The White House's annual Economic Report of the President estimates a housing deficit of 10 million single-family homes in the U.S., a figure higher than most contemporary estimates but disputed by economists and industry insiders. The report, drafted by the White House Council of Economic Advisors, argues that construction lagged significantly after the 2008 global financial crisis, preventing the housing stock from keeping pace with historical growth. It outlines a strategy to expand housing supply through regulatory reform, aiming to increase affordability and stabilize prices by stimulating construction, particularly in high-cost markets.
The report claims that excessive government regulations, dubbed the "bureaucrat tax," add over $100,000 to the cost of building each single-family home. These costs include changing building codes, compliance expenses, and zoning approval fees. By reducing these regulatory burdens, the report estimates that as many as 13.2 million new homes could be spurred, potentially adding an average of 1.3 percentage points to annual economic growth over the next decade and supporting 2 million manufacturing and construction jobs. The report specifically criticizes green energy housing standards introduced during the Biden administration, citing a 2021 analysis that these standards could add up to $31,000 to a home's price, with a payback period for homeowners potentially extending to 90 years.
While the White House report primarily points to overregulation as the main cause, other factors contributing to the housing shortage include labor shortages, land constraints, and rising building material and borrowing costs, as highlighted by a report from the Federal Reserve Bank of St. Louis. These issues can delay or halt approved residential projects, and homebuilders face a dilemma where increasing starts too much could further compress already tight profit margins due to high construction costs and declining new-home prices in some markets. Despite an uptick in permits since the Great Recession, total permits per capita in 2024 (4.3 per 1,000) remain 35% below the 1960-2000 average of 6.6 per 1,000, and the homeowner vacancy rate in 2024 was a historically low 0.95%.
The White House's proposed blueprint involves streamlining residential construction and potentially tying federal funding to state and local governments to a reduction in regulatory burdens. This approach aims to address the mismatch where home prices have risen 82% since 2000, while incomes are up only 12%. The report serves as a political and messaging opportunity for the current administration, offering a plan to address high housing costs, which have become a major concern for voters, especially after mortgage rates jumped, making homeownership less attainable.
