‘Unfiltered’: Is new construction now ‘the only game in town’? 

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On this episode of Real Estate Insiders Unfiltered, Jim Tobin and Ken Wingert of the National Association of Home Builders discuss the top challenges builders are facing in a year that is turning out to be tougher than expected.

From fluctuating mortgage rates to tariffs and inflation, builders have plenty to worry about. That's already being reflected in NAHB's most recent monthly confidence survey, which found that sales expectations for the next six months have declined. 

Still, Tobin — NAHB's president and CEO — and Wingert, the trade association's chief advocacy officer, say the industry is on track to complete 1 million single-family homes this year, which would narrow the housing supply gap and help with affordability.

The supply problem: NAHB estimates that the U.S. has a deficit of 1.5 million housing units — and some economists put the number as high as 5.5 million — which has contributed to high home prices and made it difficult for buyers to enter the market. 

Tobin believes builders will make a dent in that figure this year. "We'll probably build 1.2 [million], maybe 1.3 [million] this year, with a million of those being single-family homes," he said. That'll help, given that the existing stock is "completely locked up."

"Until we solve that problem, new home construction is the only game in town if you want to buy a house," he added.

The only solution to the 'affordability crisis': The median sale price of an existing home was nearly $400,000 in February, according to NAR — an amount that 7 in 10 households cannot afford. For new homes, the median sale price was even higher at $414,500, the U.S. Census reported.

Increasing overall supply is key to bringing home prices in line with Americans' ability to pay. "The only way we're going to solve the affordability crisis is to build more housing, plain and simple," Tobin said. Household formation, immigration and housing stock all drive building — and the current existing stock "has never been older because we're just not building enough units," a trend that dates back to the Great Recession.

A disappointing start to the year: Tobin had expected President Donald Trump's return to the White House to deliver a "much better" start to 2025 after the economic growth experienced during his first term as president. But new tariffs, which Tobin believes are "inflationary," have complicated the situation. "I think that we would prefer open trade," Tobin said.

The levy on Canadian lumber expected later this year is one variable likely to affect new home construction, with the majority of builders already reporting supplier price hikes that could add nearly $11,000 to the cost of building a home — even as many tariffs have been paused.

 The 'uncertainty factor': "The real danger in tariffs is that uncertainty factor, and what it does to overall builder confidence," Wingert said. "There's not a room in the house that's not impacted by tariffs," said Wingert, adding that NAHB is "most concerned" about possible construction delays. 

Builders often need to take "calculated risks," he added, but "if you don't know what goes into the calculation, that makes it really hard" to move a project forward.