Jamie Spencer
In a bid to tackle America’s housing affordability crisis, President-elect Donald Trump has set his sights on expanding housing stock through increased construction. During an August 15 press conference, Trump revealed his plan to open federal lands for new housing, aiming to mitigate the high costs affecting millions of Americans. “We’re going to open up tracks of federal land for housing construction,” Trump declared, emphasizing the urgency of the housing crisis. Currently, the U.S. faces a shortage of 4 million homes, according to the National Association of Realtors, driving the need for bold initiatives.
Boosting Affordability with Deregulation
Trump’s plans include reducing the regulatory barriers that can inflate housing costs, building on a previous initiative from his first term. In 2020, he signed an executive order, Eliminating Regulatory Barriers to Affordable Housing: Federal, State, Local and Tribal Opportunities. Experts view this as a potential blueprint for his new administration’s approach. “We will eliminate regulations that drive up housing costs with the goal of cutting the cost of a new home in half,” Trump said in a recent speech at the Economic Club of New York.
Regulations currently account for 24% of single-family home costs and about 41% of multifamily housing costs, noted Jim Tobin, President of the National Association of Home Builders. “If we reduce the regulatory burden on home construction or apartment construction, we’re going to lower costs [for] the consumer,” Tobin said, highlighting the positive impact deregulation could have on housing affordability.
Labor Challenges in Home Construction
While increasing the housing supply may address affordability, Trump’s proposed immigration policies could have the opposite effect. The construction industry relies heavily on immigrant labor, with around 31% of U.S. construction workers being immigrants, according to the NAHB. Any disruptions, such as potential mass deportations, could hinder workforce availability and drive up construction costs.
“Anything that threatens to disrupt the flow of immigrant labor will send shock waves to the labor market in home construction,” Tobin warned. Recruiting native-born workers has proven challenging, with only 3% of young American adults expressing interest in construction trades, according to a 2017 NAHB survey. Should immigrant labor be restricted, the labor shortage could force wage increases, which would likely translate to higher home prices for consumers.
Tariffs and Rising Building Costs
Trump’s proposed tariffs—ranging from 10% to 20% on imports and potentially up to 100% on goods from China—pose another challenge to the housing sector. A blanket tariff on essential building materials, such as lumber and metals, could increase construction costs, which currently average $392,241 for a single-family home, according to ResiClub. “Any tariffs that raise the cost of the products are going to flow directly to the consumer,” Tobin said.
Chief Economist Daryl Fairweather of Redfin cautioned that while the full effects of tariffs depend on their specifics, any increase in raw material costs will ultimately impact housing affordability. Builders are expected to construct around 1.2 million single-family homes and 300,000 multifamily units next year, a rate that falls short of the nation’s growing demand.
Federal Land Use and Urban Housing Challenges
Trump’s plan to open federal lands for housing construction could help increase housing stock, but experts warn that this solution may not benefit densely populated urban areas where housing is most needed. Daryl Fairweather pointed out that federal lands are generally located in rural regions, meaning this initiative may not alleviate housing shortages in “densely populated blue cities that really need the most help.”
Balancing Housing Priorities in a Shifting Market
While Trump’s proposed strategies address critical issues in housing affordability, experts remain cautious about the potential ripple effects of his broader policies. Measures such as deregulation and federal land use may increase housing availability, but immigration restrictions and tariffs could drive up building costs, ultimately impacting affordability.
President-elect Trump’s approach to the housing crisis centers on boosting construction and reducing costs, with strategies aimed at breaking down regulatory barriers and opening up new land for development. However, other policies—like immigration restrictions and import tariffs—pose challenges that could impact the affordability gains he seeks to achieve. As the administration shapes its housing policy, balancing affordability with the economic realities of labor and material costs will be key to addressing America’s housing needs effectively.
