As the discourse surrounding housing affordability heats up in the United States, President-elect Donald Trump has articulated his vision for addressing this pressing issue. His commitment to increasing the availability of affordable housing was underscored during an August 15 news conference, where he remarked on the urgent need for new construction: “We desperately need housing for people who can’t afford what’s going on now.” This sentiment reflects a growing national crisis; as reported by the National Association of Realtors, the U.S. currently faces a staggering shortage of approximately 4 million homes.
Trump’s intentions echo the thoughts of many industry experts, such as Jim Tobin, the president and CEO of the National Association of Home Builders (NAHB), who stated, “It’s clear that the prescription for that crisis is more building.” While there has been a slight uptick in new home construction this year, experts contend that these efforts fall short of addressing the overwhelming demand. Data from the U.S. Census shows that singles-family housing starts have risen modestly to 1,027,000 as of September, marking a 2.7% increase from the previous month. However, this growth is merely a drop in the bucket compared to what is needed.
While the idea of ramping up construction appears straightforward, a multitude of factors complicate Trump’s approach. His various commitments—such as mass deportation of immigrants and substantial regulatory rollbacks—could inadvertently undermine any progress toward making housing more affordable. According to Jacob Channel, a senior economist at LendingTree, the construction industry heavily relies on immigrant labor. A drastic reduction of this labor force could lead to increased construction costs, thereby exacerbating the very crisis Trump aims to resolve.
Furthermore, Trump’s assertion that he could manipulate mortgage rates back to levels seen during the pandemic raises eyebrows. Economists have noted that presidents do not possess the direct levers to control mortgage rates, adding another layer of skepticism to Trump’s promises.
One notable policy put forward by Trump is his executive order geared toward dismantling regulatory barriers to affordable housing. This aligns with his campaign messaging on slashing regulations that inflate building costs. Dennis Shea, executive director of the Bipartisan Policy Center’s Terwilliger Center, has suggested that this order could serve as a blueprint for future initiatives. Indeed, experts identify that roughly 24% of costs associated with single-family homes and about 41% for multifamily homes stem from regulatory burdens at various levels.
Experts like Tobin argue that if regulatory challenges can be minimized, prices could come down significantly for buyers, stating, “If we reduce the regulatory burden on home construction or apartment construction, we’re going to lower costs [for] the consumer.” Yet, it’s crucial to consider that while simplifying the regulatory framework could enhance affordability, it may also risk instigating challenges like reduced oversight on construction practices.
Trump has pointed to illegal immigration as a primary driver of rising home prices—a claim challenged by experts who emphasize that undocumented immigrants generally do not own homes but rather rent them from U.S. citizens. If a mass deportation occurred, it’s suggested that affected homes would remain occupied, thus failing to alleviate price pressures in the market. However, proposals focused on stringent border control might restrict immigrant labor, which is fundamental for the construction sector. The NAHB estimates that about one-third of construction workers in the U.S. are immigrants, which, if disrupted, threatens to instigate significant labor shortages.
Adding complexity to Trump’s housing agenda is his proposed blanket tariff of 10% to 20% on all imports, alongside steep tariffs on goods from China. Such tariffs could inflate the cost of raw materials essential for construction. Analysts argue that any rise in procurement costs would likely be passed on to consumers, further straining home affordability. The average construction cost for a single-family home is already around $392,241—an investment that would only become more burdensome under these proposed tariffs.
Though homebuilders project plans to construct 1.2 million new single-family homes and around 300,000 multifamily units within the next year, these figures remain inadequate. Experts suggest that the construction pace is not yet on a trajectory to meet the burgeoning demand.
The ultimate question remains: how effectively will the Trump administration prioritize efforts to address housing affordability? Analysts suggest that while some of Trump’s plans may yield benefits, the ripple effects of his broader policies—including immigration and trade—could prove detrimental. As the nation grapples with a housing crisis that disproportionately affects densely populated urban areas, the proposed federal land releases for new homes may not suffice in delivering the comprehensive relief needed. The intersection of housing policies, immigration, and trade presents a complicated puzzle that the incoming administration must navigate thoughtfully if it hopes to truly make housing accessible for all Americans.