Eliminating Excessive Regulations Will Ease the Nation’s Housing Affordability Crisis

Excessive government regulations are frustrating the efforts of home builders and multifamily developers to build more housing and address the nation’s housing affordability crisis, the National Association of Home Builders (NAHB) told Congress today.

Testifying before the House Small Business Committee during a hearing focusing on deregulation, NAHB Chairman Buddy Hughes, a home builder and developer from Lexington, N.C., said that residential construction is one of the most heavily regulated industries in the country.

“Regulatory costs, which include complying with building codes, zoning issues, permitting roadblocks and other costly challenges, make up nearly 25% of the cost of building a single-family home and more than 40% of the cost of a typical apartment,” said Hughes. “Congress and the Trump administration must look for ways to reform the regulatory rulemaking process while also eliminating excessive or unnecessary regulations so that more Americans can achieve homeownership and have more affordable rental options.”

Amid a nationwide shortage of roughly 1.5 million housing units, NAHB has put together a 10-point housing plan to get at the heart of the problem by removing barriers that hinder the construction of new homes and apartments. At the top of the list is the need to eliminate excessive regulations and reform the regulatory process.

“The prospect of an improved regulatory climate where federal agencies are limited to regulations that follow the letter and spirit of the law and are tailored to meet the needs of small businesses can lead to more informed, less burdensome rules and unleash home builders to increase supply and address the nation’s housing affordability crisis,” said Hughes.

Increased regulations, especially energy building code requirements such as the Biden administration’s mandate by the U.S. Department of Housing and Urban Development (HUD) and the U.S. Department of Agriculture (USDA) that requires them to insure mortgages for new single-family homes only if they are built to the 2021 International Energy Conservation Code (IECC) and HUD-financed multifamily housing be built to 2021 IECC or ASHRAE 90.1-2019, are making it much harder for home builders and multifamily developers to build housing that is attainable and affordable for American families.

According to Home Innovation Research Labs, compliance with the 2021 IECC can add more than $22,000 to the price of a new home, but in practice, home builders have estimated increased costs of up to $31,000. Furthermore, it can take as long as 90 years for home owners to see a payback on this investment.

NAHB is urging Congress to introduce and pass legislation to fix this situation by preventing HUD and USDA from adopting a minimum energy standard that harms housing affordability.

“In these challenging economic times, the significant undersupply in housing coupled with rapidly increasing home prices clearly indicate the need to reduce the regulatory burden on the housing industry,” said Hughes. “NAHB stands ready to work with Congress to reform our broken regulatory rulemaking process, unburden and empower small businesses and make housing attainable for all Americans.”