The National Association of Home Builders (NAHB) reports that increasing regulatory costs, the shortage of construction workers, tariffs on $10 billion worth of building materials, and concerns over housing finance have impacted housing affordability.
According to the report, regulations account for 25% of the price of a single-family home, and 30% of the cost of a multi-family development.
“Removing regulatory barriers that contribute to the increased costs of housing will pave the way to homeownership,” said NAHB Chairman Greg Ugalde, a builder and developer from Torrington, Connecticut. “Home builders and the residential construction community are committed to working with Congress to ensure homeownership is within reach of hard working families.”
The latest NAHB/Wells Fargo Housing Opportunity Index found that 61% of new and existing homes were deemed affordable. The current homeownership rate of 64.2% remains below the 25-year average of 66.3%, according to the U.S. Census Bureau’s Housing Vacancy Survey.
Home buyers stated in an NAHB analysis that high home prices remain a barrier to homeownership. Seventy-eight percent of buyers estimated they could afford fewer than half of the homes for sale in their markets. The NAHB states 53% of buyers seeking a home in Q1 2019 have been searching for three months or longer.
The analysis found that seniors are most likely to be actively searching for a home at 56%, with 50% of millennials actively looking to buy a home. Baby boomers have the lowest share of people actively searching for a home at 41%. Potential buyers within Gen X came in at 42%.
Despite affordability concerns, the NAHB states younger generations are optimistic about finding a home. The report states that 23% of millennials, 22% of Gen X’ers and 20% of seniors expect house hunting to become easier in the future. Baby boomers (18%) were the least optimistic about the prospects of finding a new home.
The NAHB also states about 20% of millennials have plans to purchase a home in the next year.