What’s the biggest single economic challenge facing working and middle-class Americans? Housing. Its supply isn’t nearly keeping up with demand. This means higher home prices and higher rents.
Data released by the Census Bureau yesterday shows fewer housing starts in May than in any month since the 2020 pandemic.
So what’s Trump doing about the slump in new housing? Three things. All will worsen it.
1. He’s put a tariff on Canadian lumber, which is driving up the cost of a key component of new homes. Trump is considering even higher tariffs on wood materials including lumber.
2. He is pushing a bill through Congress that will explode the national debt, causing long-term interest rates to rise. It’s estimated that the additional debt will boost average annual mortgage payment by $1,450 by 2034 and boost the lifetime cost of the average mortgage by $44,000 in 2034. These added costs will also make houses and rental units less affordable.
3. He’s intent on deporting a large number of the people who construct homes — the people who do the excavating, roofing, carpentering, and installing of drywall and insulation. Undoubtedly, this too will drive up the costs of homes, making them less affordable.
You couldn’t come up with a worse housing policy if you tried.
Robert Reich is a professor of public policy at Berkeley and former secretary of labor. His writings can be found at https://robertreich.substack.com/.