How big is the US housing shortage? 10 million homes

U.S. Housing Shortage Reaches 10 Million, White House Economists Report

White House economists have determined that the United States faces a shortage of 10 million houses, according to a new report released Monday. The analysis suggests that regulatory cuts could stimulate construction, stabilize prices, increase home ownership, and drive faster economic growth.

The findings, included in the Economic Report of the President, come at a challenging time for President Donald Trump, whose approval ratings have declined amid concerns about his tariffs, the ongoing Iran conflict, and unfulfilled promises regarding inflation reduction and economic growth.

In March, Trump signed two executive orders directing federal agencies to reduce housing regulatory burdens and simplify mortgage access for smaller banks. However, critics note the administration has been slow to implement additional measures that would demonstrate housing affordability is a top priority.

The White House has attempted to focus on housing and affordability issues for months in preparation for what political analysts expect will be a difficult midterm election season for Republicans. These efforts have been repeatedly sidetracked by global issues. Even a January speech at the World Economic Forum in Davos, initially planned to address housing, instead became dominated by discussions about control of Greenland.

Compounding the housing crisis, the Iran war has driven up home buying costs, with average 30-year mortgage rates rising from just under 6% to 6.37%. Trump’s public messaging on housing has sometimes appeared contradictory, as he told his Cabinet earlier this year, “I don’t want to drive housing prices down. I want to drive housing prices up for people that own their homes, and they can be assured that’s what’s going to happen.”

The economic report, prepared by the White House Council of Economic Advisers, argues that the country would have 10 million more houses if “homebuilding and the growth of the single-family housing stock had continued at their historical pace instead of falling dramatically” following the 2008 global financial crisis. That crisis, largely triggered by mortgage defaults, led to a significant pullback in residential construction that has yet to fully recover.

The analysis highlights a growing affordability gap: home prices have surged 82% since 2000, while incomes increased just 12%. This disparity was temporarily masked by historically low mortgage rates, but when rates jumped due to post-pandemic inflation, monthly housing costs rose dramatically. Affording a home, long considered a cornerstone of middle-class status, has become a primary concern for voters under 40.

The report identifies various construction regulations, which it terms “the bureaucrat tax,” as adding more than $100,000 to building costs. These expenses include changing building codes over the past decade, compliance costs, and zoning approval fees. The analysis estimates that reducing these regulatory burdens could potentially stimulate construction of up to 13.2 million homes, adding approximately 1.3 percentage points to annual economic growth over the next decade while supporting 2 million manufacturing and construction jobs.

According to an administration official speaking on condition of anonymity, the president could decide to make federal funding to state and local governments contingent on reducing some of these regulations.

The report specifically criticizes green energy housing standards implemented during the Biden administration as a factor in increasing construction costs. These standards established preferences for more efficient air conditioning units and water heaters, along with higher standards for ductwork. However, critics of this position argue that removing such requirements could increase long-term homeowner costs through higher utility bills.

The White House cites a 2021 analysis by the National Association of Home Builders claiming these standards could add up to $31,000 to new home prices, with potential homebuyers needing “up to 90 years to realize a payback on the added cost of the home.”

The actual savings from rolling back Biden-era housing standards remains uncertain due to ongoing legal challenges regarding their enforcement and varying practices across states. In March, a federal judge in Texas sided with 15 Republican-led states that argued the standards for federally backed housing were unlawful.

As housing affordability continues to impact millions of Americans, the administration’s approach to balancing regulatory reform, construction incentives, and environmental standards will likely remain a critical economic and political issue.