Manager in housing construction says there are 4 obstacles to more housing

• U.S. home prices and rents have risen in part due to a housing shortage.
• There are four key obstacles to building more homes, according to an industry leader.
• These are the cost of land, shortage of construction workers, regulations and NIMBYism.

The US is suffering from a deep housing shortage, driving home prices and rents skyrocketing.

The laws of supply and demand explain it: the supply shortage — estimates of which range 2.8 million homes to more than 7 million housing – along with an increase in demand in recent years has sent prices skyrocketing.

The head of the top trade association and lobby for the housing industry believes there are a few key hurdles to correcting that shortfall. Jim Tobin, executive director of the National Association of Home Builders, blamed the high cost of land, shortage of skilled construction workers, burdensome government regulations and anti-development “Not in My Backyard” sentiment for the housing shortage.

Costs of land

The cost of land — a significant part of the price of a home —have increased significantly in many places in recent years as availability has plummeted, exacerbated by high demand for housing and restrictive land use laws that prohibit dense development.

In any case 75% of residential areas in many major US cities such as Los Angeles, Seattle and Chicago are zoned exclusively for detached single-family homes. This means that as demand for housing increases, these communities cannot accommodate many additional homes. As demand overwhelms the supply of land, prices rise.

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

Labor shortage

A national shortage of construction workers — estimated at about 500,000 workers this year — has also driven up the cost of building new homes and renovating existing homes, Tobin said, noting that there is a particular shortage of skilled workers in residential construction.

Fewer construction workers means less – and slower – housing construction and higher wages for workers, which in turn leads to higher house prices. The labor shortage has increased as politicians have prioritized college over the trades and a wave of experienced workers retired during the pandemic, industry experts said.

Lots of rules

Tobin also pointed out that builders face a significant regulatory burden. Rising housing demand in recent years has run headlong into a web of local, state and federal regulations — from restrictive single-family zoning to energy code requirements — that are slowing or killing housing construction in communities across the country, he said. When it comes to housing, state and local governments check most rules that most inflate housing costs by limiting or slowing construction, but federal regulations also play a role.

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“All these delays add more cost and less availability,” Tobin said. “We need all options on the table when it comes to increasing housing supply, whether that means allowing more density in suburbs or cities.”

‘NIMBY’ opposition

Many of these restrictive regulations are underpinned by local opposition to new housing — the epitome of “NIMBY,” or “Not in my backyard,” Tobin said. Many local homeowners oppose new construction for the simple reason that additional housing in their community would lower their home values, he argued.

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

The future of housing

Tobin said the strength of the overall economy and interest rates will also play a big role in determining housing costs over the next few years. He expects mortgage rates to fall to a “new normal” of around 5 to 5.5% in 2026, which is lower than 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 effect on housing costs. He is optimistic that Trump will roll back some federal regulations and open up some federal land for new housing, but he worries that mass deportations will potentially shrink the already scarce supply of workers, and new tariffs that increase costs of building materials.

Tobin said he plans to work with Trump’s transition team, the new administration and Congress to advocate for tariff policies that don’t drive up construction costs. “I would certainly welcome an increase in the domestic industry when it comes to building materials,” Tobin said, “but tariffs only work if that’s the result.”