The Impact of Trump's Executive Orders on Homebuilders

After taking office, President Donald Trump was quick to put his plans into action. On his first day, he signed numerous executive orders, including ones that directly affect the housing market and homebuilders.

Among these orders, Trump aimed to prioritize housing by issuing an executive order intended to lower costs and increase availability of homes. This was well-received by the National Association of Homebuilders (NAHB), which stated that Trump recognized the ongoing housing affordability crisis and that reducing regulatory barriers is necessary for affordable housing development.

However, the true effects of these executive orders remain unclear and sometimes contradictory. Homebuilders must navigate the challenges of high interest rates, difficulties in finding labor, and rising material costs, all of which can lead to more expensive homes for buyers.

Trump's Housing Order Lacks Clarity

While it is encouraging that Trump acknowledges that low housing supply is driving prices up, the specifics of how he plans to address this issue in his housing executive order are vague. The order mostly criticizes the Biden administration’s policies, calling them oppressive. Trump appears to want to loosen regulations on homebuilding, but many of these regulations are set at the local level, limiting the federal government’s ability to change them directly.

Traditionally, the federal government can encourage local governments to ease zoning regulations through funding conditions, such as those tied to transportation projects. However, some local governments may choose to abandon federal funding in order to keep their zoning laws intact.

Experts suggest that while Trump is directing federal departments to investigate these issues, real change may largely depend on incentivizing local governments to make adjustments.

Impact of Immigration Orders

Trump's immigration executive orders focus primarily on border policies and funding for a border wall. While these measures may not directly impact builders in the short term, a significant change in immigration policy, such as mass deportations, could greatly reduce the number of available construction workers. According to the NAHB, about 32.5% of construction workers in the U.S. are immigrants, with some trades relying even more heavily on immigrant labor.

A decrease in labor availability could significantly impact builders and their ability to complete projects. Urban areas thus far targeted for deportation raids tend to have limited housing construction. Still, cities like Los Angeles, which are experiencing increased demand for housing due to recent wildfires, may feel the effects more acutely.

Tariffs and Material Costs

Another significant aspect of Trump's policy that homebuilders are concerned about is the tariffs placed on imports from countries like Canada, Mexico, and China. Tariffs increase the costs of building materials, such as timber and steel, which may raise the overall cost of home construction.

Studies from the NAHB have indicated that previous tariffs have added significant costs to new homes, making it more difficult for builders to meet affordable housing demands. While some builders may view Trump's proposed tariffs as negotiating tactics, the immediate effect is a potential increase in material costs, making it more challenging to construct affordable homes for buyers.

In summary, while Trump's executive orders attempt to position housing as a priority, the impact of these policies on the ground remains uncertain. Homebuilders may face a mix of challenges from regulation, labor availability, and material costs that can complicate efforts to provide affordable housing solutions.

Trump, Housing, Homebuilders