• Both presidential campaigns have discussed ideas for reducing housing costs.
• JD Vance says a Trump administration would build more housing in part by lowering energy costs.
• Economists say reducing costs for labor and building materials is much more important for home construction.

As rising housing prices and rents weigh on households across the country, presidential candidates are weighing in on the situation. housing shortage.

Former President Donald Trump does not rank housing among top 20 priorities on his campaign website, but he and his running mate argued that some of their main agenda items — including deporting millions of immigrants — would reduce housing costs.

With that in mind, Senator JD Vance recently promised that a future Trump administration would build millions of homes, in part by making energy cheaper. “We’re going to drill, baby, drill, reduce energy costs, and it’s going to make it easier to build houses,” he said during an October campaign stop in Nevada.

Housing policy experts and economists disagree, saying lower energy costs would not significantly boost construction or make housing less expensive.

The cost of new housing is largely determined by the availability of workers, prices of building materials and government regulations that limit construction. Other policies Trump has promised to enact — including raising tariffs on many foreign imports and deporting millions of immigrants — are expected to inflate housing costs by increasing the cost of materials keys and worsening the labor shortage.

A spokesperson for Vance did not immediately respond to a request for comment.

Construction materials and tariffs exceed the price of oil

Economists say falling electricity costs and diesel fuel prices would make some goods and services needed to build housing somewhat cheaper. But they would not reduce the costs of the most important construction-related inputs, namely labor and building materials.

“I’m not saying it’s unimportant,” Anirban Basu, chief economist for the construction industry trade group Associated Builders and Contractors, told Business Insider. “Energy prices are important, but they are not as important as many other inputs.”

Prices for major building materials, including lumber and structural steel, are much more substantial. “When softwood lumber prices spiked during the pandemic, it had a huge impact on apartment and single-family home construction,” Basu said.

Notably, under the Biden administration, the United States produced and exported more crude oil than ever in the country’s history, even as housing costs have soared.

Tariffs imposed by the Trump and Biden administrations on products like Canadian lumber aren’t helping, Andrew Justus, a housing policy analyst at the Niskanen Center, a nonpartisan think tank, told Business Insider. And Trump promised to significantly increase prices if he is elected.

“When you think about what specifically falls within the government’s remit, in terms of reducing housing construction costs, one of the simplest things they can do is reduce the extra tax they take from the most basic building materials,” Justus said. .

Labor costs and reducing red tape are also key

Labor costs generally increase as a share of overall construction costs, Basu said. This is largely the result of a national shortage of construction workersparticularly among skilled workers, and lagging productivity in industry. While labor productivity has improved in most sectors of the economy over the past half-century, construction productivity in the United States declined.

“If you look at a typical construction site, it doesn’t look that different from what it might have looked like five or six decades ago,” Basu said.

Vance has also said that Trump’s plan to deport millions of immigrants would reduce demand for housing and, therefore, slow the rise in housing prices and rents. But economists say immigration is not a major reason for rising housing costs and that a large share of construction workers are immigrants. Mass deportations would slow down housing construction and drive up prices.

“We simply don’t have the workforce we need in the construction industry, and any drastic reduction in our workforce would only make the situation worse,” said urban planner Nolan Gray and research director for California YIMBY, at Business Insider.

But the biggest barrier to improving housing affordability lies in local and state regulations. Land use planning laws that block denser forms of housing like duplexes or apartment buildings in favor of detached single-family homes make it more difficult to build cheaper housing.

“A lot of these suboptimal outcomes come from really bad zoning decisions that tend to favor rezoning properties, as opposed to embracing density,” Basu said.

The Trump campaign said it would remove regulations that hinder construction, with Vance saying it would “stop the ridiculous regulations that make it harder for our construction companies and workers to build homes” when stopping the campaign in Nevada.

But the campaign hasn’t released detailed plans — and when Trump was president, he pushed to protect single-family zoningwhich makes housing more expensive. And even though Vice President Kamala Harris has propose projects To encourage deregulation as part of its more explicit housing agenda, most land use and building regulations are controlled by state and local governments.