NAHB Commends Biden’s First-Time Home Buyer Tax Credit Proposal, Plan to Strengthen LIHTC

The National Association of Home Builders (NAHB) applauds President Biden for proposing a comprehensive housing plan in his State of the Union address that would help ease the nation’s housing affordability woes and enable more hardworking families to achieve homeownership and rental housing opportunities.

“We commend President Biden for making housing and homeownership a top national priority,” said NAHB Chairman Carl Harris, a custom home builder from Wichita, Kan. “Many of the initiatives proposed by the president to build and preserve an additional 2 million homes—including a new $10,000 tax credit for first-time home buyers, strengthening the Low-Income Housing Tax Credit and up to $25,000 in down payment assistance to first-generation home buyers—are important steps forward to address a national housing shortage of roughly 1.5 million units and to boost housing affordability.”

NAHB welcomes the discussion on how the tax code can effectively incentivize homeownership, including through the proposed first-time home buyer tax credit, and believes that should be accompanied by a modernization of the mortgage interest deduction. Specifically, NAHB has called for converting the mortgage interest deduction to an ongoing tax credit targeted to the middle-class, who typically do not itemize and do not benefit from the current homeownership tax incentives.

And while addressing the demand-side through tax credits and down payment assistance plays a vital role in tackling America’s housing affordability challenges, Harris stated that “building more homes is the most important factor when it comes to easing shelter inflation, achieving a healthy supply-demand balance in the for-sale and rental markets, and bending the housing cost curve.”

Harris added that NAHB is seeking to work not only with the administration, but with Democratic and Republican leaders in Congress, state and local officials and all other public and private stakeholders to advance the cause of housing and increase the nation’s housing supply.

“Neither the public nor the private sector can meet the challenge alone,” said Harris. “Together, they must seek to implement and devise innovative solutions that allow the nation’s home builders to expand housing production. Any policy that seeks to ease shelter inflation and improve affordability without adding single-family or multifamily for-sale or for-rent housing is doomed to fail.”

Implementing several elements in the White House plan will move the ball forward to achieve the administration’s goal of building and preserving an additional 2 million homes; but NAHB believes that a provision in the proposal dealing with rental housing fees is counterproductive because a one-size-fits-all requirement would interfere with the breadth and differences in states’ fee requirements that already cover limitations in amounts of specific types of rental housing fees, refundability, and return and disclosure requirements, just to name a few.

Moreover, more needs to be done to enable America’s builders to construct the housing to meet the needs of a growing population. NAHB believes policymakers at all levels of government can help in these efforts by working to:

• Eliminate excessive regulations;
• Oppose restrictive, costly national energy code proposals that will raise housing costs while providing little energy savings to consumers;
• Overturn inefficient zoning rules;
• Promote careers in the skilled trades;
• Reduce impact fees and other upfront taxes associated with housing construction;
• Alleviate permitting roadblocks;
• Diminish NIMBY opposition; and
• Ease density and growth restrictions.

“Yesterday, the White House brought housing and housing affordability to the forefront of the national agenda,” said Harris. “Today, we need to build on that momentum by working to implement tax credits for first-time buyers, expand the Low-Income Housing Tax Credit and enact these other common-sense solutions. This broad blueprint will reduce housing inflation and the overall inflation rate, lower housing costs, and enable builders to boost attainable housing production to put the economy on a firmer footing.”