House prices are up 60% since 2019, and rent prices are up more than 30%. These shocking increases have left roughly one-third of all American households, including half of all renters, housing cost burdened, meaning they spend more than 30 percent of their gross income on rent or mortgage payments. The pandemic exacerbated the problem, but the housing affordability crisis has been growing for decades. People are seeing the American Dream of home ownership evaporate in front of their eyes.

We simply have not built enough houses to keep up with demand. Fixing the supply shortage and restoring affordability will require building an additional 2-5 million houses.

Improve Construction Productivity

It is not just that we have not built enough homes. Incredibly, the productivity of home construction is no better today than it was in the 1950s. By contrast, overall labor productivity has more than tripled in the same timeframe. Home building is stuck in the previous century.

Revolutionize Home Building with Modular Construction

Using modular construction to build housing has the potential to unlock productivity gains that will make homes more affordable. Modular construction involves producing segments of homes in a factory setting and assembling them onsite. Sweden has made major strides in this area, and we should study what they have learned and bring the best parts of it back to this country.

Standardize and Streamline Building Codes

Due to the 10th Amendment, building codes and land use regulations are determined at the state and local level. This has its benefits, but imagine if cars needed to be built differently and built onsite in each state and locality. The federal government does not create building codes, but the National Institute of Standards and Technology (NIST) should develop recommendations for how to standardize codes across jurisdictions to increase building construction productivity.

Use New and More Efficient Building Materials

New materials like cross-laminated timber have the potential to reduce the cost of building construction. NIST should develop recommendations for how building codes should be updated to allow for the greater use of these materials.