Excessive regulations are contributing to the housing affordability crisis. On average, regulations imposed by government at all levels account for nearly 25% of the price of building a single-family home and more than 30% of the cost of a typical multifamily development. NAHB believes that Congress must reassert its oversight authority over rulemaking agencies and that efforts to further regulate the housing industry must be subject to greater public scrutiny and based on sound data.
Reform Efforts by the Trump Administration
President Trump has made regulatory reform one of his top priorities. In addition to issuing statements of support for several of the pending regulatory reform bills, he has taken a number of steps to facilitate change:
- Placed a regulatory freeze on all regulations that were passed during the last months of the Obama Administration. This freeze is meant to give Trump Administration cabinet appointees time to consider new and pending rules before they become effective.
- Issued Presidential Executive Order 13771 on Reducing Regulation and Controlling Regulatory Costs, which directs each federal agency to repeal two existing regulations for every new rule issued and to offset any new compliance costs by reducing others so that the net cost is no more than zero.
- Issued Executive Order 13777 on Enforcing the Regulatory Reform Agenda. This EO outlines the steps each agency must take to evaluate its existing regulations and identify those that could be eliminated or revised to reduce existing regulatory burdens.
- EO 13777 also calls for agencies to conduct retrospective review of their existing regulations. Steps include designating a Regulatory Reform Officer and establishing a Regulatory Reform Task Force. Importantly, the EO includes a reporting mechanism and directs the agencies to seek input from regulated entities.
NAHB has submitted its recommendations to:
- Environmental Protection Agency
- Department of Housing and Urban Development
- Federal Emergency Management Agency
- Department of Commerce (National Marine Fisheries Service)
- Department of Justice
- Fish and Wildlife Service
- Army Corps of Engineers
We will soon provide suggestions to the Department of Labor, Department of Energy, Occupational Safety and Health Administration and others once their notices are published.
The Small Business Administration’s Office of Advocacy is also collecting input through a series of nationwide Regulatory Roundtables. NAHB has had good representation at all roundtables to date.
NAHB supports federal efforts to address overly burdensome regulations, especially those that impact small businesses, and to ensure greater transparency and accountability in the federal regulatory process.
Why It Matters
As increasingly complex regulations are layered over existing ones, the growing mountain of red tape generates skyrocketing compliance costs that stifle business initiative and harm consumers. The housing industry provides a good example. On average, nearly 25% of the cost of building a typical new single-family home – almost $85,000 – is attributable to government regulation. According to NAHB research, approximately 14 million American households are priced out of the market for a new home by government regulations.
Three key reforms can fix the broken regulatory rulemaking process:
- Restore congressional oversight to the rulemaking system;
- Ensure rulemaking agencies consider the disproportionate impact rules have on small businesses; and
- Reconsider the rulemaking process.
Reasonable regulations are essential to protecting the health and safety of workers, the environment and financial institutions, but they must strike a balance. Federal regulations must be carefully structured to achieve their intended benefits while minimizing the burdens on small businesses.