• In the United States, housing prices and rents have soared in part because of the housing shortage.
• There are four main obstacles to building more housing, according to an industry leader.
• These are the cost of land, the shortage of construction workers, regulations, and NIMBYism.

The United States suffers from a severe housing shortage, which exorbitant real estate prices And rents.

The laws of supply and demand explain it: the shortage of supply — estimates of which vary from 2.8 million households has more than 7 million houses – coupled with an uptick in demand in recent years, have sent prices are skyrocketing.

The head of the leading trade association and lobby for the homebuilding industry believes there are some major obstacles to solving this shortage. Jim Tobin, CEO of the National Association of Home Builders, blamed the housing shortage on the high cost of land, a shortage of qualified construction workers, burdensome government regulations and anti-development sentiment. my garden.

Land cost

The cost of land – one important part of the cost of a house – a has increased significantly in many places in recent years as its availability has fallen, exacerbated by the high demand for housing and restrictive land use laws which prohibit dense development.

At least 75% of residential neighborhoods In many major U.S. cities like Los Angeles, Seattle, and Chicago, zones are reserved exclusively for detached single-family homes. This means that as demand for housing increases, these communities cannot accommodate much additional housing. As demand exceeds the supply of land, prices rise.

“We’re hearing more and more that it’s harder to find affordable land to develop for housing,” Tobin said.

A shortage of labor

A national shortage of construction workers – estimated at around 500,000 workers this year — has also driven up the cost of building new housing and renovating existing homes, Tobin said, noting that skilled workers in residential construction are particularly scarce.

Fewer construction workers means less – and slower – residential construction and higher wages for workers, which in turn leads to higher real estate prices. The labor shortage has worsened as policymakers prioritized college over trades and a wave of experienced workers retired during the pandemic. industry experts said.

Lots of regulations

Tobin also emphasized that builders face a significant regulatory burden. Growing demand for housing in recent years has been met with a host of local, state and federal regulations — from restrictive single-family zoning to energy code requirements — that are slowing or killing residential construction in communities across the country , he said. When it comes to housing, state and local governments control the majority of regulations that most inflate housing costs by limiting or slowing construction, but federal regulations also play a role.

“These delays add up to higher costs and lower availability,” Tobin said. “We need all options on the table when it comes to increasing housing supply, and that means allowing greater density in suburbs or cities.”

A “NIMBY” opposition

Many of these restrictive regulations are reinforced by local opposition to new housing – epitomized by “NIMBY” or “Not in My Backyard” sentiment, Tobin said. Many local homeowners oppose new construction for the simple reason that adding housing to their community would lower the value of their homes, he argued.

“One of the challenges we have in localities across the country is people who already have theirs and don’t want anyone else to have theirs,” Tobin said. “We have local government officials who will not support more housing development because they are afraid of backlash from local voters.”

The future of housing

Tobin said the strength of the overall economy and interest rates will also play a major role in determining housing costs in the coming years. He expects mortgage rates to settle into a “new normal” of around 5% to 5.5% by 2026, lower than mortgage rates. current 30-year fixed rate of 6.79% but above the pre-pandemic average.

Looking ahead to next year, Tobin said he expects President-elect Donald Trump to have a mixed impact on housing costs. He is optimistic that Trump will roll back some federal regulations and opening federal lands for new housingbut he worries mass deportations potentially reducing the already scarce supply of workers, and new tariffs inflate the cost of construction materials.

Tobin said he plans to work with the Trump transition team, the new administration and Congress to advocate for tariff policies that do not result in increased construction costs. “I would certainly support an increase in domestic industry when it comes to building materials,” Tobin said, “but tariffs only work if that is the result.”