Trump signs executive orders aimed at home affordability ahead of the midterm elections

WASHINGTON (AP) — President Donald Trump on Friday signed a pair of executive orders aimed at showing his commitment to improving home affordability — a key issue for many voters ahead of the November election for control of the House and Senate.

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Under the first order, the federal government will reduce housing regulatory burdens and create incentives for best practices by state and local governments, with the goal of making it easier for builders to build more homes. The second would reduce the regulatory burdens associated with mortgages and make it easier for smaller community banks to make home loans.

“Layers of unnecessary regulatory barriers, slow permitting processes, and burdensome mandates at all levels of government have delayed construction, restricted development, and raised the costs of new housing,” the draft order said. “These restrictions have made housing less affordable for many Americans.”

The executive orders — obtained exclusively by The Associated Press — show how the Trump administration is seeking to place greater emphasis on the importance of homeownership. Housing affordability has emerged as a key policy challenge for Republicans and Democrats alike, as lawmakers work on measures to show they are responding to concerns that purchasing a first home has become difficult for middle-class families.

On Thursday, the Senate passed a broad, bipartisan housing bill, which seeks to adjust policies to increase construction and limit institutional ownership of home development. The path to putting the measure through the House is uncertain. The White House said in a statement issued on March 2 that it supports passing this measure.

It is unclear how quickly federal efforts can create new construction or significantly reduce mortgage costs, as key regulatory issues related to home development involve the policy choices of state and local governments, and mortgage rates will reflect changes in financial markets.

A building shortage for several years has kept prices high, while rising mortgage rates in the wake of the pandemic have left many renters unable to buy and current landlords unwilling to part with their current properties.

The orders reduce environmental regulations and simplify the mortgage process

Under the first order signed by Trump on Friday, federal agencies will create incentives to speed up permitting times by state and local governments, including scaling back “green” building codes, reductions in design-build mandates and making it easier to deploy innovative construction methods.

The order looks largely at federal environmental regulations, directing the EPA and the Secretary of the Army to review and update stormwater, wetlands and other water-related permitting requirements to reduce costs and improve the ability to secure homes.

The Departments of Commerce, Housing, Urban Development, and Transportation, along with the Federal Housing Finance Agency, have been instructed to eliminate regulations and update programs that reduce residential development. Many federal agencies will also seek to eliminate environmental and energy efficiency regulations that can increase costs and restrict home construction.

Biden-era energy efficiency mandates in guidelines for the Department of Housing and Urban Development and the Departments of Agriculture could add up to $9,000 to housing construction costs, White House officials said. The officials requested anonymity to clarify details of the orders before signing them, saying other federal regulations would add more to those involved.

The Historic Preservation Advisory Council will streamline its guidelines on historic reviews, while the federal government will seek to bring the New Markets Tax Credit program in line with Opportunity Zone tax credits created during Trump’s first term.

The order does not seek to change state and local zoning laws, as the administration sought to preserve suburban housing rather than increase housing density.

White House officials said federal agencies could incorporate best practices on housing regulations as a standard for rewarding discretionary grants to state and local governments. An example of a best practice is for local governments to have a 60-day deadline to approve building permits. Management believes this will have a long-term impact on home builders and buyers.

The second order aims to simplify the mortgage process, directing the Consumer Financial Protection Bureau to change its mortgage guidelines so smaller banks can engage in more lending. The CFPB will update requirements under the Home Mortgage Disclosure Act to reduce regulatory burdens of obtaining a mortgage, among other guidance.

The administration’s theory is that changes in mortgage regulations would increase the number of financial institutions competing to make home loans, thus lowering borrowing costs for buyers. The White House insists that its changes will maintain the financial health and stability of the mortgage market.

White House officials expect potential homebuyers to be able to see the impact of changes in mortgage regulations within months.

The Republican Party’s electoral chances may be harmed by rising home prices

High housing prices have emerged as a major issue for voters under 40 ahead of the midterm elections scheduled for this fall.

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The median price of an existing home sold in February was $398,000, according to the National Association of Realtors. This total is approximately five times the average household income. The historical rule of thumb was that homes generally cost three times a family’s income.

The average interest rate on a 30-year mortgage in February was 6.05%, down from 6.84% a year ago, the National Association of Realtors said.

Lower borrowing costs have made monthly payments more manageable, but rates are still well above the sub-3% averages that occurred in 2020 and 2021 as the weak economy dealt with the coronavirus pandemic and its fallout.

Trump has primarily sought to address the challenge of housing affordability by directing the two government-controlled mortgage companies, Fannie Mae and Freddie Mac, to purchase $200 billion worth of mortgage securities.

He also called for limiting the ability of financial institutions to purchase homes and setting caps on interest rates paid on credit cards, arguing that both steps would make it easier to purchase homes.

But the president has previously objected to the idea of ​​dramatically increasing construction, saying doing so could lead to lower home prices and net worth for current owners. This has him trying to balance his desire to keep prices high while finding ways to boost ownership for people who are renting now.

“People who own their homes, we’re going to keep them wealthy,” Trump said at a January Cabinet meeting. “We’re going to keep those prices high. We’re not going to destroy the value of their homes so that someone who hasn’t worked hard can afford a home.”