The Trump administration wants to improve housing affordability and availability, as emphasized by an executive order signed by the president on his first day back in office. The order called upon the heads of all executive departments and agencies “to deliver emergency price relief, consistent with applicable law, to the American people.”
Across the housing industry, it is widely acknowledged that there is not much the federal government can do to bring down housing costs, as many of the regulatory burdens that exist are on the state and local levels. But trade groups are getting creative in coming up with possible solutions that are within the scope of the federal government.
While the Mortgage Bankers Association (MBA) is vocally advocating for a “reasonable reduction” in mortgage insurance premiums on Federal Housing Administration (FHA) loans, the National Association of Home Builders (NAHB) is now pushing for a reduction in permitting requirements, which it argues drives up housing costs.
Data published in 2021 by the NAHB found that regulatory costs at the federal, state and local levels accounted for 24% of the final sales price of a new single-family home. Additionally, the trade group reported in 2024 that various upfront costs — including building permits, impact fees, water and sewer fees, and architecture and engineering approvals — made up 7.6% of the cost of constructing a home. Since 1998, building permit fees have doubled from 0.9% to 1.8% of total construction costs.
The average newly constructed single-family home had a sales price of $665,298 last year. The trade group said this is the highest average sales price in the survey’s history, without accounting for inflation.
“The permits and things are actually not a huge fraction of the overall cost of building a home, but the zoning and the regulations do make it prohibitive to build in some places, which contributes to the overall housing inventory crisis,” said Chen Zhao, the head of economics research at Redfin.
“It is pretty straightforward. If we bring down the regulatory burden for building, that should obviously increase the housing supply, which would bring down prices.”
Although most of the permitting and regulatory requirements are at the local or state level, the NAHB believes there are some meaningful changes the federal government could make to drive down the permitting burdens faced by builders and buyers of new homes.
In prepared testimony given this week to the Senate Environment and Public Works Committee, NAHB Chairman Carl Harris said that “most land developers have been forced to step away from particular parcels of land due to the uncertainty of being able to obtain the necessary permits.”
According to Harris, one of the biggest permitting roadblocks is the Clean Water Act. He said the law can be unclear about which parts of a land parcel may be considered “waters of the United States” (WOTUS), which requires a federal wetland permit before building can begin.
“Obtaining a CWA Section 404 permit takes upwards of one year, and completing an Endangered Species Act (ESA) consultation when required can take several more,” Harris said. “When considering these implications, it’s clear why we need to make the unwieldy permitting process more straightforward for home builders.”
The NAHB said it feels that the Environmental Protection Agency (EPA) and the Army Corps of Engineers have “blatantly overstepped their federal authority regarding the jurisdictional waters of the U.S.”
Due to this, the NAHB is asking Congress to ensure that the agencies respond to requests about CWA Section 404 permits in a timely manner. It is also asking for assurance that regulatory changes to the definition of WOTUS do not invalidate prior approved jurisdictional determinations.
Additionally, the NAHB is asking that the U.S. Fish and Wildlife Service or the National Oceanic and Atmospheric Administration (NOAA) act faster when builders contact them about a project that potentially impacts endangered species.
“This process usually results in permitting delays, project reconfiguration, and possibly the loss of buildable lots,” the NAHB said in a statement.
The strain that building permit delays puts on builders — as well as homeowners and prospective buyers — has been top of mind lately for many due to the wildfires in Los Angeles. But, as illustrated by the experiences of those looking to rebuild in LA, much of the regulatory burden is at the local level.
In January, LA Mayor Karen Bass issued an executive order that directed city agencies to expedite the building permit process in wildfire-affected areas by having discretionary review procedures waived, with a goal of getting permit approvals within 30 days. According to permit management software firm PermitFlow, it typically takes two to six months to obtain a permit for a large construction project in LA.
In inventory-strapped New Hampshire, even as the governor has yet to issue any executive orders on the matter, there are some state-led initiatives focused on reducing the barriers to new construction.
Under one InvestNH Housing program, municipalities receive $10,000 per unit to quickly issue permits for multifamily projects. Another program helps communities and developers pay for the costs to renovate or tear down dilapidated structures and replace them with housing.
Unfortunately for those looking to make a difference at the federal level through the Trump administration’s executive order, solutions such as these are not the answer. But Zhao does see a way that the federal government could push forward some initiatives at the state and local levels.
“I think the federal government could try to lean on local governments or create incentives for local governments to allow denser housing,” Zhao said. “I think that could make a huge difference in our coastal metro areas where we are seeing the greatest housing shortages.”
Despite the challenges, the NAHB is determined to push forward with these reforms.
“Enacting common sense regulatory reforms that will make compliance more efficient and less onerous will help home builders to better safeguard the environment and expand the availability of attainable, affordable housing for all Americans,” Harris said.
