The National Association of Home Builders (NAHB) has urged Congress to implement policies aimed at addressing supply-side challenges, which are the primary factors contributing to low housing supply and high home prices. This was stated during a testimony before the House Financial Services Subcommittee on Housing and Insurance.
NAHB Chairman Buddy Hughes, a home builder from Lexington, North Carolina, emphasized the severity of the housing affordability crisis in the United States. He noted that "nearly 77% of U.S. households cannot afford a median-priced new home." A significant shortage of over 1.5 million housing units and rising construction costs are key contributors to this issue, making it difficult for builders to produce affordable housing.
Hughes identified five major obstacles affecting builders, referred to as the “5 Ls”: lending, labor, lumber, lots, and laws. Each of these factors plays a role in increasing the cost of new homes.
Credit for development and construction loans is becoming more restricted. Additionally, there is a persistent labor shortage in the construction sector with over 200,000 unfilled jobs. Construction material costs have increased by 34% since December 2020 due to supply chain disruptions. Furthermore, tighter land use and zoning regulations have led to low lot supplies.
Regulatory costs significantly impact new home prices—accounting for about a quarter of the purchase price for single-family homes—and pose challenges for building entry-level housing.
To address these issues, Hughes called on Congress to take several actions:
- Preserve key federal programs like the Low-Income Housing Tax Credit and HUD's Section 8 voucher programs.
- Support workforce development initiatives such as Job Corps.
- Increase domestic lumber supply and negotiate an agreement with Canada regarding lumber tariffs.
- Pass legislation to reduce regulatory barriers like minimum lot size requirements.
- Reassert congressional authority over federal rulemaking agendas and amend energy standards related laws.
These steps aim to alleviate pressures on builders and improve housing affordability nationwide.
