As Americans face challenges in becoming homeowners, a recent report highlights that government regulations have been driving up the cost of new homes by about $132,000.
The report reveals that the combination of soaring mortgage rates and limited housing inventory has made homeownership unattainable for many families. In fact, home affordability is currently the top concern nationwide, contributing over 25% to the overall price of new homes.
This situation is likely to become a prominent topic as the 2026 midterm elections approach, with lawmakers under pressure to tackle climbing home prices and the broader housing affordability crisis.
The National Association of Home Builders (NAHB) commissioned the report, emphasizing that regulations from various levels of government significantly contribute to the ongoing housing shortage and affordability issues.
The findings indicate that these regulations add about $131,734 to the cost of a new home, which is 26.4% of the final sales price. This estimate, based on an average new home price of $499,500, represents the largest increase NAHB has recorded since it started tracking such data in 2011.
To make matters worse, regulatory costs have surged by 40% since 2021.
“Our updates every five years confirm what we’ve been saying: the cost of building single-family homes in this country keeps rising, worsening the housing affordability crisis,” NAHB President and CEO Jim Tobin stated. He noted that with a 40% increase over the last five years, the combined regulatory burden from all government levels now exceeds $130,000 for new homes.
NAHB estimates there is a structural housing shortage of approximately 1.2 million units in the U.S. and argues that the escalating regulatory costs are hindering efforts to boost supply.
Tobin pointed out that regulatory costs differ by state, mentioning that regions in the Southeast—like Texas, Florida, and the Carolinas—tend to have lower regulatory expenses compared to states like California, New York, New Jersey, and Illinois.
Looking ahead, he anticipates further increases in regulatory costs but believes there are ways policymakers can mitigate this through reforms. “Anything we can do to cut costs is crucial,” he said.
He referenced the bipartisan 21st Century Housing Act, which aims to simplify permitting, reduce construction barriers, and enhance financing options to boost the nation’s housing stock.
The White House and the Department of Housing and Urban Development have not yet responded to requests for comments regarding the report’s insights.
NAHB maintains that the study isn’t a call to eliminate all regulations, but rather an effort to quantify their total effect on housing affordability.
“Regulation is necessary, but it can become excessive,” Tobin remarked. “We must protect health and safety while removing burdensome regulations that inflate costs and distance Americans from homeownership.”
The analysis is based on responses from 54 land developers and 337 single-family builders surveyed in March 2026.
