How Can Density and Varying Housing Types Influence Local Tax Bases?

Local land use decisions shape far more than the look of our neighborhoods. They directly affect housing affordability, infrastructure costs, and the long-term fiscal health of communities.

However, zoning and development policies are often evaluated without a clear understanding of how different development patterns actually perform over time. NAHB’s new Value of Land Use Efficiency video and infographic resource in the Land Use 101 toolkit helps ground these conversations in data.

Developed in partnership with Urban3, this resource takes a data-driven look at how a wide range of residential development types — from single-family homes to townhomes, "missing middle" housing, and mixed-use development — contribute to local tax bases relative to the public services they require. The findings reinforce an important point: Different housing types perform differently depending on context, but more compact and efficient land-use patterns often generate more tax revenue per acre while requiring less infrastructure and long-term maintenance.

In contrast, low-density development can struggle to cover its own public costs, even when homes are more expensive. The takeaway is not that one housing type is “right” or “wrong,” but that communities should allow the market to respond to local demand rather than restricting options through outdated or inflexible policies.

For NAHB members working with local officials, planners and policymakers, this research helps reframe housing conversations that are often driven by perception or political pressure. Instead of debating housing types based on preference alone, communities can evaluate them based on measurable fiscal outcomes.

For builders and housing advocates, the resource provides credible, independent analysis that supports allowing a full range of housing choices so builders can deliver what buyers and renters are actually seeking.

At a time when communities are facing housing shortages, rising infrastructure costs and growing resistance to new development, the Value of Land Use Efficiency resource offers a clearer lens for decision making. By grounding land-use policy in real economic performance and supporting all forms of housing development, local leaders can advance affordability, sustainability and long-term community resilience without sacrificing fiscal responsibility.

Visit nahb.org/lu101 to explore these resources and more.