Builders Association Urges White House to Take Action Over Housing Costs

The National Association of Home Buildings wants to mount popular political pressure on the White House to do something about “issues threatening the housing industry,” as the text of its open letter seeking co-signers notes.

“On behalf of the 140,000 members of the National Association of Home Builders (NAHB), we are writing to urge the White House to take immediate action as the housing market is reaching an inflection point that threatens to derail the current housing and economic expansion,” the organization wrote.

The letter mentions a few: rising interest rates, skyrocketing home prices and rents, and escalating materials costs. Heaven knows there is true pain in the housing construction industry. The construction PPI, or producer price index—which measures the year-over-year growth of prices paid by the industry for goods and services—sits at outrageous levels announced last week. Inputs to multifamily residential construction, excluding capital investment, labor, and imports, were up 20.1%. For single family homes, the increase was 20.4%.

“While the price growth in March represents a deceleration from the June 2021 peak, builders continue to face inflationary and supply chain headwinds. Inflation of building materials costs remains high, forcing builders to pass on rising costs in the form of higher prices,” at the time said First American senior commercial real estate economist Xander Snyder in prepared remarks.

The 30-year mortgage rate is above 5% for the first time in a decade. Even with low inventory, such rates combined with supply chain disruptions, the NAHB argues, “have significantly decreased housing affordability conditions, particularly for entry-level buyers and renters.”

The organization’s suggested solution to the Biden administration is three-pronged. The first is the reduction of “burdensome regulations that account for nearly 25% of the price of building a single-family home and more than 30% of the cost of a typical multifamily development.”

The second, suspend tariffs on imported Canadian softwood lumber “and to move quickly to enter into negotiations with Canada to pursue a new, long-term softwood lumber agreement.” The third, seek “immediate remedies to lumber and building material supply chain bottlenecks.”

Finding solutions is not only important for the industry, but for society. Increasing millions feel a housing squeeze and face the tradeoffs of what they can spend on basics while affording a place to live.

Unfortunately, these requests are likely nowhere near enough. While there are regulations that make construction more difficult, like local zoning, one group’s burdensome regulations may also be another larger portion of the country’s demands for control over construction standards and impacts on communities. In addition, many of the regulations are local, not national, and would require an act of a Congress that is short on intra-cameral cooperation.

Getting a new trade deal with Canada would be challenging given a 40-year-old trade dispute that doesn’t seem a candidate for quick resolution, as Marketplace notes. Even if it was, a massively destructive beetle infestation, increased wildfires, and that major storm in British Columbia that broke needed rail distribution would still drive prices up.

As for eliminating supply chain bottlenecks, it seems unlikely that a presidential fiat would do anything. Supply chain issues across all industries are something experts in the field have been warning for two decades that could crack under the right set of conditions. They did and it could take years for the fundamental changes that are needed.

It is a crisis, and raising an alarm is necessary. However, the solution unfortunately is beyond a  quick fix.