Executive order embraces limited government approach to housing affordability

A March 13 Trump executive order, “Removing Regulatory Barriers to Affordable Home Construction,” offers a number of good ideas for addressing high housing costs. It acknowledges that “layers of unnecessary regulatory barriers, slow permitting processes, and onerous mandates at all levels of government have delayed construction, restricted development, and driven up the costs of new housing,” and seeks “to reduce regulatory barriers to building homes and to steward taxpayer dollars in a manner that promotes housing affordability.” This deregulatory approach is a very promising one – and a welcome contrast to Senate legislative efforts that mostly go in the opposite direction and expand the already bloated and intrusive federal housing bureaucracy.

The executive order recognizes the role of costly and lengthy permitting delays under federal statutes such as the Clean Water Act, National Environmental Policy Act, and National Historic Preservation Act. Home builders have long complained, with good cause, that these statutes often make the approval of new housing projects considerably more expensive, in some cases prohibitively so. This executive order instructs the relevant agencies – including the Environmental Protection Agency, Army Corps of Engineers, Council on Environmental Quality, and Advisory Council on Historic Preservation – to expedite the permitting process as much as the law allows, both for the housing projects themselves as well as for roads and other infrastructure projects needed for new housing.

In addition, the executive order targets expensive building code provisions that became fashionable under the Biden administration and its prioritization of climate change over affordable housing. This includes a 2024 Department of Housing and Urban Development (HUD) requirement that new homes qualifying for federally-backed mortgages must comply with green energy efficiency standards that even HUD admitted would add $2,800 to $6,800 to the price of a new home and reduce new construction by 1.5 percent. It also takes on other ill-advised energy use mandates, including Department of Energy efficiency standards for manufactured housing.

On the same day as the executive order, the Senate took a very different approach to housing policy when it passed the 21st Century ROAD to Housing Act. This bill contains a few useful deregulatory measures, but it is primarily an expansion of the federal housing bureaucracy – more of what contributed to the problem in the first place. It also imposes new restrictions on large investors buying or building homes – another anti-market and likely counterproductive measure. 

Unfortunately, the president has expressed support for the Senate bill even as he outlines a better approach in the executive order. Fortunately, the bill may run into opposition from some House Republicans whose version did not include several of the more objectionable provisions in the Senate legislation.

It is now up to the relevant agencies to follow the executive order’s lead. In several cases, that is already happening. For example, the Environmental Protection Agency has revised its Clean Water Act permitting authority, and HUD has delayed implementation of Biden-era building code provisions. It is a good start, but unraveling the federal red tape driving high housing costs must remain a high priority, and the executive order sets out an excellent blueprint for doing so.