U.S. Housing Supply: Recent Trends and Policy Considerations

July 7, 2023 R47617

U.S. Housing Supply: Recent Trends and Policy July 7, 2023
Considerations
Lida R. Weinstock
At the national level, several measures indicate that housing supply may be relatively low. Local
Analyst Macroeconomic
housing market conditions can vary substantially, and national indicators do not necessarily
Policy
accurately reflect conditions in a particular local market. These national indicators seem to

suggest, however, that supply constraints may be an important factor in many housing markets
across the country. A few key points are summarized below.

• When accounting for population, the housing stock (total number of housing units) remained largely
unchanged between 1980 and 2022.
• Across rental and owner-occupied markets, vacancy rates have decreased since the housing market crash
and financial crisis of 2007-2009. Vacancy rates dipped further during the COVID-19 pandemic and hit
several-decade lows in 2022.
• The number of single-family homes available for sale each year has trended downward since 2000 but
particularly after the housing crisis of 2007-2009.
• New housing units, as measured by total population-controlled housing starts (housing starts divided by
total population), have trended downwards in recent decades, most notably after the 2007-2009 crisis. Total
starts rose at a relatively slow pace in the years after, never recovering to pre-2007 levels. (Starts for
multifamily rental properties increased over this period but represent a small portion of total starts.)
• Several research organizations have found evidence of supply or underbuilding gaps in the U.S. housing
market, although estimates of the number of units needed to close this gap differ.
Relatively low housing supply, especially when demand for housing is strong, can cause undesirable frictions in the housing
market. One of the main results of low supply has been decreasing affordability. Prices for both homeowners and renters
have increased over recent decades, even when controlling for inflation and income. Rental and owned-housing affordability
indexes have also shown a trend of decreasing affordability in the past decade, and cost burdens are fairly widespread for
those at or below median income. Additional issues may arise at the local level, such as housing shortages based on job
growth or demographic changes in a particular location, and individual preferences may be harder for the housing market to
meet due to supply or price constraints.
Identifying the main causes of lagging housing supply can be important not only in understanding the issue but also in
considering potential policy options to increase supply without increasing price. In recent decades, increasing regulatory
costs, restrictive zoning and land use, and changing demographics have contributed to supply issues. The housing market
crash in 2007 significantly impacted supply, with the construction industry (and therefore new housing construction) never
fully recovering and therefore contributing to the underbuilding gap. In more recent years, disruptions from the COVID-19
pandemic and rising inflation have increased costs of inputs to construction, and policies to counteract rising inflation have
increased mortgage financing costs. On a longer-term horizon, climate change may be a risk to housing supply should natural
disasters increase in frequency or intensity, as they have in recent years.
Given the specific challenges facing housing supply, policy considerations may differ notably at the local level and national
level. Policymakers may be equally interested in local and national supply issues and policies. Further, many of the supply
constraints discussed in this report are regulated at the local level. To the extent that the federal government has policy
authority in national and local housing markets, Congress may have influence in shifting the housing supply curve when it
comes to the inputs to building new units and refurbishing existing ones, potentially by incentivizing local zoning reform and
construction, among other things.
For related issues and background on the housing market, see CRS Report R46855, Housing Issues in the 117th Congress,
coordinated by Katie Jones.
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U.S. Housing Supply: Recent Trends and Policy Considerations

Introduction and Economic Context
While the national housing market may be marked by certain characteristics, the supply and
demand for housing may vary notably locally across the country. Supply conditions can vary
greatly from place to place depending on historical factors, construction trends, and pre-existing
stock and infrastructure. Job markets, infrastructure, public transportation, and density all differ
among locations and can contribute to changing demographics and household characteristics.
These local differences can influence the demand to own or rent and whether to do so in a
detached dwelling or multifamily structure. The result can be large variations in price and
availability across localities.
Supply and demand for housing are fairly fixed in the short term. On the supply side, new homes
cannot be built—nor can existing homes be refurbished—overnight. Constructing or renovating
housing is a lengthy process, and delays and disruptions may occur at any step. First, land must
be available. The available land must be properly zoned for the type of housing being built.
Owners/builders must secure financing, obtain necessary permits, and potentially wait for
environmental studies to be conducted. Plans must be submitted to local governments to ensure
compliance with all building codes and local ordinances. (In certain scenarios, homeowners’
associations or other organizations may have to be consulted.) Once the construction process
begins, the necessary raw materials, machinery, and labor could prove scarce. Once housing is
built, final inspections are generally required before occupancy. All in all, depending on the type
and location of housing, this process can take several years and could include unforeseen delays
and disruptions. Many projects never actually come to fruition. All of this is to say that
meaningfully changing the amount of housing available across price points takes time.1
On the demand side, at the national level, the population ultimately determines the demand for
housing. Trends over time in demographics and household formation can change the level of
demand, but in the short term, absent a shock to the housing market (such as during the COVID-
19 pandemic), demand is fairly static.2 There are a certain number of people, and all of those
people presumably want shelter.
This report focuses on the important policy question of whether there is enough housing generally
for the population. Related to this is another policy question: What can policymakers do to
expand the supply of housing, and what can they not do? Lastly, there is the question of whether
there is adequate housing locally that meets individual preferences. While this report focuses on
the first and second questions and discusses national-level trends and policy considerations, local-
level considerations can provide important context for aggregate trends, and as such, this report
briefly discusses certain local considerations, as relevant.
This report first discusses various metrics and customary interpretations of housing supply (in
relation to housing demand) and how those trends affect other aspects of the housing market. The
report then discusses factors that have contributed to housing market trends in recent decades and
considers potential policy options available to Congress.

1 See CRS In Focus IF12048, High Home Prices: Contributing Factors and Policy Considerations, by Mark P.
Keightley and Lida R. Weinstock.
2 For example, see David Albouy, Gabriel Ehrlich, and Yingyl Liu, Housing Demand, Cost-of-Living Inequality, and
the Affordability Crisis, National Bureau of Economic Research, Working Paper no. 22816, November 2016, p. 2,
https://www.nber.org/system/files/working_papers/w22816/w22816.pdf.
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Trends in Housing Supply3
No single metric paints a complete picture of the housing supply in the United States. Instead,
economists rely on several measures to summarize the housing supply. These measures are not
always comparable, and they do not always segment clearly. This section discusses a few such
measures, including stock, vacancy rates, inventory, and construction metrics. Where possible,
owner-occupied versus rental markets are parsed, although this is not entirely possible with all of
the data.4 Additionally, owner-occupied and rental housing markets interact with one another.
Homes can transition between being owner-occupied and rented, and this directly affects how
much of each type of housing exists. For the purposes of analysis in this report, the focus is on
overall supply (inclusive of all housing types). Data are caveated as necessary.
Housing Stock
One of the clearest ways of thinking about housing supply is to look at how many housing units
exist in the country.5 As shown in Figure 1, the number of housing units in the United States
increased at a fairly steady rate between 1980 and 2022. The population of the United States also
grew over this time. When accounting for population ages 16 and over, the number of housing
units was essentially stagnant over this period, with the number of housing units fluctuating
between 0.5 and 0.6 per person.6 Data used here do not account for the rate at which a single
household may own or rent multiple housing units or the rate of household formation. A steady
housing stock indicates steady supply over time and therefore does not necessarily indicate a
housing supply issue. However, overall housing stock numbers do not provide information about
changes in the type, size, or quality of housing.

3 For more details on overall housing market trends and current housing policy issues, see CRS Report R46855,
Housing Issues in the 117th Congress, coordinated by Katie Jones.
4 For example, single-unit, detached homes are sometimes used as a proxy for owner-occupied homes, but, in actuality,
a growing percentage of that market is rentals.
5 Census defines housing unit as “a house, an apartment, a group of rooms, or a single room occupied or intended for
occupancy as separate living quarters.” See https://www.census.gov/housing/hvs/definitions.pdf.
6 This type of statistic could be calculated in various ways and using various types of population data. This is only one
methodology and may not be illustrative of all other methodologies.
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Figure 1. Total Housing Units
1980-2022

Source: CRS calculations based on Census Bureau, Housing Vacancies and Homeownership Historical Tables, Table
7. Annual Estimates of the Housing Inventory: 1965 to Present, https://www.census.gov/housing/hvs/data/
histtabs.html; and Bureau of Labor Statistics (BLS), “Current Population Survey,” https://www.bls.gov/cps/
data.htm.
Notes: Figure uses population based on BLS definition of civilian noninstitutional population for those ages 16 and
older. This includes all people residing in the United States who are not on active duty in the military or in
institutions, such as prison. Foreigners residing in the United States are included in this number. BLS does not
provide the civilian noninstitutional population for all other age groups back to 1980. For more information, see
BLS, “Current Population Survey: Concepts,” https://www.bls.gov/opub/hom/cps/concepts.htm. Housing data are
affected by revisions in 1981, 1989, 1993, and 2002.
Vacancy Rates
Vacancy rates measure how much housing inventory is vacant at a given time. Housing units
could be vacant for a variety of reasons, such as being on the market for sale or rent or in the
middle of renovations. From 1980 to 2007, the amount of vacant owner-occupied and rental
housing units as a percentage of all units was somewhat volatile but did not have a discernible
trend.7 Figure 2 shows the vacancy rate since 1980 for owned homes, while Figure 3 shows the
vacancy rate for rented homes over the same period.8 In general, for the structures with
comparable units, the vacancy rate for rental units has been higher than that for owned homes.
However, across types of properties and markets, vacancy rates have decreased since the housing

7 From the first quarter of 1980 to the first quarter of 2023 the owner vacancy rate went from 1.3% to 0.8%, and the
rental vacancy rate went from 5.2% to 6.4%. See Census Bureau, Housing Vacancies and Homeownership Historical
Tables, Table 1. Quarterly Rental Vacancy Rates: 1956 to Present, and Table 2. Quarterly Homeowner Vacancy Rates:
1956 to Present, https://www.census.gov/housing/hvs/data/histtabs.html.
8 Census calculates the rental vacancy rate, expressed as a percentage, by dividing the number of vacant year-round
units for rent by the sum of renter-occupied units, vacant year-round units rented but awaiting occupancy, and vacant
year-round units for rent. Census calculates the homeowner vacancy rate, expressed as a percentage, by dividing the
number of vacant year-round units for sale by the sum of owner-occupied units, vacant year-round units sold but
awaiting occupancy, and vacant year-round units for sale. Year-round units is defined as those intended for occupancy
at any time, even if they are not always in use. See Census Bureau, Current Population Survey Design and
Methodology, October 2006, pp. 11-2, 11-4, https://www.census.gov/housing/hvs/files/tp-66.pdf.
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market crash and financial crisis of 2007-2009. Vacancy rates dipped further during the COVID-
19 pandemic and hit several-decade lows in 2022. Altogether, the current vacancy rates indicate
relatively low housing availability.9
Figure 2. Homeowner Vacancy Rate
Figure 3. Rental Vacancy Rate
1980-2022
1980-2022

Source: Census, Housing Vacancy and
Source: Census, Housing Vacancy and
Homeownership Historical Tables, Table 6,
Homeownership Historical Tables, Table 5,
https://www.census.gov/housing/hvs/data/
https://www.census.gov/housing/hvs/data/
histtabs.html.
histtabs.html.
Notes: Figure uses data that incorporate most
Notes: Figure uses data that incorporate most
recent American Housing Survey data for number
recent American Housing Survey data for number
of units in a structure. Data are affected by
of units in a structure. Data are affected by
revisions in 1993 and 2002.
revisions in 1993 and 2002.
Available Single-Family Housing Inventory
The number of single-family homes for sale each year has trended downward since 2000 but
particularly after the housing crisis of 2007-2009, as shown in Figure 4.10 The total number of
single-family units for sale decreased each year since 2018, hitting a two-decade low in 2021.
New homes for sale actually increased over this period but still remained below their 2006 peak.
The recent decrease in single-family homes for sale was a result of significant decreases in the
availability of existing homes, which was four times smaller in 2021 than in 2007, when it
peaked.
Months’ supply of housing measures the balance of supply and demand in the housing market. It
is calculated as the ratio of active listings at the end of a month to the number of sales during that
month, and it indicates how long current for-sale inventory would last if no new homes went on
the market.11 While there is some disagreement about the exact amount of supply that would
constitute a balanced housing market—one in which price appreciation is relatively stable—many
housing economists typically put that number around between four and six months.12 What

9 For more information about quarterly vacancy rates during the housing crisis and pandemic, see Census, Housing
Vacancy Rates Near Historic Lows, March 12, 2022, https://www.census.gov/library/stories/2022/05/housing-vacancy-
rates-near-historic-lows.html.
10 The data in this section are focused on single-family homes available for sale. However, once sold, a home could be
occupied by the owner or rented by the owner.
11 Wichita State University Center for Real Estate, “What Is ‘Months’ Supply’?,” https://realestate.wichita.edu/
question/what-is-months-supply/.
12 For example, see National Association of Realtors (NAR), “Inventory and Months’ Supply,” January 22, 2021,
https://www.nar.realtor/blogs/economists-outlook/inventory-and-months-supply; and Redfin, “Real Estate Glossary:
Definition of Months of Supply,” https://www.redfin.com/definition/monthsof-supply.
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constitutes a balanced housing market may additionally differ from place to place. A lower
number generally indicates that there are relatively few sellers compared to buyers. Assuming
four to six months’ supply indicates a housing market in equilibrium, anything above six months
indicates a surplus of housing, and anything below four months indicates a shortage. As shown in
Figure 5, the months’ supply of homes has trended downward since the housing crisis. The
months’ supply of new homes is higher than that of existing homes, which has been lower than
pre-crisis for several years. The months’ supply of new homes most recently indicates equilibrium
in that market, but the months’ supply of existing homes indicates a shortage over the past few
years.
Figure 4. Inventory of Single-Family
Figure 5. Months’ Supply of Single-
Homes for Sale
Family Homes
2000-2021
2000-2021

Source: Department of Housing and Urban
Source: HUD and NAR via HUD,
Development (HUD) U.S. Housing Market
https://www.huduser.gov/portal/ushmc/
Conditions data, which uses data from the
hs_newsf.html.
National Association of Realtors (NAR),
Notes: Existing homes data are not available prior
https://www.huduser.gov/portal/ushmc/
to 1999. Dashed gray lines represent the range of
hs_newsf.html.
balanced months’ supply. Values above this range
Note: Existing homes data are not available prior
represent a surplus of homes, and values below
to 1999.
this range represent a shortage of homes.
When the months’ supply of homes is evaluated along with the relatively low inventory of homes
for sale, the combination would suggest low supply to satisfy the demand in the single-family
homes market.
Housing Construction
Low inventory and vacancy rates in the national housing market would generally signal to
homebuilders that with a demand for more units, they may be able to receive higher prices in the
future, prompting them to increase construction. There are several metrics to measure the level of
construction in the United States, including new permits, starts, completions, units currently
under construction, and private spending on construction.
Figure 6 below shows population-controlled housing starts (starts divided by total population)
since 1980. Although somewhat cyclical with the business cycle, housing starts have more
recently trended downward.13 Notably, housing starts fell rapidly after the housing and financial

13 An additional facet to declining construction is declining construction of specific types of housing. For example, the
share of construction of “starter homes”—single family homes of 1,400 square feet or less—has been trending
(continued...)
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crisis of 2007-2009, then rose at a much slower pace in the years after, and never fully recovered
to pre-2007 levels. Despite the declining vacancy rates in 2022, construction starts actually
decreased in 2022.
Figure 6. Ratio of New Privately Owned Housing Units Started to Population
1980-2022

Sources: U.S. Census Bureau, “New Residential Construction Historical Data, Housing Units Started by
Purpose and Design,” https://www.census.gov/construction/nrc/historical_data/index.html; and BLS, “Current
Population Survey,” https://www.bls.gov/cps/data.htm.
Notes: Single family data are not disaggregated by for sale versus rent. Figure uses population based on BLS
definition of civilian noninstitutional population for those ages 16 and older.
The pace of residential construction is subject to the availability of labor, supply chains, and
financing costs, which may have contributed to what has been referred to as an underbuilding gap
in recent decades.14 While the exact magnitude of the underbuilding of housing units is debatable,
many observers agree that the gap exists and puts upward pressures on housing prices.15

downward over the past several decades. This alone does not necessarily contribute to low supply of all units but may
have negative consequences for specific demographic groups or specific local markets. However, such trends are not
within the scope of this report. See Sam Khater, “The Housing Supply Shortage,” Freddie Mac Presentation for the
Bipartisan Policy Center, December 2021, https://bipartisanpolicy.org/download/?file=/wp-content/uploads/2021/12/
BPC-Final-Supply-Presentation.pdf.
14 For example, see Bipartisan Policy Center, “Getting Serious About Housing Supply Series,”
https://bipartisanpolicy.org/getting-serious-about-housing-supply-series/.
15 For example, a report from NAR suggests an underbuilding gap of 5.5 million units from 2000 to 2020 and a
cumulative gap of 6.8 million units in 2020. Using different methodology, Freddie Mac estimated a gap of 3.8 million
units in 2020. In either case, the gap is significant. See Kenneth T. Rosen et al., “Housing Is Critical Infrastructure:
Social and Economic Benefits of Building More Housing,” Rosen Consulting Group for NAR, June 2021,
https://cdn.nar.realtor//sites/default/files/documents/Housing-is-Critical-Infrastructure-Social-and-Economic-Benefits-
of-Building-More-Housing-6-15-2021.pdf; and Freddie Mac, “Housing Supply: A Growing Deficit,” May 7, 2021,
https://www.freddiemac.com/research/insight/20210507-housing-supply. For a review of the above and additional
estimates of housing gaps, see Annie Lowrey, “The U.S. Needs More Housing Than Almost Anyone Can Imagine,”
The Atlantic, November 21, 2022, https://www.theatlantic.com/ideas/archive/2022/11/us-housing-gap-cost-
affordability-big-cities/672184/.
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Consequences of Low Housing Supply
Metrics of housing supply offer mixed evidence on the overall supply of housing. On the one
hand, the housing stock has remained steady over the past several decades. On the other hand,
housing construction has trended downward and inventories are relatively low. To determine if
housing supply is low (relative to housing demand), economists often look to wider housing
market conditions. Relatively low housing supply, especially when demand for housing is strong,
can cause undesirable frictions in the economy. This section provides a brief overview of selected
notable issues that can and have arisen from low supply, including rising prices and a lack of
housing options.
Evidence suggests that low supply may be an issue concentrated in particular markets, for
particular types of housing, or at particular price points. For example, even if enough housing
units exist in the aggregate, there may not be enough housing units that are available and
affordable to certain income brackets. Such discussions are largely outside the scope of this
report, but this section briefly highlights certain statistics that support the idea that supply issues
may be concentrated.
Affordability Implications
In economics, price changes are a direct result of changing supply, demand, or both in a particular
market. The housing market has been no exception. With strong demand for housing, but lagging
supply, prices have increased. For example, when many people bid on a smaller set of houses, the
final prices are likely to be higher compared to when there is a larger set of houses available for
sale. As illustrated in Figure 7 and Figure 8, prices for both homeowners and renters have
increased over recent decades, even when accounting for inflation or income.16 Prices can also
rise due to improvements in the quality of housing. Certain measures account for quality changes.
For example, the U.S. Federal Housing Finance Agency produces house price indexes based on
repeat transactions on the same physical property units, which helps to control for differences in
housing quality in its sample.17 According to this measure, for owner-occupied single-family
properties, year-over-year price increases have been positive since the early 1990s, apart from the
period during and immediately after the housing crisis (2007-2011).18

16 Figure 7 and Figure 8 do not account for the entire housing market. Notably, owned units in multifamily buildings
are not included.
17 Charles A. Calhoun, OFHEO House Price Indexes: HPI Technical Description, March 1996, p. 1,
https://www.fhfa.gov/PolicyProgramsResearch/Research/PaperDocuments/1996-03_HPI_TechDescription_N508.pdf.
18 Federal Housing Finance Agency (FHFA) House Price Index Datasets are available for download at
https://www.fhfa.gov/DataTools/Downloads/Pages/House-Price-Index-Datasets.aspx#mpo.
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Figure 7. Real Home Prices and Ratio of
Single-Family Median Home Price to
Income
Figure 8. Real Rent and Ratio of Median
1980-2022
Asking Rent to Income
1988-2022

Sources: CRS calculations based on HUD’s U.S.
Housing Market Conditions reports, which use
Sources: CRS calculations based on Census
data from NAR for existing home prices and the
Current Population Survey and Housing Vacancy
Census American Community Survey for median
Survey Historical Table 11A. Quarterly Median
family income, available at
Asking Rent: 1988 to Present, available at
https://www.huduser.gov/portal/ushmc/
https://www.census.gov/housing/hvs/data/
hd_home_prices.html. Inflation data are from the
histtabs.html. Inflation data are from the CPI, and
BLS Consumer Price Index (CPI),
median family income data are from the American
https://www.bls.gov/cpi/data.htm.
Community Survey.
Notes: Median family income was used for
Notes: Data are affected by revisions in 1989,
consistency with HUD methodology for
1993, and 2002.
affordability considerations. Owned units in
multifamily buildings are not included.
In addition to actual prices, housing and rental affordability indexes can also be useful to
consider. NAR calculates a housing affordability index that measures whether a family with
median income can qualify for a mortgage on a median-priced home with a 20% down
payment.19 Mortgage affordability is a function of mortgage interest rates as well as home prices,
meaning that mortgages can become more affordable because interest rates decreased, prices
decreased, or both. Since 1980, the affordability index for fixed-rate mortgages has generally
trended upward, meaning that home buying became more affordable. Even though house prices
were increasing over this period, low mortgage rates enhanced affordability. Affordability has
trended downward since 2012—decreasing notably between 2020 and 2022—but still remains at
an index value that indicates a family with median income can afford a median fixed rate
mortgage.20
The U.S. Department of Housing and Urban Development (HUD) calculates a rental affordability
index that considers “whether a typical renter household has enough income to qualify for a lease
on a typical rental home at the national level” based on median income among renters and the

19 NAR no longer produces the Housing Affordability Index Composite Index owing to FHFA’s discontinuation of the
release of certain mortgage rates. As such, this CRS report considers only the index for fixed-rate mortgages, which
NAR continues to produce. For more details, see NAR, “Housing Affordability Index,” https://www.nar.realtor/
research-and-statistics/housing-statistics/housing-affordability-index.
20 For Fixed-Rate Housing Affordability Index, see U.S. Department of Housing and Urban Development (HUD),
“U.S. Housing Market Conditions National Housing Market Summary and Data,” Fixed-Rate HAI,
https://www.huduser.gov/portal/ushmc/hd_hsg_aff.html.
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median price of rental units.21 Based on HUD’s methodology, rent affordability trended
downward between 2001 and 2021 and hit an index level below 100 in 2021, indicating that the
typical renter household did not have the income required to qualify for a lease on a typical rental
home.22
Another indication that lower affordability has become a widespread issue in housing markets is
high rates of cost burden among renters and homeowners. (By standard definition, cost-burdened
households spend more than 30% of household income on rent or mortgage payments.23)
According to a recent Fannie Mae analysis, across the 30 most populous core-based statistical
areas,24 between 30% and 60% of owner households earning median income or less for their areas
were cost-burdened, and between 50% and 90% of analogous renter households were cost-
burdened in 2019.25 The Harvard Joint Center for Housing Studies analyzed cost burdens by
income bracket using 2020 data. According to this analysis, cost burdens are more widespread
among lower-income households, with over 70% of households making under $30,000 cost-
burdened and almost 50% of households making between $30,000 and $44,999 cost-burdened.26
Housing Mismatch in Local Markets
Perhaps the most obvious result of low supply in the housing market is an actual lack of adequate
housing. NAR creates a housing “shortage” tracker that compares new permits to new jobs in
metropolitan areas.27 According to NAR, the historical average across metropolitan areas is one
permit per every two new jobs, which NAR categorizes as sufficient supply.28 A majority of
metropolitan areas do not meet this criterion. A little over half of the areas considered by NAR
have one permit per three or more new jobs. Based on single-family permits only, there are even

21 This index assumes that to qualify for a lease, a household must have an annual income of which the rent in question
is 30% or less. See HUD, “HUD’s New Rental Affordability Index,” November 7, 2016, https://www.huduser.gov/
portal/pdredge/pdr-edge-trending-110716.html. Some question the use of housing cost to income ratio as an appropriate
measure of affordability, because such ratios do not account for the fact that the housing costs incurred by a household
are partly a choice rather than a necessity. For example, some households may choose to pay more than 30% of their
income on rent for the convenience of living closer to work or having a larger unit with better amenities. Opponents of
the 30% affordability threshold also point out that this measure implies that a household must have at least 70% of its
income left for non-housing-related spending. But this suggests that a household making, for example, $40,000 needs
twice as much money for non-housing spending than an identical household earning $20,000 ($28,000 vs. $14,000,
respectively).
22 HUD, “U.S. Housing Market Conditions National Housing Market Summary and Data,” Rental Affordability Index,
https://www.huduser.gov/portal/ushmc/hd_rai.html.
23 Some households, particularly those at the higher end of the income distribution, may choose to be cost-burdened.
24 According to 2020 standards for delineating core based statistical areas, they are defined as “a geographic entity
associated with at least one core of 10,000 or more population, plus adjacent territory that has a high degree of social
and economic integration with the core as measured by commuting ties.” See Office of Management and Budget,
Office of Information and Regulatory Affairs, “2020 Standards for Delineating Core Based Statistical Areas,” 86
Federal Register 37770-37778, July 16, 2021.
25 Kim Betancourt et al., “The U.S. Housing Shortage from a Local Perspective,” Fannie Mae, October 2022, p. 8,
https://www.fanniemae.com/media/45106/display.
26 Harvard University, Joint Center for Housing Studies, The State of the Nation’s Housing 2022, p. 7,
https://www.jchs.harvard.edu/sites/default/files/reports/files/Harvard_JCHS_State_Nations_Housing_2022.pdf.
27 Metropolitan area is defined as an area with at least 100,000 total non-farm employees.
28 NAR, “Housing Shortage Tracker,” September 2022, https://www.nar.realtor/research-and-statistics/housing-
statistics/housing-shortage-tracker. This tracker proxies shortages and likely does not do so perfectly. For example,
every new job does not necessarily indicate the need for a housing unit, and the availability and condition of existing
stock may be an important factor in the extent to which new housing is needed. Nonetheless, this proxy can provide
useful information on the pace of job growth compared to the pace of housing stock growth in local areas and help
identify those areas that may be falling behind on housing needs relative to others.
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fewer areas with sufficient supply. As mentioned in the “Housing Construction” section above,
several sources, including NAR and Freddie Mac, have additionally identified a gap between how
many units exist and how many units are demanded.29
On a national level, it is not necessarily obvious that there is a shortage of housing units. There
may be housing gaps, but it is not clear that there are not enough units for the population on the
whole. Instead, the market appears to be clearing at a higher price point. However, even if there
are technically enough units to house the population, that may not be true at certain price points
or in certain locations. For example, the NAR shortage tracker notes several metropolitan areas
that showed a 1:1 permit to new job ratio, while other areas had much higher ratios, such as
Springfield, IL, with a ratio of 1 permit for every 20 new jobs. Supply constraints in local markets
can also lead to shortages of houses at certain price points even if there are technically enough
units per household. A 2022 report from Fannie Mae analyzes housing shortages from a local
perspective and identifies eight different types of metro areas that have different supply and
economic characteristics. These different characteristics have led, in the authors’ estimation, to
varying levels of affordability and differing needs in terms of the types of housing necessary to
address supply and affordability concerns.30
Another potential mismatch resulting from relatively low housing supply is that individual
preferences may result in distortions in housing markets as individuals make decisions to meet
their preferences at a given price point. There may not be adequate housing across price points for
all types of housing and in all locations. Therefore, the higher prices resulting from relatively low
supply and high demand could result in people needing to compromise on the type of housing or
housing location in order to afford housing.31 This type of phenomenon might not be obvious in
aggregate statistics but could result in distortions in local and national housing markets if
widespread enough. For example, increased migration from 2018 to 2020 away from popular but
expensive markets to more affordable markets resulted in increasing home prices in the
destination markets, particularly in the West and South.32
Causes of Low Housing Supply
The combination of high and rising home prices and rents but largely stagnant or decreasing
supply trends (depending on the metric) suggests that supply is not adequately responding to
these higher prices. Generally, this lagging supply in the face of increasing prices suggests that
costs to building homes has increased or that there are other barriers to increasing supply. A
complicating factor is that supply does not respond immediately to prices or policy changes, and
therefore determining if supply is increasing appropriately is an inexact science.
This section briefly highlights a few of the most commonly cited specific explanations of why
housing supply may not be responding adequately to demand and price changes and is not meant
to be an all-inclusive list of factors that could be contributing to lagging supply. Of note, some
conditions or policy stances that may contribute to relatively low housing supply may be

29 A housing gap and an affordable housing gap are related but distinct phenomena. An affordable housing gap refers to
the difference between how many units are available that households of certain incomes could afford and how many
units that particular group of earners demands. Low supply likely exacerbates the affordable housing gap, but an in-
depth analysis of the link between the two is not within the scope of this report. For example, see National Low Income
Housing Coalition, “The Gap: A Shortage of Affordable Rental Homes,” https://nlihc.org/gap.
30 For details of Fannie Mae’s analysis, see Betancourt et al., “The U.S. Housing Shortage from a Local Perspective.”
31 For more detail, see CRS In Focus IF12048, High Home Prices: Contributing Factors and Policy Considerations, by
Mark P. Keightley and Lida R. Weinstock.
32 Khater, “The Housing Supply Shortage.”
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desirable in others ways. This section is meant only to highlight conditions that could be
contributing to low supply and does not purport to evaluate the full costs and benefits of any
policy. In addition, many policy proposals act on the demand side of the housing market, which is
beyond the scope of this report.
Regulatory Costs
The cost of acquiring and preparing land for construction has increased relative to the price of the
housing units being built in recent decades.33 In some areas, there is little undeveloped land to
build on, and this partly explains why land prices would rise. But even in those areas, price
signals would eventually lead to greater housing density absent regulatory obstacles to increasing
supply. According to a Freddie Mac analysis, tightening land use restrictions (discussed below)
are partly responsible for this increasing cost, which can cause significant delays in permit
approvals, slowing the rate of new construction.34
Apart from slowing construction, some regulation already directly impacts supply. Notably,
certain zoning restrictions—such as single-family zoning requirements, minimum lot sizes, and
parking requirements, among others—affect how much land can be built on and how many
housing units can be built on that land.35 Another factor that can further exacerbate these issues is
existing residents’ opposition to new developments near or in their own neighborhoods.
Requirements for community hearings or input, therefore, may slow or halt construction projects.
Additionally, community opposition to regulatory changes that would reduce costs, such as
zoning reform, could perpetuate existing challenges.36
Official government data on the cost of regulation on the construction or renovation of housing
do not exist. However, some private groups have done such analyses. According to a 2021 study
by the National Association of Home Builders (NAHB), state, local, and federal government
regulations accounted for 23.8% of the average sales price of a new single-family home in 2021
(down from 24.3% in 2016 and 25% in 2011).37 On a dollar basis, the average cost of regulation
accounted for $93,870 in 2021, up from $84,671 in 2016 and $65,224 in 2011.38 Researchers at
the Wharton School created the Wharton Residential Land Use Regulatory Index in 2006 and
updated it in 2018. In comparing the index across these years, researchers found:
In terms of the regulatory process, the number of entities needed to approve projects
requiring a zoning variance is increasing in the typical place. This makes the process more
cumbersome and increases the potential for projects to be vetoed. Density controls are also
used more widely and are more severe on average. The use of minimum lot sizes to control

33 Freddie Mac, “What Is Causing the Lean Inventory of Houses?,” July 27, 2017, https://www.freddiemac.com/
research/forecast/20170726-lean-inventory-of-houses.
34 Freddie Mac, “What Is Causing the Lean Inventory of Houses?”
35 Alexander Von Hoffman, “Single-Family Zoning: Can History Be Reversed?,” Harvard Joint Center for Housing
Studies, https://www.jchs.harvard.edu/blog/single-family-zoning-can-history-be-reversed; and Catie Gould, “Shifting
Gears: Why Communities Are Eliminating Off-Street Parking Requirements—and What Comes Next,” Lincoln
Institute of Land Policy, October 12, 2022, https://www.lincolninst.edu/publications/articles/2022-10-shifting-gears-
eliminating-off-street-parking-requirements.
36 Freddie Mac, “What Is Causing the Lean Inventory of Houses?”
37 Paul Emrath, Government Regulation in the Price of New Home: 2021, NAHB, May 5, 2021, https://www.nahb.org/-
/media/NAHB/news-and-economics/docs/housing-economics-plus/special-studies/2021/special-study-government-
regulation-in-the-price-of-a-new-home-may-2021.pdf. Estimates for 2016 and 2011 can be found at
https://www.nahb.org/-/media/F927CA599F4343F19541BD9F929E50ED.ashx and
https://eyeonhousing.wordpress.com/2011/07/08/government-regulations-25-cost-of-a-new-home/, respectively.
38 Emrath, Government Regulation in the Price of New Home: 2021.
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density is now almost omnipresent. And, it is no longer uncommon to see one-acre (or
greater) minimums in suburban areas; this was much rarer in the 2006 data. Other
regulations investigated (e.g., open space requirements and affordable housing programs)
do not show such big increases in the aggregate, but there also is no evidence they are
declining—either in usage or strictness of enforcement. The one exception involves impact
fees on developers. The aggregate propensity for communities to impose them fell by one-
third, from about 75% in the 2006 survey to 50% in 2018.39
The Cost of Financing
The trend in interest rates in the U.S. economy directly affects the housing market by affecting
borrowing costs for building, renovating, and purchasing homes.
Following a prolonged period of high inflation and interest rates, the Federal Reserve began
lowering the federal funds rate in the mid-1980s. In response to the 2007-2009 housing and
financial crisis, the Federal Reserve reduced the federal funds rate to a range of 0-0.25%, where it
remained unchanged for several years. Since early 2022, the Federal Reserve has aggressively
raised the federal funds rate to combat high inflation.40 As a result, borrowing costs have
increased, which has potential implications for the housing supply.
Homebuilders are heavily reliant on borrowing to finance new construction. Higher interest rates
increase the costs of financing residential construction and renovation. As the costs of building
and refurbishing homes increases, the rate of construction can slow and the supply of new homes
can tighten. According to the NAHB, rising interest rates, along with rising material costs, have
raised construction costs and slowed the rate of homebuilding, perpetuating the “long-term
housing deficit.”41 In addition, rising rates can disincentivize existing homeowners from moving
so that they do not lose the low mortgage rates they received in the past, lowering the inventory
of existing homes for sale.42 A recent academic estimate suggests that, given projected mortgage
rates (and holding other variables constant),43 moving could decline by around 25% between
2018 and 2033, which could significantly diminish available housing inventory.44
Construction Input Costs
Employment in the residential building construction industry fell by roughly 465,000 jobs from a
peak in April 2006 to a trough in January 2011, coinciding with the housing market crash and
financial crisis of 2007-2009. Despite job growth in this industry since 2011, employment in
residential building construction has still not recovered to 2006 levels. For the construction
industry as a whole, the monthly job openings rate has fairly consistently been above 4% between

39 Joseph Gyourko, Jonathan Hartley, and Jacob Krimmel, The Local Residential Land Use Regulatory Environment
Across U.S. Housing Markets: Evidence from a New Wharton Index, National Bureau of Economic Research Working
Paper no. 26573, December 2019, https://www.nber.org/system/files/working_papers/w26573/w26573.pdf.
40 For more information on the inflation and Fed’s actions in response, see CRS Report R47273, Inflation in the U.S.
Economy: Causes and Policy Options, by Marc Labonte and Lida R. Weinstock. For more information on monetary
policy more generally, see CRS In Focus IF11751, Introduction to U.S. Economy: Monetary Policy, by Marc Labonte.
41 NAHB, “Rising Interest Rates, Higher Construction Costs Slow Housing Production,” press release, June 16, 2022,
https://www.nahb.org/news-and-economics/press-releases/2022/06/rising-interest-rates-costs-slow-housing-production.
42 Nicole Friedman, “The Home Buyer’s Quandary: Nobody’s Selling,” Wall Street Journal, May 10, 2023,
https://www.wsj.com/articles/low-mortgage-rates-home-sales-low-supply-899aab29.
43 The authors control for zip code fixed effects, county and year fixed effects, mortgage and borrower controls, and a
zip code house price index.
44 Julia Fonseca and Lu Liu, “Mortgage Lock-In, Mobility, and Labor Reallocation,” Social Science Research Network,
March 24, 2023, p. 3, https://dx.doi.org/10.2139/ssrn.4399613.
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March 2021 and March 2023, representing between 300,000 and 400,000 openings per month.45
Altogether, the construction industry faces significant labor shortages, which has likely hindered
both residential and nonresidential construction alike.
In nominal terms, over the past few years, the employment cost to employers in the construction
industry (as measured by the index for the total compensation for private industry workers in
construction) has generally increased on a quarterly basis as measured by the percent change from
a year previously. However, in real terms, these costs have actually decreased each quarter from
the second quarter of 2021 to the first quarter of 2023, meaning that the cost of labor may not
currently be a major constraint to increased residential construction.46 The relatively low
employment in the construction industry combined with declines in real employment costs
indicates either that the main labor constraint to increased construction is a pool of labor that is
small relative to the demand for construction or that builders prefer lower costs but less
construction to higher costs but more construction.
The cost of inputs to residential construction has been a significant constraint for the
homebuilding industry in recent years. Prices—as measured by the percent change in the
producer price index47 from a year ago—for net input goods to residential construction rose
rapidly beginning in April 2020 and stayed elevated until 2023, when these costs began to come
down. Inflation for input goods to construction was higher than producer inflation for final
demand or headline consumer inflation during this period. Much of this inflation in inputs was
likely due to lumber supply shortages that began in 2020 as a result of supply-chain disruptions
due to the COVID-19 pandemic.48 A lumber shortage, in and of itself, is a constraint for
homebuilders in addition to the constraint of higher costs. NAHB estimated that in the 12 months
ending in April 2021, higher lumber costs added around $35,000 to the price of an average new
home and $119 to monthly rents in new multifamily buildings.49 In recent years there have been
supply bottlenecks for a variety of other materials and inputs, including energy and steel.50
Altogether, the cost and availability of inputs, including labor and building materials, have likely
significantly hindered the homebuilding industry’s ability to increase the amount and pace of
residential construction in recent years. While this trend appears to be easing, it is, as of yet,
unclear how long it will take construction to recover or if any new disruptions may occur.
Natural Disasters
Any one specific natural disaster may cause significant damage or destruction to residential
property, contributing to supply challenges in the affected market. Disasters can be localized, and

45 For job openings data, see Bureau of Labor Statistics (BLS), “Job Openings and Labor Turnover Survey,”
https://www.bls.gov/jlt/data.htm.
46 For employment cost index data, see BLS, “Employment Cost Index,” https://www.bls.gov/eci/data.htm.
47 The producer price index is a measure of the “average change over time in the selling prices received by domestic
producers for their output.” For more information, see BLS, Producer Prices, https://www.bls.gov/opub/hom/pdf/ppi-
20111028.pdf. The data cited uses the series for “inputs to new residential construction, excluding capital investment,
labor, and imports.”
48 For more information on lumber shortages, see CRS Report R46636, COVID-19 and the U.S. Timber Industry, by
Anne A. Riddle; and John V. Duca and Anthony Murphy, “Why House Prices Surged as the COVID-19 Pandemic
Took Hold,” Federal Reserve Bank of Dallas, December 28, 2021, https://www.dallasfed.org/research/economics/2021/
1228.
49 Paul Emrath, “Higher Lumber Costs Add More Than $35K to New Home Prices, $119 to Monthly Rent,” NAHB,
April 28, 2021, https://eyeonhousing.org/2021/04/higher-lumber-costs-add-more-than-35k-to-new-home-prices-119-to-
monthly-rent/.
50 For example, see World Construction Today, “Construction Material Shortages to Continue in 2021,”
https://www.worldconstructiontoday.com/news/construction-material-shortages-to-continue-in-2021/.
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while they may not yet result in significant impacts at the national level, the threats associated
with natural disasters have been rising recently.51 Property destruction in one location can result
in distortions in other markets owing to resulting shifts in migration and demand.52 Therefore, the
more widespread these risks become, the more likely they are to result in supply disruptions at the
national level.53 Currently, a significant portion of the housing stock is vulnerable to the impacts
of flooding, storms, wildfires, and tornadoes, to name a few.54
Aging in Place Trends
Certain demographic characteristics may be affecting housing supply, particularly in owner-
occupied markets. Trends such as “aging in place” may be limiting the supply of homes for sale
as the relatively large baby boomer generation maintains homeownership.55 However, by some
estimates, homeownership does not begin to drop off until past the age of 75. If this pattern holds,
a large number of homes for sale may become available in the coming years as the baby boomer
generation ages into this bracket.56 At the same time, the millennial generation, another relatively
large cohort, is largely of home-buying age, and homeownership rates for this group have
accelerated in recent years, potentially putting further strain on the supply of owner-occupied
housing.57 Other trends in household characteristics, such as declining marriage rates and birth
rates, may also be resulting in challenges to housing supply as it currently exists. (There may not
be adequate supply of smaller housing units to meet altered demand, for example.58)
Policy Considerations
To the extent that certain conditions in the housing market—notably issues surrounding
affordability and choice—are being caused by low supply, those problems are unlikely to be fixed

51 Howard Kunreuther, “Reducing Losses from Catastrophes: Role of Insurance and Other Policy Tools,” Environment:
Science and Policy for Sustainable Development, vol. 58, no. 1 (January/February 2016), pp. 30-37.
52 Tamara L. Sheldon and Crystal Zhan, “The Impact of Natural Disasters on U.S. Home Ownership,” Journal of the
Association of Environmental and Resource Economists, vol. 6, no. 6 (September 19, 2019), pp. 1169-1203,
https://www.journals.uchicago.edu/doi/full/10.1086/705398#_i18.
53 Many studies link a rise in the frequency, intensity, or magnitude of natural disasters to climate change. Other results
of climate change, such as rising sea levels, may also prove a challenge to housing supply in the long term not only
because of hazards posed to the housing stock but also because of any policies or migration that arise as a result. See
Basel Committee on Banking Supervision, “Climate-Related Risk Drivers and Their Transmission Channels,” April 14,
2021, pp. 6-7, https://www.bis.org/bcbs/publ/d517.htm; and Steven Rothstein and Joe Weisbord, Housing Finance and
Climate Risk: Taking Action in an Uncertain Future, Mortgage Bankers Association, February 16, 2023, p. 12,
https://www.mba.org/docs/default-source/research—riha-reports/24981-riha-climate-change-volume-1.pdf.
54 CoreLogic, “2021 Climate Change Catastrophe Report,” February 17, 2022, https://www.corelogic.com/press-
releases/corelogic-climate-change-catastrophe-report-estimates-1-in-10-u-s-residential-properties-impacted-by-natural-
disasters-in-2021/; and CoreLogic, “Risk Redefined: CoreLogic Climate Change Catastrophe Report Emphasizes Need
to Address Increasing Frequency of Hazard Events,” press release, January 27, 2021, https://www.corelogic.com/press-
releases/risk-redefined-corelogic-climate-change-catastrophe-report-emphasizes-need-to-address-increasing-frequency-
of-hazard-events/.
55 Freddie Mac, U.S. Population Growth: Where Is Housing Demand Strongest?, January 2021, p. 4,
https://www.freddiemac.com/fmac-resources/research/pdf/202101-Insight-12.pdf.
56 Andrew Van Dam, “The Age at Which People Give Up on Homeownership, and More!,” Washington Post, April 14,
2023, https://www.washingtonpost.com/business/2023/04/14/foreign-toursts-america/.
57 Millennial homeownership rates still lag those of older generations. For example, see Freddie Mac, Millennials and
Housing, 2021, p. 4, https://sf.freddiemac.com/docs/pdf/fact-sheet/millennial-playbook_millennials-and-housing.pdf.
58 Tracy Hadden Loh and Evan Farrar, “The Great Real Estate Reset, Modernizing Family: American’s Demographics
Are Transforming, but Our Housing Supply Is Not,” Brookings Institution, December 16, 2020,
https://www.brookings.edu/essay/trend-2-americas-demographics-are-transforming-but-our-housing-supply-is-not/.
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without supply-side solutions, which happen with a lag and therefore will not be realized in the
short term. While this report has focused mainly on low supply nationally, policymakers may be
more interested in local solutions given differences in price and availability across localities.
Additionally, many housing policies are created, implemented, and regulated at the state or local
level, which restricts the ability of federal policymakers to influence housing market policy.
Nonetheless, there are certain policy options available to Congress. This section focuses
specifically on federal policy considerations for increasing supply across price points. Of note,
this section discusses certain policy options that would remove barriers to economically efficient
outcomes. Existing policies that cause certain market distortions may be desirable for other
reasons. This section does not discuss the potential benefits of such policies.
Policy Options for Lowering Cost of Inputs
The options below focus on increasing the availability, decreasing the cost, or removing barriers
to the use of land, labor, and raw materials in the construction process.
Federal Government Recommendations and Grants for Local Reform
The federal government does not have direct authority over local land use regulation. Zoning,
permitting, and land use are generally controlled by states, many of which have delegated
authority to localities.59 Federal agencies, however, can and have made recommendations related
to these issues. For example, a recent report from HUD includes the following recommendations
for local jurisdictions for pro-housing land use and zoning reforms to increase supply and
affordability: “Increase multifamily zoning; allow missing middle and larger multifamily
development by-right; enable adaptive reuse and conversions; eliminate parking requirements;
reduce minimum lot sizes; support equitable transit-oriented development; and streamline
permitting processes and timeline.”60
Some have argued that non-traditional building techniques, such as factory-built housing, are
more efficient and cost-effective than traditional building techniques, but they face regulatory
barriers and financing obstacles that have restricted their use. Past HUD recommendations on this
topic have included updating the HUD code, expanding areas zoned to accept factory-built
housing by state and local governments, and improving financing conditions by defining factory-
built housing as real property. (For example, certain types of factory-built housing are not built on
permanent foundations and therefore may be subject to different codes and may not qualify for
typical mortgages.61)
In addition, federal programs may incentivize or encourage local reforms. For example, the
Community Development Block Grant-Pathways to Removing Obstacles62 (P.L. 117-328,
Division L, Title II) tasks HUD with awarding competitive grants to state, local, and regional
entities to remove regulatory barriers to affordable housing. HUD recently requested another $85

59 Anika Singh Lemar, “The Role of States in Liberalizing Land Use,” North Carolina Law Review, vol. 97, no. 2
(January 1, 2019), p. 297; and Harvard Law Review, “Addressing Challenges to Affordable Housing in Land Use Law:
Recognizing Affordable Housing as a Right,” Housing Law and Policy Note, February 10, 2022, p. 1107.
60 HUD Office of Policy Development and Research, Pro-Housing Land Use and Zoning Reforms, April 2023,
https://www.huduser.gov/portal/sites/default/files/pdf/policy-and-practice-publication-2023-april.pdf.
61 HUD Office of Policy Development and Research, Factory-Built Housing for Affordability, Efficiency, and
Resilience, Winter/Spring 2020, https://www.huduser.gov/portal/periodicals/em/WinterSpring20/highlight1.html.
62 Previously called the Yes In My Backyard Incentive Grant Program.
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million for the program in its FY2024 Congressional Budget Justification.63 Other legislation on
this topic was proposed in the 117th Congress, such as the Yes in My Backyard Act (S. 1614 and
H.R. 3198) and the Housing, Opportunity, Mobility, and Equity Act of 2022 (S. 5223 and H.R.
9466). The Biden-Harris Administration Housing Supply Action Plan to Help Close the Housing
Supply Gap in Five Years similarly included plans to “reward jurisdictions that have reformed
zoning and land-use policies with higher scores in certain federal grant processes, for the first
time at scale.”64
Incentives for the Construction Industry
Various types of incentives for the construction industry could also potentially affect the amount
of production by incentivizing hiring, training, or construction directly. For example, policies
such as the low-income housing tax credit (LIHTC), which provides tax credits to offset the cost
of producing affordable rental housing units, may increase supply in particular housing markets.65
The proposed Neighborhood Homes Investment Act (S. 657) would create similar tax credits in
owner-occupied markets.66 There is debate about whether and to what extent such policies
improve (or would improve) supply. Many spectators argue that these tax credits are an important
tool in increasing supply.67 For example, LIHTC has created about 3 million units nationwide.
Estimates vary greatly on how much LIHTC construction has crowded out private construction
and, therefore, how much overall supply has been affected.68
Improving Supply Chains
The cost and availability of materials used in the construction or renovation process have been a
constraint to housing supply at various points, as discussed earlier in the “Construction Input
Costs” section. To some extent, shocks that affect the cost and availability of inputs are
unpredictable. For example, the COVID-19 pandemic and the Russian invasion of Ukraine in
2022 both caused supply chain shocks that were not foreseeable.69 To the extent that the federal
government can reduce frictions in supply chains, such actions could potentially improve supply
conditions.70 For example, as part of the Housing Supply Action Plan, the Biden Administration
plans to “work with the private sector to address supply chain challenges and improve building
techniques” to improve the pace of construction. Trade policies also affect supply chains.

63 HUD, “Community Development Program,” Congressional Justification, FY2024, https://www.hud.gov/sites/dfiles/
CFO/documents/2024_CJ_Program_-_CDF.pdf.
64 The White House, “President Biden Announces New Actions to Ease the Burden of Housing Costs,” May 16, 2022,
https://www.whitehouse.gov/briefing-room/statements-releases/2022/05/16/president-biden-announces-new-actions-to-
ease-the-burden-of-housing-costs/.
65 See CRS In Focus IF11335, The Low-Income Housing Tax Credit: Policy Issues, by Mark P. Keightley.
66 See CRS In Focus IF11884, Neighborhood Homes Investment Act: Overview and Policy Considerations, by Mark P.
Keightley.
67 For example, see Owen Minott and Julia Selby, “The LIHTC and NHTC: Two Important Tools to Increase Housing
Supply,” Bipartisan Policy Center, October 27, 2022, https://bipartisanpolicy.org/blog/two-tools-increase-housing-
supply/.
68 For more details, see CRS In Focus IF11335, The Low-Income Housing Tax Credit: Policy Issues, by Mark P.
Keightley.
69 See CRS Report R46636, COVID-19 and the U.S. Timber Industry, by Anne A. Riddle; and CRS In Focus IF12104,
Russia’s 2022 War Against Ukraine: Global Economic Effects, by Andres B. Schwarzenberg.
70 The White House, “President Biden Announces New Actions to Ease the Burden of Housing Costs.” Other, more
general supply chain initiatives could have effects on housing markets. See CRS Insight IN11927, Summary of Selected
Biden Administration Actions on Supply Chains, by Lida R. Weinstock.
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In part, the increase in construction costs reflects market dynamics that are beyond the
government’s control, but some government policies directly contribute to costs. For example,
lowering trade barriers to material inputs in the construction process could reduce costs and
improve supply. Research suggested that 2017 tariffs on Canadian lumber increased U.S. lumber
prices.71 The NAHB expected that the 2022 decreases in lumber tariffs would improve the
volatility of lumber prices.72 While not the sole factor, the decreased tariff likely contributed to
decreasing lumber prices over the past year, as measured by the producer price index for
lumber.73

Author Information

Lida R. Weinstock

Analyst Macroeconomic Policy

Disclaimer
This document was prepared by the Congressional Research Service (CRS). CRS serves as nonpartisan
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under the direction of Congress. Information in a CRS Report should not be relied upon for purposes other
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71 Joseph Buongiorno, “Projected Effects of US Tariffs on Canadian Softwood Lumber and Newsprint Imports: A
Cobweb Model,” Canadian Journal of Forest Research, vol. 48, no. 11 (2018), pp. 1351-1357,
https://www.fs.usda.gov/research/treesearch/58183.
72 NAHB, “Canadian Lumber Tariffs Cut by More Than Half,” August 5, 2022, https://www.nahb.org/blog/2022/08/
lumber-tariff.
73 For producer price index lumber data, see BLS, “PPI Database Commodity Data,” https://www.bls.gov/ppi/
databases/.
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