The United States is facing a housing shortfall of at least 10 million single-family homes, according to the Council of Economic Advisers (CEA) in the White House's latest Economic Report of the President, published on Monday.

The estimate is based on the long-term slowdown in homebuilding following the 2008 financial crisis. The report argues that if construction had continued at pre-2008 trends, the U.S. housing stock would be significantly larger today.

The CEA also notes that this gap reflects a structural supply failure rather than short-term demand fluctuations, driven by regulatory constraints, permitting delays, and elevated construction costs across many states.

Regulatory Constraints And Rising Costs

The CEA attributes the shortfall largely to binding supply constraints, including zoning restrictions, permitting delays, building code expansions, and rising compliance costs. Residential construction rules have also become significantly more complex over time, contributing to higher per-unit costs and slower development timelines.

The report estimates that regulatory and procedural frictions materially increase the cost of new housing and reduce overall construction output, limiting the responsiveness of supply even as demand persists.

Mortgage Rates Rise on Inflation and Energy Shock

Broader market conditions are adding pressure to affordability. The average 30-year fixed mortgage rate climbed to 6.38%, a six-month high, driven by inflation fears linked to rising oil prices following geopolitical tensions in the Middle East. Inflation forecasts have also been revised upward, with OECD projecting 4.2% inflation in 2026, reinforcing expectations of sustained high borrowing costs.

Policy Push To Ease Credit Conditions

The administration signed an executive order to deregulate the mortgage market, including reforms to lending rules and digital mortgage processes. The policy claims potential savings of around $5,000 per mortgage through reduced compliance costs and expanded lender participation.

Earlier, large-scale mortgage-backed securities purchases were also directed to support the housing market, briefly lowering mortgage rates before reversing amid market volatility.

Property Taxes Add Further Pressure

U.S. property taxes rose 3.7% in 2025 to nearly $397 billion, even as home values declined slightly, highlighting persistent cost pressure for homeowners beyond purchase prices.