After officially taking office earlier this week, President Donald Trump ordered “emergency price relief” for Americans on housing costs and other living expenses.
“Many Americans are unable to purchase homes due to historically high prices, in part due to regulatory requirements that alone account for 25 percent of the cost of constructing a new home according to recent analysis,” an executive action signed by Trump on Monday read.
However, the executive action offers few specifics about how the administration plans to lower home costs. Cutting federal regulations may provide some cost savings, but many regulations are enforced by state and local governments – outside the federal government’s purview.
Plus, slashing regulations may not be enough to offset some of the Trump administration’s other expected economic policies, like tariffs and deportations, which could add to the cost of building new homes.
The “recent analysis” cited by Trump’s executive action echoes data from the National Association of Homebuilders released in May 2021, less than four months after Trump left office for the first time. The study found that regulations imposed by all levels of government at the time accounted for $93,870, or 23.8%, of the then-average sales price of a new single-family home, $397,300. The median sales price for a new home for sale in November 2024, the latest data available, was $402,600, according to the US Census Bureau.
A separate NAHB study published in 2022 found that regulations increased the development costs of building multifamily housing by about 40.6%. (The NAHB has lobbied against what it calls expensive regulations around building homes.)
Jim Tobin, the CEO of the NAHB, said that although many land use decisions are made by local governments, easing federal restrictions would help lower construction costs for homebuilders.
“(Federal regulations) are one of the biggest headaches facing our builders,” said Tobin. “It really impedes our ability to build more housing affordably, especially at that low end of the market.”
Trump’s executive action comes amid a growing need for affordable housing. However, regulations are not the only reason homes have gotten so expensive.
Many experts say the US needs to build millions of homes to properly meet increased demand, spurred in part by a growing number of millennials, the largest generation, reaching the age at which they would like to buy a home.
That housing shortage, along with elevated interest rates, has made purchasing a home significantly more difficult for many Americans.
The standard 30-year fixed mortgage rate was just below 2.8% when Trump left office in January 2021 during the Covid-19 pandemic. Last week, it was 7.04%.
The rise in borrowing costs can be partially attributed to the Federal Reserve’s recent interest rate hike campaign to tame a historic bout of inflation. Though Trump promised to bring down interest rates on the campaign trail, the president does not directly impact monetary policy, and the Fed many not cut interest rates again for a few months.
Closing costs, the fees owed on the day when a home purchase is finalized, have also added to the expenses homebuyers must pay before officially owning a new home. The median cost of a loan paid by homebuyers – including origination fees, appraisal and credit report fees, and title insurance – was about $6,000 in 2022, a nearly 22% increase from 2021, according to a report from the Consumer Financial Protection Bureau.
The Biden administration had cracked down on so-called “junk fees” hidden in closing costs, though it is unclear whether the Trump administration will continue that effort.
Tariffs and deportations could hurt cost-cutting efforts
Despite Trump’s executive action seeking to lower the cost of building new homes, many of his administration’s planned economic policies may have the opposite effect.
On Monday, Trump said he plans to move forward with an across-the-board tariff of 25% on Mexican and Canadian goods on February 1, but many homebuilders use lumber from Canada when building new homes. Without an exception for those imports, a 25% tariff on Canada would make the cost of building a home significantly more expensive, multiple homebuilders told .
“I’ve been in this business since 1988, and I’ve never had a problem getting lumber, but if the price of lumber goes up, we have to pass that along to the customer,” said Gary Franke, who owns a home framing construction business in Southern California. “We can’t sustain that, so we’d pass it along.”
Mass deportations could also make construction labor costs more expensive, NAHB’s Tobin said.
“We do not have enough trained new workers in the domestic workforce, so we have to go over our borders to attract that labor,” he said. “We’re going to be mindful of how construction labor from the immigrant pool is affected by what the president is doing.”
“While tariffs may go up on one side, if we lower the regulatory burden on the other side, a lot of these things could be a wash,” he added. “We will need to look at everything holistically as we move through the next four years.”
