White House Report: U.S. Faces a Shortage of 10 Million Homes

(SeaPRwire) –   According to a new report released on Monday, White House economists estimate that the United States is facing a deficit of 10 million homes. They suggest that reducing regulations could stimulate more construction, which would in turn stabilize prices, boost homeownership, and foster more rapid economic growth.

This analysis, which is part of the Economic Report of the President, presents both a political challenge and a communication opportunity for President Donald Trump. His public approval ratings have declined due to concerns over his trade tariffs, the conflict with Iran, and his unfulfilled promises to lower inflation and accelerate economic expansion.

In March, President Trump signed two executive orders aimed at easing federal regulatory burdens on housing and making it simpler for smaller banks to offer mortgages. However, he has been slow to implement other measures that would signal housing affordability as a top priority for his administration.

The White House has been attempting to shift focus to housing and other affordability issues for several months in preparation for what is anticipated to be a difficult midterm election season for Republicans. However, their efforts have been sidetracked by a series of international events. For instance, a speech in January at the World Economic Forum in Davos, Switzerland, which was intended to focus on housing, devolved into a confrontation for Trump regarding control of Greenland.

Meanwhile, the conflict in Iran has contributed to an increase in the cost of purchasing homes, with the average interest rate for 30-year mortgages rising from just under 6% to 6.37%.

President Trump has also advocated for maintaining high home prices to protect the equity of existing homeowners. Earlier this year, he stated to his Cabinet, “I don’t want to drive housing prices down. 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 report outlines a strategy for housing

The housing section of the annual economic report, which The Associated Press obtained prior to its official release, details a plan for how increased home construction could benefit the middle class and the broader economy, providing President Trump with an argument to present to voters.

Compiled by staff at the White House Council of Economic Advisers, the report concludes that there would be 10 million more homes in the country if “homebuilding and the growth of the single-family housing stock had continued at their historical pace instead of falling dramatically” following the 2008 global financial crisis. That crisis was largely triggered by a surge in housing market defaults, where prices had been inflated by questionable lending practices.

The analysis points out that home prices have increased by 82% since 2000, while incomes have only risen by 12%. This disparity was temporarily obscured by historically low mortgage rates. However, when rates climbed along with inflation in the post-pandemic period, monthly mortgage payments also increased for buyers, making homeownership—a symbol of middle-class status—a primary concern for voters under 40.

The White House asserts that the executive orders issued in March, along with plans to purchase mortgage-backed securities, demonstrate the president’s commitment to addressing housing issues.

The report contends that various regulations on home construction, which it labels the “bureaucrat tax,” add over $100,000 to the cost of building. This cost encompasses changes to building codes over the past decade, compliance expenses, and zoning approval fees, among other expenditures.

According to the report’s projections, a reduction in these regulatory costs could help stimulate the construction of as many as 13.2 million homes. This could potentially boost annual economic growth by an average of 1.3 percentage points over the next decade and support 2 million jobs in manufacturing and construction, the report argues.

An administration official, speaking anonymously to discuss the report before its release, indicated that President Trump might consider making federal funding to state and local governments conditional on the reduction of certain regulations.

The report also criticizes the green energy housing standards implemented during the Biden administration, identifying them as a factor contributing to increased construction costs. These standards favored more energy-efficient air conditioning units and water heaters, as well as higher specifications for associated ductwork.

However, eliminating some of these requirements could lead to higher long-term costs for homeowners, such as increased utility bills.

The report references a 2021 analysis by the National Association of Home Builders, which suggests that these standards could add up to $31,000 to the price of a new home, with a homebuyer potentially taking as long as 90 years to recoup the added cost of the home.

The extent of savings that would result from rolling back Biden-era housing standards remains unclear due to ongoing legal challenges regarding their enforcement and variations in state practices. In March, a federal judge in Texas sided with 15 Republican-led states that argued the standards for federally backed housing were unlawful.