscape in America, Steve Martinez, a home builder from Boise, Idaho, told lawmakers that housing is by far the largest single expense for American families and rising costs are putting the nation in an untenable situation.
“Shelter inflation—rent and homeownership costs—is still rising well above a 5% rate driven in large part by a nationwide shortage of 1.5 million housing units,” said Martinez. “The only way to tame inflation and bring housing costs down is to remove the barriers that are preventing home builders from increasing housing production.”
Rising housing costs for consumers are tied to rising business costs. Like home buyers seeking a mortgage, home builders and developers rely on banks for financing to build new homes and housing developments. But tighter financing conditions for development and construction loans are making it more difficult for builders and developers to finance new housing.
“In today’s market, tighter lending conditions, a limited supply of land, permitting roadblocks and delays, and rising fees are all contributing to increased construction costs that make it increasingly difficult to boost the supply of housing,” said Martinez.
NAHB has released a 10-point plan to address the nation’s housing affordability challenges by seeking sensible policy solutions at all levels of government that include reducing excessive regulations, fixing building material supply chains, overturning inefficient local zoning rules, and promoting careers in the skilled trades to address a severe labor shortage in the construction industry.
Regulatory costs, which include complying with building codes, make up nearly 25% of the cost of a single-family home and more than 40% of the cost of a typical apartment development. Increased regulations, especially energy building code requirements such as the recent decision by the U.S. Department of Housing and Urban Development (HUD) and the U.S. Department of Agriculture requiring them to insure mortgages for new single-family homes only if they are built to the 2021 International Energy Conservation Code (IECC) or HUD-financed multifamily housing built to 2021 IECC or ASHRAE 90.1-2019 standards, are making it much harder for home builders and multifamily developers to build attainable and affordable housing.
“NAHB supports legislative efforts to ensure that all regulations are designed with small businesses in mind; that regulatory rulemaking agencies are required to consider the true cost of regulations on small businesses; and that regulatory rulemaking agencies comply with the letter and intent of the law in crafting new regulations,” said Martinez. “Therefore, NAHB urges Congress to pass legislation such as the Small Business Regulatory Flexibility Improvement Act which would require federal agencies to consider the direct and indirect economic effect of a rule on small businesses.”
To help mend faulty building material supply chains and ease price spikes and volatility, Martinez called on Congress to invest in domestic production capabilities while reducing trade barriers for essential building materials like distribution transformers. The price of distribution transformers has increased by 72% since the start of the pandemic with wait times often ranging from 12 months up to two years.
“NAHB stands ready to work with members of this committee and full Congress towards achieving thoughtful effective policies aimed at increasing supply while making both homeownership renting more affordable,” concluded Martinez.
