The residential construction industry is on the road to recovery after the worst housing market downfall since the Great Depression. Housing production has picked up every year since we hit bottom in 2009 and continues to track upward. Meanwhile, solid economic and job growth are helping to gradually unleash pent-up demand for new homes.
While encouraging, we still haven't hit normal single-family production levels—those seen in the early 2000s. That's because builders are facing major headwinds that are delaying a full housing recovery. The largest obstacle right now is overregulation of the home building industry. This year alone, regulatory agencies have introduced or finalized myriad rules affecting residential construction.
These regulations run the gamut from environmental mandates that impede land development to workplace rules and burdensome lending policies. Their benefits often are unproved, and they can add significant cost to a house. NAHB economists found that local, state, and federal regulations on average raise the price of a new home by 25%; in some cases, it can be as high as 36%. As a result, many buyers are pushed out of the market and our industry loses ground in the recovery.
As a builder for over 40 years, I know sensible, cost-effective regulations—developed with industry input—allow us to move forward. But overly burdensome rules that produce nothing more than red tape are a different story.
Perhaps this year's most extreme example of overregulation is the expanded definition of "waters of the United States" (WOTUS) under the Clean Water Act. Issued by the EPA and U.S. Army Corps of Engineers, this rule is essentially a land grab. It could place millions of acres of private property—including certain roadside ditches, isolated ponds, and channels that may flow only after it rains—under federal jurisdiction, making them subject to expensive, time-consuming permitting and mitigation requirements.
The WOTUS rule is such a misuse of federal authority that memos show that the Corps wanted to keep its distance from the regulation. According to these documents, the Corps indicated that the EPA used flawed technical and scientific analysis and failed to consult with necessary stakeholders.
The NAHB has been combating the expanded WOTUS definition since the rule was first proposed. Most recently, NAHB successfully urged the House of Representatives to approve legislation requiring the EPA and the Corps to withdraw the rule and develop a new plan; it's asked the Senate to do the same.
A group of 13 states challenged the rule in North Dakota district court, and the court has issued an injunction barring its implementation in those states. The NAHB also filed suit against the EPA, and has asked for a nationwide implementation delay.
When harmful rules are proposed, NAHB meets with the appropriate regulators to discuss alternatives and encourages congressional representatives to pass legislation that will keep home building moving forward. NAHB has a strong track record of warding off regulatory overreach, and we must remain diligent and prepared to meet future challenges.