NAHB Urges Congress to Act on Several Fronts to Ease Housing Affordability Crisis
Testifying at a Senate Finance Committee hearing on July 20 regarding the role of tax incentives in affordable housing, the National Association of Home Builders (NAHB) told Congress that the housing affordability crisis is far-reaching and will require action on several fronts, not just the tax arena.
“The housing affordability crisis is the result of failing to produce enough housing to match demand,” said NAHB Chairman Jerry Konter, a home builder and developer from Savannah, Ga. “If we are going to solve this crisis, we must drive down the cost to build as well as the cost to own or rent. Well-structured housing tax incentives can help us achieve this, but Congress needs to take broader action as well.”
Supply-side challenges including building material production bottlenecks, excessive regulations and labor shortages coupled with rising inflation and increased mortgage rates have exacerbated the housing affordability crisis by raising construction and home costs, particularly as they relate to the entry-level market.
“A year ago, nearly one-quarter of new homes were priced under $300,000. Today, it’s 10%,” said Konter.
Recent housing data indicate the affordability crisis is worsening, as the Commerce Department reported yesterday that single-family housing starts fell below a 1 million annual pace in June and registered the lowest production level in two years. The lackluster housing report is in line with NAHB’s latest Housing Market Index (HMI), which shows builder confidence in the single-family housing market plunged 12 points in July, the largest single-month drop in the history of the HMI, except for the 42-point drop in April 2020.