Expected Republican control of the White House and both chambers of Congress in January has sparked anticipation among developers of single-family homes of eased regulations on building more housing.
In November, single-family homebuilders’ confidence in the housing market increased for the third month in a row, according to the National Association of Home Builders/Wells Fargo Housing Market Index released Monday. The confidence level in the market among builders for newly built single-family homes was 46 in November, up three points from last month, according to the index.
This month's presidential election eliminated some of the uncertainty homebuilders were facing and left some hopeful for the future, according to Carl Harris, chairman of the builders association.
“Builders are expressing increasing confidence that Republicans gaining all the levers of power in Washington will result in significant regulatory relief for the industry that will lead to the construction of more homes and apartments,” Harris, a custom home builder from Wichita, Kansas, said in a statement. “This is reflected in a huge jump in builder sales expectations over the next six months.”
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It’s a sentiment that has echoed throughout residential real estate in recent weeks as developers and agents have come to anticipate a Trump presidency could help the embattled housing market.
During his campaign, Trump said his party would combat housing affordability and help new homebuyers. His administration pledged to reduce mortgage rates by slashing inflation, opening some federally owned land to new construction, promoting homeownership through tax incentives and cutting “unnecessary regulations that raise housing costs.”
Increasing housing supply
But the election results won’t immediately solve all of homebuilders’ problems, according to Harris.
There’s still “an ongoing shortage of labor and buildable lots along with elevated building material prices” to contend with, he said. And though the stock market has rallied following the election, “the bond market has concerns, as indicated by a rise for long-term interest rates.”
“There is also policy uncertainty in front of the business sector and housing market as the executive branch changes hands,” Harris said.
This month at the National Association of Realtors’ largest annual meeting, NAR NXT, real estate professionals discussed ways to overcome the shortage of labor and lack of buildable lots.
One way, according to Phil Crone, vice president of Leading Builders of America, is to make changes to the education system that would bring more younger workers into the labor force. By supplying more skilled workers, developers could see faster construction and lower their costs.
Another suggestion offered at the meeting was to increase local engagement and pushback against the not-in-my-backyard movement where residents oppose development in their communities. Tamara Small, the CEO of the Massachusetts chapter of NAIOP, the Commercial Real Estate Development Association, said one way to do that is by driving up attendance at local meetings about development.
“We need to have small business owners," Small said during a panel discussion. "We need to have long-time residents, old and young, come together and really say ‘We can do this together.’”
CoStar News reporter Paul Owers contributed to this report.