The high cost of housing emerged as an issue on the presidential campaign trail last fall. Could some of the campaign promises made by President-elect Donald Trump on immigration and tariffs spell headwinds for new home construction?
The National Association of Home Builders (NAHB) estimates that the U.S. is short about 1.5 million homes, which along with persistently elevated mortgage rates is keeping housing costs high. Ken Wingert, NAHB’s chief advocacy officer, spoke to Scotsman Guide about the incoming administration’s agenda and what it could mean for the homebuilding industry.
There’s been a need for more construction workers for years. Any idea how many are needed?
Overall, we figure that we’re between (200,000 to 400,000 skilled workers short at any given time.) When you think about what goes into building a house, it’s dozens of different trades. We, as a country, have under-invested in workforce development. That’s something our association and members have really focused on, trying to get more kids interested in the trades.
One of the Trump administration signature plans is mass deportations. Is that a cause of concern for the construction industry?
It is a concern. If you look at the existing construction workforce, we estimate about 30% of that is foreign born. We don’t have any numbers on how many of those folks are here legally versus otherwise, but anytime you’re decreasing the labor pool or putting a chill on folks showing up to the job site, that’s going to cause an impact.
We would like to see a comprehensive immigration reform package through Congress. That’s something we’ve focused on for a long time, but we’re going to wait and see how exactly the administration decides to carry out some of the stuff that the president-elect talked about in the campaign.
Are builders concerned about what tariffs could do for lumber and other building supplies?
The Canadian lumber tariffs dating back to 2020 really had a pile-on effect to some of the other supply chain disruptions that happened during COVID. Those tariffs are still in place. Much like labor, anything that increases the cost of construction is going to make it harder to build. It’s going to slow down our aim at getting more supply into the market.
What types of deregulations could spur more homebuilding?
Building codes have traditionally been a local issue and the Biden administration chose to try to nationalize that, especially when it comes to energy efficiency. We want to build sustainable homes that are energy efficient, but some of the requirements are a little bit over the top.
If you think about the various environmental regulations — water regulation, Endangered Species Act — those can slow down the permitting process for new development. Labor would be kind of the third bucket at the federal level. Anything that restricts construction is going to keep costs high and, as the population grows, really put the squeeze even more on housing affordability.
What could a new administration do about labor?
The current administration has been focused on prevailing wage rules around the costs of things tied to federal contracts. Those tend to trickle down to the local level.
There was a rule proposed around what’s called the heat standard in terms of what was allowable for workers to be out in the elements, and specifically in the heat, working. Construction tends to happen in the summer. We felt some of those rules, while well intentioned, were not well executed.
What one thing would you advise the new administration to do to lower home costs and increase inventory?
The regulatory approach is the easiest first bite at the apple. It’s a hard question because there is no one thing that’s gotten us to this point. It’s been regulatory policies, tax policies, workforce development or lack thereof. There is no one magic bullet, especially at the federal level.
Something the president’s been focused on has been overall government efficiency and where can we ease regulations, speed up approval times and really encourage more folks to get into the construction workforce.
What else should I have asked you?
The overall noise in the first three months is going to be around the tax issue. All of the 2017 tax cuts that were passed during the last Trump administration are set to expire at the end of 2025 and that’s going to affect every individual, every business across the country unless Congress does something.
Now, that we have a Republican trifecta (with the White House, Senate and House), they’re going to move on a tax bill first and that’s going to have a lot of implications for real estate, whether that’s overall business tax rates and deductibility to programs like the Low-Income Housing Tax Credit and other tax benefits that really do help spur construction and, in some cases, homeownership.
