It’s a uniquely challenging time to be a prospective homeowner in America.
It’s nearly as challenging trying to gauge the degree to which elevated home prices, stubbornly high interest rates, skilled-labor shortages and other persistent headwinds might impact the nation’s housing market – and, by extension, the kitchen and bath trade. Already, a growing number of factors, including recent stock-market declines and waning consumer confidence, are resulting in the dampening of 2025 market projections.
The primary culprit for the growing uncertainty, however, is the issue of affordability.
With home prices still rising in most U.S. markets, mortgage rates hovering around 7%, and the nation facing an acute shortage in available housing – as many as seven million units, by some estimates – the dearth of affordable new and existing homes is approaching crisis levels.
And that’s deeply troubling news.
Even prior to this year, an entire generation of younger, first-time homebuyers unable to handle high down payments and elevated mortgage costs have effectively been shut out of the housing market. Rising construction costs, dwindling lot supplies, regulatory red tape and tightening credit for development and construction loans are also making it difficult for builders to produce housing that’s attainable. Families earning the nation’s median income now need a whopping 40% of their earnings to handle the mortgage payment on a median- priced home. More than 75% of America’s households are unable to afford such a home. At the same time, while home-equity levels remain at record highs, legions of current homeowners – reluctant to trade a low mortgage rate for a higher one – are reticent about relocating to another home.
“This is the time for enlightened bipartisan action on solutions that address the nation’s housing affordability crisis.”
As if all of that is not troubling enough, construction- material costs have risen dramatically in recent years, resulting in elevated home prices and a higher cost for both new construction and remodeling. Potential new tariffs on foreign imports of softwood lumber, gypsum, aluminum, steel and other key building materials may drive home prices even higher, analysts say.
All of this points, as never before, to an urgent need for action.
The good news is that a groundswell of support is apparently gaining steam in Washington and elsewhere, with a growing number of stakeholders pushing to implement government policies aimed at addressing America’s critically low housing inventory, while easing the affordability crisis and fostering homeownership for would-be buyers.
A growing consortium of housing-related trade associations led by the National Association of Home Builders, for example, is pushing Congressional policymakers to eliminate an array of regulatory barriers that hinder the production of affordable new homes, while strengthening programs aimed at boosting construction, reining in regulatory costs and stabilizing volatile trade markets (see related story, NAHB Pushes Congress to Boost Production of Homes in U.S.).
Proposals call for a multifaceted approach aimed at adopting less-burdensome land-use regulations, addressing workforce needs, eliminating permitting roadblocks, reducing the cost of developing finished lots, revamping tax policy, fixing inefficient building material supply chains, and overcoming other obstacles preventing builders from constructing the homes that America desperately needs.
Addressing the nation’s housing-affordability crisis by creating housing supply and lowering costs should be a national priority in 2025.
Congressional leaders, local governments and community planners, financial institutions, trade associations, real estate professionals and others from across the political spectrum must work to develop programs that boost housing production, make homeownership more affordable, and help more people find a path to the long-held American Dream.
