Homebuilder association push back on federal rules that add to construction costs and delay projects
The National Association of Home Builders (NAHB) is calling on Congress to roll back costly and excessive regulations that it says are making homes and apartments less affordable for Americans.
Testifying before the House Small Business Committee this week, NAHB chairman Buddy Hughes, a home builder and developer from Lexington, North Carolina, said that regulatory costs are one of the biggest barriers to addressing the nation’s ongoing housing shortage.
“Regulatory costs, which include complying with building codes, zoning issues, permitting roadblocks and other costly challenges, make up nearly 25% of the cost of building a single-family home and more than 40% of the cost of a typical apartment,” Hughes told lawmakers.
In a market already short more than 1.5 million housing units, Hughes said those extra expenses are keeping homes out of reach for many Americans, and stalling progress in fixing the country’s housing crisis.
One of NAHB’s biggest concerns is a federal mandate that ties mortgage insurance to strict new building codes.
New requirements from the Department of Housing and Urban Development (HUD) and the US Department of Agriculture (USDA) mandate that federally insured mortgages can only be used for new single-family homes built to the 2021 International Energy Conservation Code (IECC). For HUD-financed multifamily buildings, the minimum standard is either the 2021 IECC or ASHRAE 90.1-2019.
According to Home Innovation Research Labs, following the 2021 IECC adds more than $22,000 to the price of a new home. Some builders have pegged the real-world cost closer to $31,000.
NAHB said the return on that investment just doesn’t make sense for most buyers, as it can take as long as 90 years for homeowners to see a payback on this investment.
The US is short by an estimated 1.5 million housing units, according to NAHB. In response, the organization has proposed a 10-point housing plan to address the crisis, with the elimination of excessive regulations listed as a top priority.
“The prospect of an improved regulatory climate where federal agencies are limited to regulations that follow the letter and spirit of the law and are tailored to meet the needs of small businesses can lead to more informed, less burdensome rules and unleash home builders to increase supply and address the nation’s housing affordability crisis,” Hughes said in a statement.
The organization is backing legislation that would prevent HUD and USDA from enforcing the current energy code requirement, a change Hughes believes could reduce building costs and improve affordability.
Read next: HUD delays manufactured home construction rule changes
While the federal government has rolled out various incentives to improve housing affordability, Hughes told lawmakers that regulatory relief may be the most effective and immediate solution.
“In these challenging economic times, the significant undersupply in housing coupled with rapidly increasing home prices clearly indicate the need to reduce the regulatory burden on the housing industry,” Hughes said. “NAHB stands ready to work with Congress to reform our broken regulatory rulemaking process, unburden and empower small businesses and make housing attainable for all Americans.”
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