Building the Future: How Small Home Builders Are Closing America's Housing Gap
Summary
The printed record of a hearing of the House Committee on Small Business titled Building the Future: How Small Home Builders Are Closing America’s Housing Gap, on May 21, 2026, Small Business Committee Document Number 119–036. Chairman Roger Williams presided, and the contents list opening statements by Hon. Roger Williams and Hon. Nydia Velázquez. The witnesses were Bill Owens of the National Association of Home Builders, Dr. Ivan Rupnik of MOD X and Northeastern University, Eric Schaefer of Fading West and Emily DiVito of Groundwork Collaborative. The chairman's opening statement says more than one-half of American households cannot afford a $300,000 home and that as much as 40 percent of the cost of multifamily home development is not tied to brick and mortar. The appendix carries the prepared statements.
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“Building the Future: How Small Home Builders Are Closing America's Housing Gap.”
Original at www.govinfo.gov. Archived at Pandemic Darlings, https://pandemicdarlings.com/source-documents/chrg-119hhrg63840-building-the-future-how-small-home-builders-are-clos-ebabe0899f/
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BUILDING THE FUTURE: HOW SMALL HOME
BUILDERS ARE CLOSING AMERICA’S HOUSING
GAP
HEARING
BEFORE THE
COMMITTEE ON SMALL BUSINESS
UNITED STATES
HOUSE OF REPRESENTATIVES
ONE HUNDRED NINETEENTH CONGRESS
SECOND SESSION
HEARING HELD
MAY 21, 2026
Small Business Committee Document Number 119–036
Available via the GPO Website: www.govinfo.gov
U.S. GOVERNMENT PUBLISHING OFFICE
63–840 WASHINGTON : 2026
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HOUSE COMMITTEE ON SMALL BUSINESS
ROGER WILLIAMS, Texas, Chairman
PETE STAUBER, Minnesota
DAN MEUSER, Pennsylvania
BETH VAN DUYNE, Texas
JAKE ELLZEY, Texas
MARK ALFORD, Missouri
BRAD FINSTAD, Minnesota
TONY WIED, Wisconsin
ROB BRESNAHAN, Pennsylvania
BRIAN JACK, Georgia
KIMBERLYN KING-HINDS, Northern Marina Islands
DEREK SCHMIDT, Kansas
JIMMY PATRONIS, Florida
CLAY FULLER, Georgia
NYDIA VELÁZQUEZ, New York, Ranking Member
MORGAN MCGARVEY, Kentucky
HILLARY SCHOLTEN, Michigan
LAMONICA MCIVER, New Jersey
GIL CISNEROS, California
KELLY MORRISON, Minnesota
GEORGE LATIMER, New York
DEREK TRAN, California
LATEEFAH SIMON, California
JOHNNY OLSZEWSKI, Maryland
MAGGIE GOODLANDER, New Hampshire
SEAN DILLON, Majority Staff Director
MELISSA JUNG, Minority Staff Director
(II)
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CONTENTS
OPENING STATEMENTS
Page
Hon. Roger Williams ................................................................................................ 1
Hon. Nydia Velázquez ............................................................................................. 2
WITNESSES
Mr. Bill Owens, Chairman of the Board, National Association of Home Build-
ers, Flagstaff, AZ .................................................................................................. 5
Dr. Ivan Rupnik, PhD, Founding Partner, MOD X, Professor of Architecture,
Northeastern University, Cambridge, MA ......................................................... 7
Mr. Eric Schaefer, Chief Business Development Officer, Fading West, Buena
Vista, CO ............................................................................................................... 8
Ms. Emily DiVito, Senior Advisor for Economic Policy, Groundwork Collabo-
rative, Washington, DC ....................................................................................... 10
APPENDIX
Prepared Statements:
Mr. Bill Owens, Chairman of the Board, National Association of Home
Builders, Flagstaff, AZ ................................................................................. 33
Dr. Ivan Rupnik, PhD, Founding Partner, MOD X, Professor of Architec-
ture, Northeastern University, Cambridge, MA ......................................... 46
Mr. Eric Schaefer, Chief Business Development Officer, Fading West,
Buena Vista, CO ........................................................................................... 56
Ms. Emily DiVito, Senior Advisor for Economic Policy, Groundwork Col-
laborative, Washington, DC ......................................................................... 63
Questions for the Record:
None.
Answers for the Record:
None.
Additional Material for the Record:
None.
(III)
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BUILDING THE FUTURE: HOW SMALL HOME
BUILDERS ARE CLOSING AMERICA’S
HOUSING GAP
THURSDAY, MAY 21, 2026
HOUSE OF REPRESENTATIVES,
COMMITTEE ON SMALL BUSINESS,
Washington, DC.
The Committee met, pursuant to call, at 10:02 a.m., in Room
2360, Rayburn House Office Building, Hon. Roger Williams [chair-
man of the Committee] presiding.
Present: Representatives Williams, Meuser, Jack, Velázquez,
McGarvey, Scholten, McIver, Cisneros, Morrison, Tran, Olszewski,
and Goodlander.
Chairman WILLIAMS. Good morning to everyone. I now call the
Committee on Small Business to order. Without objection, the
Chair is authorized to declare a recess of the committee at any
time, and I now recognize myself for my opening statement.
Good morning and welcome to today’s hearing titled Building the
Future: How Small Home Builders are closing America’s housing
gap. I want to thank our witnesses for joining us today and for
lending their time and expertise to this important conversation.
And homeownership remains a cornerstone of the American dream.
Homeownership represents more than just a roof over your head.
It is the foundation of personal stability and freedom and a place
where families are formed, children are raised, and memories are
made. It is where much of America’s small business activity begins,
with millions of entrepreneurs launching and operating businesses
from their homes. Roughly half of all new businesses start in the
home. But that dream, for too many Americans, feels increasingly
out of reach. Our nation is facing a serious supply and affordability
challenge. Today, more than half, one-half of the American house-
holds cannot afford a $300,000 home. And when housing construc-
tion slows and housing becomes unattainable, communities stag-
nate, growth slows, and young families are priced out. Priced out.
Main street across the country feel that the consequences as
fewer people are able to plant roots, start businesses, and invest
in their neighborhoods. Amid these challenges, small homebuilders
have become essential. They have often the most agile, responsive,
and innovative builders willing to meet that moment. Across the
country, small business and small homebuilders are pushing the
boundaries of what is possible in housing delivery. Whether
through modular or manufactured housing, or emerging methods
like 3D printed construction, small home builders are re-imagining
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how homes are built from the concept to completion. These innova-
tions offer real promise. By reshaping our approach to housing con-
struction, these innovations can deliver faster construction
timelines, lower material costs, reduce waste, and offer greater effi-
ciency in bringing homes to the market.
Yet despite this momentum, significant barriers remain for the
small homebuilders across the country. Key challenges such as
overregulation and access to capital continue to drive up home
costs and constrain supply. In some cases, much as 40 percent of
the cost of multifamily home development is tied to—is not tied to
brick and mortar, but to navigating layers of compliance costs, lo-
cally and state and federal requirements.
At a time when many families are struggling to find an afford-
able place to live, we must ask hard questions about whether our
current system is helping meet those moments. Because often the
solutions already exist in the ingenuity of builders and entre-
preneurs across this country. What they need is a space to build,
the clarity to plan, and the freedom to innovate as they can deliver
their homes to Americans that we need urgently. Local officials
across the country are beginning to realize this, and needless to
say, whatever local regulations have been loosened, like in Austin,
Texas, the housing market has boomed.
Now, you also will hear from our witnesses today, small business
home builders are continuing to press forward despite their bar-
riers, but it is time to stop hamstringing our best and our bright-
est. When small home builders are constrained, It affects people
far—it affects people far beyond the housing market, and other in-
dustries feel the pressure. Local economies lose momentum and
worker mobility becomes restricted. Housing is a driver of economic
growth, and when workers cannot find affordable homes near their
jobs, certain employers struggle to recruit and maintain talent.
Productivity suffers and economic expansion slows. A shortage of
housing does not just limit where people live, it also limits where
people can grow, where workers can move, and how strongly local
economies can compete.
So as a committee, it is our responsibility to look at the chal-
lenges that facing small home builders and bring their obstacles to
light with clarity and with purpose. It is also our duty to empower
the people who build America to do what they do best. And ur role
is to ensure that the committee is a partner in progress, not a road-
block to it. Just yesterday, the Ranking Member and I, along with
our colleagues, voted to pass the House-led bipartisan housing bill
that we passed out of this chamber yesterday. We need to work to-
gether to ensure that small home builders can compete, innovate,
and deliver the housing this country is counting on. I want to
thank all of you again for being here. Coming, it is a big deal that
you will come. I look forward to the conversation ahead today. With
that in mind, I now yield to our Ranking Member and my friend
from New York, Ms. Velázquez.
Ms. VELÁZQUEZ. Thank you, Mr. Chairman, for calling this
timely hearing on one of the most important issues facing our econ-
omy. Let me also take this opportunity to welcome all the wit-
nesses and to thank you for being here.
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Nowhere is our affordability crisis more evident than in housing
where half of renters are rent-burdened and a quarter pay more
than half of their income. In New York City, our rental market is
out of control. On average, New Yorkers who rent are paying 41
percent of their income. This isn’t a red or blue state issue either.
Cities in states like Texas and Florida also face rental affordability
issues. Similarly, homeownership is drifting further out of reach.
According to the Atlanta Fed, the salary needed to afford the me-
dian home is roughly $116,000, 36 percent higher than the actual
median income of $85,000. Over just the past 6 years, the median
home price has surged over 30 percent, and elevated interest rates
are keeping many locked into their low in low-rate pandemic-era
mortgages. As a result, an entire generation has been priced out
of home ownership.
According to the National Association of Realtors, the first-time
homebuyer share is now at a record low, and the typical age of a
first-time homebuyer is an all-time high of 40 years old. We are not
building enough housing to meet demand. Experts estimate we lack
between 3 and 5 million units nationwide. Tackling this issue will
mean addressing shortages of both single-family and multifamily
housing developments. I hope this hearing can identify causes and
address solutions to this crisis, including by leveraging the power
of small firms across the nation.
Yesterday, the House began addressing some of those issues by
passing the 21st Century Road to Housing Act, which makes im-
portant reforms to federal housing programs and includes language
I offer on cooperative housing developments and oversight of mon-
itors and receivers of public housing authorities. This bill is an im-
portant first step, but it is not the complete answer. I urge the Sen-
ate to act quickly and pass this bill. Yet we must all recognize that
we still need substantial investment in housing programs to tackle
this issue. While the issue, slow housing construction, is caused by
many structural problems, from labor and materials to financing to
land regulations, it is clear that the administration who cam-
paigned on affordability is making the problem worse.
For instance, this administration’s cruel and racist immigration
policies have specifically targeted a large portion of the construc-
tion workforce. As a result, threats of ICE raids have deterred even
documented workers and legal residents from showing up to job
sites, extending timelines and growing costs. Tariffs enacted solely
by the president are adding costs to building materials, including
Canadian softwood lumber, steel, aluminum, and copper, and even
kitchen cabinets and furniture. These tariffs are inflating prices
from foundation to finish. To make matters worse, the war in Iran
has caused diesel to surge to over $6 per gallon in many states,
causing builders to face additional fuel surcharges in transporting
building materials. High prices and growing inflation threaten to
keep interest rates high, while further straining the budgets of
renters, homebuyers, builders, and sellers.
Just last week, we received inflation data that confirmed price
hikes are once again outpacing incomes, driven primarily by the
president’s signature policies, tariffs and the Iran war. The Kraft
Heinz CEO said this plainly to the Wall Street Journal last week:
consumers are literally running out of money at the end of the
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month. Meanwhile, the administration is proposing to gut the very
programs, rental assistance, community development grants, and
home investment partnerships, that help fill the gap between what
the market can deliver and what families can afford. Taken to-
gether, these policies and economic conditions aren’t alleviating the
housing shortage. They are making it worse.
Rather than focusing on the issue he was elected to solve, the
president focuses on securing $1 billion in taxpayer funds for a
ballroom and even spending $30 million on an odd bid contract to
paint the reflecting pool. Not to mention spending $1.7 billion on
a slush fund for his insiders and cronies, some of whom ransacked
the Capitol on January 6th. A billion dollars could build a lot of
houses and go a long way toward helping small businesses fill this
gap. I look forward to hearing from witnesses about how we could
better allocate our resources to address this crisis and make life
more affordable for everyday Americans. Thank you. I yield back.
Chairman WILLIAMS. The gentlelady yields back.
We will now move to the witness introductions. Our first witness
today is Mr. Bill Owens. Mr. Owens is Chairman of the Board of
the National Association of Home Builders. Mr. Owens is also the
principal of Owens Construction, an Ohio-based residential con-
struction firm he established in 1982, that is recognized for award-
winning energy-efficient home designs. Mr. Owen has also held nu-
merous leadership roles across the home building industry, includ-
ing Chairman and positions with the NAHB Remodelers Council,
Home Builders Institute, and the New American Home and Re-
model Task Force. Mr. Owens is a longtime industry leader at the
local, state, and national level. He has served on the NAHB Board
of Directors for more than 20 years. He has previously served as
president of the Ohio Home Builders Association. Mr. Owens is
also a Member of the Harvard Joint Center for Housing Studies
Remodeling Futures Steering Committee and remains active in
professional education, workforce development, and community
service along with his wife, Betsy. I want to thank you again for
being here today. It is a pleasure.
Our next witness is Dr. Ivan Rupnik. Dr. Rupnik is founding
partner of MOD X, a research-based advisory group focused on ac-
celerating the underutilized housing industry. Dr. Upnick is also a
professor of architecture at Northeastern University. His research
focuses on industrialized housing delivery, particularly the regu-
latory and institutional barriers in off-site construction in the
United States. Dr. Rupnick’s work has been featured in the New
York Times, and he has presented at HUD, the Harvard Kennedy
School, and the National Housing Summit. Through multiple HUD-
funded projects, MOD X has produced major policy reports. Their
work has identified regulatory reform as a top priority for scaling
industrialized housing. Dr. Rupnick holds a PhD in architecture
from Harvard University, where his doctoral research examined
the relationship between building design Industrial Management
and Housing Policy, and he also holds a Master of Architecture
with distinction from the Harvard Graduate School of Design and
a Bachelor of Architecture summa cum laude from Louisiana State
University. I look forward to our discussion.
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Our next witness today is Mr. Eric Schaefer. Mr. Schaefer is the
Chief Business Development Officer at Falling West Development,
or Fading, sorry, Fading West Development, a Colorado-based mod-
ular home builder focused on providing affordable, high-quality
homes, and he also helps lead Fading West’s innovative modular
housing projects focused on meeting the needs of communities. Mr.
Schaefer also plays a key role in building partnerships with devel-
opers, nonprofits, and municipalities across Colorado, Hawaii, and
the broader western region. Since the company’s manufacturing fa-
cility opened in 2022, he has helped advance 25 projects resulting
in the creation of more than 500 homes across the western United
States. Mr. Schaffer has testified before the Senate Banking Sub-
committee on Housing, Transportation, Community Development
in 2024 and the House Financial Services Committee on Housing
and Insurance in 2025. He holds a Bachelor of Science in Commu-
nication from Florida State University and a Master of Divinity
from Columbia Theological Seminary. So I look forward to your tes-
timony.
I now recognize the Ranking Member, Velázquez, to briefly intro-
duce our last witness appearing before us today.
Ms. VELÁZQUEZ. Thank you, Mr. Chairman.
Our final witness today is Emily DiVito, senior advisor for eco-
nomic policy at Groundwork Collaborative, where she manages the
work on the housing crisis. Prior to Groundwork, she was the direc-
tor of finance, corporate regulation, and consumer protection at
Roosevelt Institute and a policy advisor at the U.S. Treasury De-
partment. Her research has been featured in The Washington Post,
The Guardian, and Bloomberg. She holds a bachelor’s degree from
Wesley College and an MPA from Columbia University. Thank you
for joining us today, Emily. We look forward to your testimony.
Chairman WILLIAMS. The gentlelady yields back.
And I want to also say thank you to our witnesses. We appre-
ciate all of you being here today. Now, before recognizing the wit-
nesses, I’d like to remind them that their oral testimony is re-
stricted to 5 minutes in length. That’s an important number here,
5 minutes. If you see the light turn red in front of you, it means
your 5 minutes has concluded and you should wrap up your testi-
mony. And if you continue on, you’ll hear this. That means you got
to stop what you’re saying, okay? I know you’ll do fine. So with
that in mind, I now recognize Mr. Owens for his 5-minute opening
remarks.
STATEMENTS OF BILL OWENS, CHAIRMAN OF THE BOARD, NA-
TIONAL ASSOCIATION OF HOME BUILDERS; DR. IVAN
RUPNIK, PHD, FOUNDING PARTNER, MOD X, PROFESSOR OF
ARCHITECTURE, NORTHEASTERN UNIVERSITY; MR. ERIC
SCHAEFER, CHIEF BUSINESS DEVELOPMENT OFFICER, FAD-
ING WEST; AND MS. EMILY DIVITO, SENIOR ADVISOR FOR
ECONOMIC POLICY, GROUNDWORK COLLABORATIVE
STATEMENT OF BILL OWENS, CHAIRMAN OF THE BOARD,
NATIONAL ASSOCIATION OF HOME BUILDERS
Mr. OWENS. Chairman Williams, Ranking Member Velázquez,
and Members of committee, thank you for the opportunity to testify
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on America’s housing supply crisis. I am here today representing
NAHB’s Members, most of whom are small businesses who build
10 or fewer homes per year yet collectively, they construct roughly
80 percent of all new housing in the United States. At its core, to-
day’s affordability challenge is driven by a simple imbalance: the
nation is not producing enough housing to meet demand. NAHB es-
timates a structural shortage of roughly 1.2 million homes. Va-
cancy rates remain historically low, and the resulting supply-de-
mand mismatch has pushed both home prices and rents beyond the
reach of too many households.
To explain why it is so difficult to build enough attainable hous-
ing, NAHB often points to the 5 L’s: lending, lots, labor, lumber,
and laws. These interrelated constraints make clear that the crisis
is structural and cannot be solved by addressing a single factor
alone. First, Lending. Housing production depends on access to cap-
ital, and for many small builders, that means financing from com-
munity banks. Credit conditions remain tight, with borrowing costs
elevated, limiting the ability of builders to move projects forward.
We are encouraged by recent efforts to highlight project-based
working capital options for homebuilders and look forward to work-
ing with the committee and the SBA to ensure these programs are
available to all builders.
Second, lots. A shortage of buildable lots remains a major obsta-
cle as land development costs continue to rise. Restrictive zoning,
infrastructure limitations, impact fees, local opposition, and federal
permitting delays all constrain the ability to bring land to market.
These challenges are especially acute for small builders who cannot
spend or who cannot spread high fixed development costs across
large-scale projects.
Third, labor. The skilled labor workforce shortage continues to
significantly limit housing production. At any given time, there are
more than 200,000 open positions in residential construction. In
2024 alone, labor shortages prevented the construction of roughly
19,000 homes and added nearly 2 months to project timelines. Con-
gress can help by strengthening workforce development programs,
expanding training and career pathways in the skilled trades, and
ensuring legal and efficient workforce access where domestic labor
supply is insufficient.
Fourth, labor and materials. Construction input costs remain ele-
vated with continued price increases in 2026 compounding the
challenges posed by financing costs, labor shortages, and delays.
Even modest increases in material prices can determine whether a
project is viable or not.
Finally, laws, meaning regulation. Regulatory costs act as a hid-
den tax on housing production. NAHB research shows that regula-
tion accounts for nearly 25 percent of the cost of a new single-fam-
ily home and over 40 percent of multifamily development costs.
These burdens increase carrying costs and financing risk. Permit-
ting challenges are particularly burdensome for small builders. For
example, under the Clean Water Act, the difference between a
streamlined nationwide permit and an individual permit can add
hundreds of thousands of dollars and more than a year in delays,
directly reducing the number of homes that can be built. The bot-
tom line is clear: there is a supply problem. Small builders are
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ready to help meet the challenge by delivering housing in local
markets and underserved communities.
But progress will remain limited if costs and delays continue to
escalate across financing, land, labor, materials, and regulation.
Congress can play a role by advancing supply-focused reforms that
expand access to capital, strengthen workforce pipelines, increase
the availability of buildable lots, and reduce the excessive regu-
latory costs and permitting delays. If we want to make housing
more attainable, we must make it easier and less expensive to
build. Thank you, and I look forward to your questions.
Chairman WILLIAMS. Thank you. The gentleman yields back.
I now recognize Dr. Rupnik for his 5-minute opening remarks.
STATEMENT OF IVAN RUPNIK, PHD, FOUNDING PARTNER,
MOD X, AND ASSOCIATE PROFESSOR OF ARCHITECTURE,
NORTHEASTERN UNIVERSITY
Mr. RUPNIK. Chairman Williams, Ranking Member Velázquez,
thank you. Thank you for the opportunity to testify.
This year I co-authored or published a report from HUD that ex-
amined why the United States has persistently struggled to indus-
trialize housing delivery while our peer economies have not. What
we found was that much of the work that was done abroad was
first proposed in the United States but never fully implemented.
The industrialization of housing delivery is the integration of de-
sign, off-site production, and on-site assembly into a coordinated
system. Most American industries operate within this regulatory
framework that supports this kind of integration, including auto-
motive. Housing does not.
In 1968, HUD documented exactly this issue and concluded that
the federal role is to create enabling conditions within which com-
panies can innovate to address housing affordability. In response,
Congress authorized HUD to pilot a form of regulatory stream-
lining called Housing System Certification. That pilot, Operation
Breakthrough, validated this approach through work in 8 different
states and 20 different companies. Six years later, Congress con-
cluded that the lack of uniform housing and building regulatory
provisions increases the cost of construction and thereby reduces
the amount of housing and other community facilities which can be
provided. The ’74 Housing and Community Development Act then
produced two performance-based regulatory reform actions.
The first was the HUD Code, which has been discussed exten-
sively. The second, the more exciting part for me, was the estab-
lishment of the National Institute of Building Science, or NIBS,
mandated by Congress to continue the work HUD had piloted de-
veloping a performance-based fast track for small innovative com-
panies to deliver housing. The problem had been identified and
measured, a solution had been demonstrated, an institution had
been established, but what was never completed was implementa-
tion.
Our recent report renewed a call for housing system certification
for 3 concrete reasons. It was proven out at a pilot level in the
United States through Operation Breakthrough. It has been oper-
ating successfully in Japan for more than 50 years. Today more
than 28 percent of Japanese housing goes through this fast-track
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route and has serious benefits. And it is also the same framework
that we already use to govern every other consequential American
manufactured product, automobiles, our aircraft, medical devices,
our food, our pharmaceuticals. A housing system is essentially a
product definition. The design logic, the structural and material
systems, the off-site manufacturing and on-site assembly processes,
quality insurance, and quality control of a defined, repeatable hous-
ing offering treated as a unified whole rather than a collection of
discrete decisions made project by project.
What defines it as a system is the integration, the design for
manufacturing assembly, coordinated supply chains, serial produc-
tion, and continuous improvement. In other words, industrialized
housing delivery. Permitting through this would be streamlined.
Lenders and insurers could rely on the certification as a basis for
underwriting. Code officials would retain their authority, but exer-
cise it against a known and tested baseline. Federal programs
could utilize certification for awards and subsidies. This is what’s
done in Japan. This is not a proposal to preempt local code officials.
It is a proposal to give them a tested performance baseline against
which to exercise their authority. The savings would come not from
redoing the same approvals in every project.
The quality gains would come from concentrating expert review
at the systems level rather than fusing it across thousands of indi-
vidual project reviews. In the U.S., the strongest endorsement for
housing system certification has come from small vertically inte-
grated companies like my friend Eric Schaefer here, who’s also
serving on a technical committee to support our work. Fading West
will be discussed today. Certification benefits factory, site, and hy-
brid delivery equally because what it certifies is the integrated sys-
tem, not the technology itself. It also certifies the technology. Some
innovative site builders have also endorsed this regulatory form for
exactly the same reason, including Texas-based JPI, a major multi-
family builder.
MOD X is working with NIBS and a steering and technical com-
mittee of 21 people to develop the standard. We hope to be com-
pleted by December of 2026. And we’re happy to say that the state
of Washington is already working to pilot this at a state level. Todd
Beyreuther, who is an industry expert and also the Chair of the
Building Council, is developing this. I wanted to make this com-
mittee aware of this important work, more than half a century in
the making, and I look forward to your questions and your
thoughts about how federal action can support state, local, and gov-
ernment, and NIBS in helping to scale. Thank you.
Chairman WILLIAMS. Thank you.
I now recognize Mr. Schaefer for his 5-minute opening remarks.
STATEMENT OF ERIC SCHAEFER, CHIEF BUSINESS
DEVELOPMENT OFFICER, FADING WEST DEVELOPMENT
Mr. SCHAEFER. Thank you, Chairman Williams, Ranking Mem-
ber Velázquez, and Members of the committee for the opportunity
to testify today.
My name is Eric Schaefer, and I am Chief Business Development
Officer for Fading West in Buena Vista, Colorado. We are a fully
integrated design, construction, and modular manufacturing com-
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pany focused on the Lean process. The U.S. faces a crushing hous-
ing deficit, and this burden falls on both national builders and
smaller home builders like Fading West. With little or no innova-
tion in the past 50 years in how houses are built, Fading West and
the modular manufacturing industry firmly believe that this com-
mittee has a vital role to play in helping small home builders inno-
vate, scale, and actively participate in resolving our national hous-
ing shortage. To understand the challenges small home builders
face, we must look at how far the U.S. lags in manufacturing adop-
tion. In our country, modular construction represents less than 5
percent of all housing. For comparison, in Scandinavia, modular
makes up over 45 percent. We are failing to address the root sys-
temic causes holding back our construction sector.
First, it is because of a fractured labor pipeline. Forty-one per-
cent of the current construction workforce will retire by the year
2031. With fewer skilled trade professionals available, labor costs
will rise and slow project timelines. Second, the price of residential
construction goods has gone up over 40 percent since 2020. And
third, the regulatory burden. Regulations account for 25 percent of
the average sale price of a new home. And fourth, there are 43,000
individual building code jurisdictions across the United States, and
this makes it difficult for modular factories to standardize.
Fading West has shown that building homes using Lean manu-
facturing principles in our 110,000-square-foot factory has helped
us reduce waste from 30 percent down to 3 percent. We have over
100 employees who can build a house in less than 10 days in the
factory and then complete the on-site work in less than 30 days for
a total of 40 days, far less than traditional construction. We build
homes 20 percent cheaper and 50 percent faster. We recently built
our 1,000th unit in our 4.5 years since opening. To see this in ac-
tion, I would like to highlight a partnership that we have with
Rural Homes, a nonprofit developer in Telluride. In high-cost
mountain and rural towns in Colorado, traditional site building
costs are prohibitive for workforce housing. Together with Rural
Homes, we have scaled a unique public-private philanthropic part-
nership blueprint. Under Governor Polis, Colorado has become a
modular-friendly state through initiatives like Proposition 123, eq-
uity funding, and Senate Bill 2409, and the state is streamlining
factory certifications and has slashed red tape. By pairing donated
municipal land, low-cost philanthropic capital, and Fading West’s
factory speed of delivery, we are building workforce housing at
prices well below regional and market pricing.
We are currently building projects all around Colorado, in Wyo-
ming, in Texas, in Montana, and have signed first contracts in the
Pacific Palisades for families that lost homes in the fire. We built
85 homes in our Colorado factory and shipped them to Lahaina for
the FEMA disaster relief project in Maui. We are currently build-
ing 24 homes for the Department of Hawaiian Home Lands
(DHHL) for a pilot project in Honolulu for their beneficiaries. We
are also partnering with DHHL to build a factory in Hawaii which
will speed up building and reduce cost.
To empower small businesses, I offer three recommendations:
provide direct capital incentives for facilities through federal grants
and 0 percent interest loans; to create regional building codes for
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different climate zones, which will unlock standardization and
allow factories to flourish; and to prioritize and reward vertically
integrated public-private partnerships. Housing policy is education
policy, it is economic policy, it is environmental policy, it is trans-
portation policy, it is community policy. The committee can em-
power small businesses to be the master key that unlocks a new
era of attainable housing, vibrant communities, and thriving local
economies across America. Thank you, and I look forward to ques-
tions.
Chairman WILLIAMS. Thank you. And the gentleman yields
back.
I now recognize Ms. DiVito for her 5-minute opening remarks.
STATEMENT OF EMILY DIVITO, SENIOR ADVISOR FOR
ECONOMIC POLICY, GROUNDWORK COLLABORATIVE
Ms. DIVITO. Chairman Williams, Ranking Member Velázquez,
and Members of the committee, thank you for the opportunity to
testify.
My name is Emily DiVito. I am the senior advisor for economic
policy at Groundwork Collaborative, an economic policy think tank
in Washington, D.C. We face a housing affordability crisis wors-
ened by existing housing shortages and a failure to build more
homes of all types. Congress is already taking on barriers to build-
ing, such as restrictive zoning, through the 21st Century Road to
Housing Act. Such efforts are important, but zoning reform alone
will be insufficient to fix the housing affordability crisis. Home
builders and home buyers face economic headwinds that Congress
must tackle head on. As this committee knows, small and medium-
sized home builders play a hugely important role in the U.S. hous-
ing system.
I would like to highlight two particular cost challenges for build-
ers that ultimately put housing out of reach for many families: the
rising cost of construction and the high cost of capital. The Trump
administration is driving up the cost of construction through its
mismanagement of the economy, specifically tariffs on core building
materials, as well as higher transportation costs and higher inter-
est rates due to the Iran conflict. In the latest Producer Price
Index, the price of goods used in residential construction was up
1.2 percent over the last month and up 6.1 percent from last year.
Higher prices place a particular strain on small builders who do
not have the resources or scale to mitigate tariff costs or to pass
rising transportation costs through to consumers.
The Center for American Progress recently estimated that higher
building costs due to the tariffs will lead to 450,000 fewer homes
built over the next 5 years. At the same time, a lethargic labor
market and the Trump administration’s immigration crackdown
make it more difficult for firms to find and retain construction
workers, adding further time delays and additional costs to the
home building process. These higher construction costs get passed
on to home buyers in the form of higher prices.
Meanwhile, just months after DOGE cut staffing at federal hous-
ing agencies, the Trump administration is pulling back on federal
housing funding by proposing the elimination of programs like
Home Investment Partnerships and Community Development
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Block Grants. These programs have channeled millions of dollars
to local businesses and community partners, helping meet the
needs of over 2 million people and resulting in the construction or
rehabilitation of more than 1.3 million units of affordable housing.
Let’s be clear, these challenges didn’t come out of nowhere. The
higher prices we see today are the result of specific policy choices
by this administration that Congress can rein in.
But even before the price hikes, cost of capital had already been
a major constraint to new construction. Building the capital stack,
the specific debt, the specific blend of debt and equity required for
a given project can be costly for firms raising capital from investors
seeking returns. Small and emerging developers without the same
resources or established track records of large firms have more
challenges securing construction loans and recruiting investors in
the first place. And even when small developers secure financing,
investors often impose strict repayment schedules and high return
expectations, which ultimately result in higher costs for consumers.
Congress should target interventions that lower the cost of cap-
ital and make it easier for homebuilders to build to affordability.
First, Congress should allow entities like Fannie Mae and Freddie
Mac to buy and sell construction loans, especially the tranches of
debt costlier for developers. Existing programs within the Federal
Home Loan Bank System should also be expanded. Second, govern-
ment should leverage their borrowing power to help cities and
states establish revolving loan funds that can extend financing
with low interest rates at long maturities to facilitate new con-
struction. Third, Congress should play a bigger role in ensuring
mortgages are affordable to homebuyers. This can be achieved
through popular policies such as providing low-rate direct federal
mortgages reducing mortgage insurance premiums, and allowing
families to utilize portable mortgages.
Ultimately, policies such as these will make it easier and cheaper
for businesses to access the financing they need to build more
homes. If Congress can lower the cost of construction and the cost
of capital, more builders, especially small ones, will be able to
meaningfully expand the housing supply at lower prices, which ul-
timately means more homes that working families can afford.
Thank you, and I look forward to your questions.
Chairman WILLIAMS. The gentlelady yields back.
We will now move to the Member questions under the 5-minute
rule. I recognize myself for 5 minutes.
Mr. Owens, as a Chairman of the National Association of Home
Builders, you spent more than 4 decades in the residential con-
struction industry and have seen firsthand how the regulatory
landscape has evolved in the local, state, and federal levels. And
small home builders play a critical role in meeting housing de-
mand. But many say increasingly complex and costly requirements
have made it harder to build homes efficiently and affordably. So
my question would be, to give a small homebuilder a fair chance
to succeed, how important is it to reduce unnecessary regulations?
And over the years, have these regulations been easier to navigate
or increasingly burdensome for some homebuilders?
Mr. OWENS. Thank you for the question, Chairman. That defi-
nitely strikes home. I mean, we deal with this every day. The, you
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know, what we’ve done with or what we’ve dealt with over the 4
decades of increased regulation just isn’t from a code or a land use
point of view. It has nothing to do with any one particular item.
But when we, when we talk about a combination of factors at the
land development phase, we talk about issues with restrictive zon-
ing, with impact fees. And again, we understand this isn’t all fed-
eral mandated. This can be state as well as local regulation as well.
But then when we look at infrastructure constraints, even the
NIMBY-ism, the local opposition, can, can add in, you know, an in-
teresting kind of twist into our ability to build. And I think what
we’re trying to do right now is to just recognize that, and as we
bring this to Congress, and I knew at some point I probably would
be able to share this with you all, is there’s not one particular item
as far as regulation goes, there’s not one thing in particular that
if we did away with today that we would be in a much better place
tomorrow to provide attainable and affordable housing. It is, I call
it death by a thousand cuts.
But every one of these adds another layer of cost that we simply
just cannot absorb, and that ultimately is going to be passed on to
the consumer much like everything else. When our costs go up,
that is a direct impact then on the eventual home buyer.
Chairman WILLIAMS. All right. Thank you.
Dr. Rupnick, as a professor of architecture and a leading tech-
nical expert in off-site construction and building innovation, you
spent years studying how design, manufacturing, regulation inter-
act in the housing industry, and through your work with MOD X,
and your collaboration with the National Institution of Building
Sciences, you’ve exploring ways to modernizing housing construc-
tion and reduce regulatory barriers that slow the development. So
offsite and modular construction are often viewed as promising so-
lutions to improve efficiency, lower costs, and expand housing sup-
ply, but they also face significant challenges because of codes, per-
mitting, and inspections, et cetera. Standardization. So my ques-
tion is, quickly could you walk us through some of the innovations,
technologies, and regulatory reforms you are exploring to make the
process more scalable and more manageable?
Mr. RUPNIK. Thank you, Chairman, for that question. I think
that there’s a lot of interesting technologies out there, but the re-
ality is, if we look globally, light wood frame construction, an
American form of construction, is actually seen in many countries
as an innovative form of construction. So I say that there are a lot
of innovative technologies. The innovations that we’re excited about
are in the code compliance space. And that’s what we’re really ad-
vocating for because as Mr. Owens pointed out, there are a lot of
regulations. We can’t point to one of them, but what we can point
to is the structure of code compliance.
So we now have a smaller number of model codes that are then
adopted by states and then modified, adopted by counties and
modified, and then actually interpreted project by project. The mul-
tiplication of what actually a company has to deal with, small or
large, is infinitesimal. The investment in streamlining code compli-
ance is the single tool that we think would benefit both conven-
tional builders and offsite builders. And that is something where
we’ve seen AI and other digital tools used in this space. And every
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industrialized economy has had the difficult process of saying our
code compliance system is fragmented. It doesn’t work. It doesn’t
work for conventional, doesn’t work for new technologies, and we
need to reform it.
Chairman WILLIAMS. Thank you.
I now recognize the Ranking Member for 5 minutes. My time is
up.
Ms. VELÁZQUEZ. Thank you, Mr. Chairman.
Ms. DiVito, Housing costs are at the root of the affordability cri-
sis, putting significant pressure on family budgets and limiting the
ability of people to save money or even meet their basic needs. Can
you outline some of the root causes of the housing shortage?
Ms. DIVITO. Thank you for the question. For decades, the U.S.
has underinvested in housing. Construction never really recovered
after the Great Financial Crisis, and since then we’ve only had per-
sistent labor and construction shortages. At the same time, as my
testimony mentioned, acute price hikes are making it worse as
builders and contractors contend with high prices on core construc-
tion materials from tariffs. And one of the biggest underlying chal-
lenges we face today is the high cost of capital that makes it in-
credibly expensive, time-consuming, and overall difficult for devel-
opers, especially small firms, to build affordable housing. And this
is why I believe that if we want to fix our housing affordability cri-
sis, we have to fix our housing financing system.
Ms. VELÁZQUEZ. Thank you.
Mr. Owens, the National Association of Builders testified before
the Financial Services Committee that uncertainty from tariffs was
constraining investment. What impact do Section 232 tariffs on
lumber, steel, and aluminum, and kitchen cabinets and finished
wood products, as well as potential future 301 tariffs, have on
small builders?
Mr. OWENS. Thank you very much for the question. Our re-
search through our econ team has shown a fairly insignificant bur-
den when it comes to tariffs. Somewhere around—when we look at
total building cost, everything that goes into the home, we’re esti-
mating that about 7 percent of building materials that go into that
home are actually imported. So we’re somewhere under 10 percent
of our net costs here. So, you know, currently with the administra-
tion working toward the American First environment, that’s influ-
encing some of our work, but it is fairly minimal.
Ms. VELÁZQUEZ. And you disagree with the member of the Na-
tional Association of Home Builders that tariffs are constraining in-
vestment?
Mr. OWENS. I don’t think there’s any question that they’re hav-
ing some impact.
Ms. VELÁZQUEZ. Okay. Wouldn’t you agree that these tariffs
have increased the cost of housing? You’re saying no?
Mr. OWENS. Slightly.
Ms. VELÁZQUEZ. Okay.
The president has proposed significant cuts to programs at HUD.
Ms. DiVito, what are some of these cuts? How do they impact hous-
ing affordability?
Ms. DIVITO. That’s right. The president has been trying to
eliminate some of the nation’s most flexible housing programs, in-
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cluding the Home Investment Partnerships Program and Commu-
nity Development Block Grants. In the president’s proposed budget
for fiscal year 2027 that would cut funding for the Department of
Housing and Urban Development by roughly $11 billion, or 13 per-
cent. Cutting this funding means that these communities and busi-
nesses that are counting on these programs for the flow of capital
won’t get it and may not be able to build as many homes or at
rates that families can afford.
Ms. VELÁZQUEZ. Do you agree that if the president and Mem-
bers in Congress are serious about addressing housing production,
that they will be increasing not decreasing HUD’s housing produc-
tion programs?
Ms. DIVITO. Yes, ma’am.
Ms. VELÁZQUEZ. On both sides of the aisle, Ms. DiVito, many
of us recognize that NIMBYs have abused land use regulation to
slow the construction of new housing starts, but solving that issue
is only part of the problem. Why is expanding government options
for access to capital so important for new construction? And par-
ticularly for small builders.
Ms. DIVITO. Thank you. Yeah, I mean, I think everybody on the
panel agrees that there’s no doubt that zoning restrictions and
complex permitting processes have worsened our housing afford-
ability crisis. Unfortunately, though, I feel strongly that fixing zon-
ing alone will not dissipate the underlying costs of securing financ-
ing, which is one of the major drivers of the affordability crisis we
see today.
Ms. VELÁZQUEZ. Thank you.
Mr. Owens, to that end, your testimony mentioned exploring
SBA financing to help get more access to capital for small devel-
opers. I am working on a bill to modernize the 504 CDC program
to support renovation of mixed-use developments for commercial
and residential units. Would this be a provision you will support?
Mr. OWENS. I think we’d want to look into that a little bit more,
but I think that we’re absolutely in alignment and very hopeful
that the Small Business Administration grant process, you know,
the lending process will help us out. We represent the small build-
ers, and anything that we can do—capital is always an issue for
us, not just in mainly the carrying cost of the business more so
than just actually financing the land.
Ms. VELÁZQUEZ. Thank you. Oh yeah, my time expired.
Chairman WILLIAMS. The lady’s time is up. She forgets that
sometimes.
I now recognize Mr. Meuser from the great state of Pennsylvania
for 5 minutes.
Mr. MEUSER. Thank you, Chairman. Thank you all. Very inter-
esting and important discussion and, and hearing here. We all
agree construction costs, regulatory delays, outdated zoning con-
straints fuel decades of underbuilding. Perhaps as many as 3 to 4
million single-family homes we need to build and make available.
Small home builders play a vital role, Mr. Owens, as you are clear-
ly bringing out, as you did in your testimony. Earlier this week, as
has been mentioned, we did pass a very bipartisan amendment to
the 21st Century Road to Housing Act that will address many of
these housing shortage issues by reducing unnecessary barriers to
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new home construction, modernizing HUD programs, allowing
banks to more freely deploy capital, and have some restrictions on
institutional purchases of single-family homes. Not the building of
single-family homes, but the purchasing of them.
So Mr. Owens, very intrigued by your testimony. You had some
real good ideas in there. I like this lending lots, labor, lumber,
laws. I mean, that’s good. Sums things up and helps us focus, I
think.
The banking, as the Ranking Member was just talking about,
you know, our Housing Act allows banks to lend more to finance
home construction. This should make a difference. It should double
it. It could actually double it according to the intent of the law any-
way. And I am intrigued, intrigued about the idea of expanding 7a
loans for home construction, maybe double it. Right now it is at $5
million. We bring it up to $10 million. I mean, one builder alone,
perhaps that could equate to, well, you do the math, 13, maybe 14,
15 new homes. Your thoughts on that?
Mr. OWENS. Thank you, sir, for the question. You know, for us,
access to capital is a must. We absolutely cannot build without
that. So when we talk about the possibility, as I said earlier, we’re
encouraged by the SBA 7a or 7b program as a way to finance direct
costs. I think there are limits, though, to that. What we had seen,
for example, phased development would be excluded from that, and
actual project-based working capital would be something that I
think I understand would have been excluded. I think when we’re
looking at the overall landscape of construction financing, larger
builders, I think, have more varied access to different capital path-
ways. We represent the small volume builders. Our average builder
is building 10 or less homes a year.
Mr. MEUSER. The ones I know. Yeah, sure.
Mr. OWENS. Yeah. So that’s the one thing right now that we’re
looking at is what are some means that these smaller builders
would have access to capital? And that’s why we sort of are, we’re
encouraged by some of your discussions with the SBA on this.
Mr. MEUSER. And the SBA would be, I think, more effective,
maybe faster, than the HUD programs that exist.
Mr. OWENS. It may be.
Mr. MEUSER. Okay. So Dr. Rupnick, well, first off yeah, Dr.
Rupnick, the 21st Century Road to Housing bill, the regulation
from a regulation standpoint, or any aspect of that bill. Could you
give me your feedback on that, some of your thoughts?
Mr. RUPNIK. I haven’t studied the specifics of it, but I think the
issue is that we have not yet really understood, based on the con-
versation today, where the cost is, because we’re talking about the
cost of regulations. We’re not talking about the structural cost of
our code compliance. So that, I think, from what I’ve seen in the
bill, and I haven’t spent as much time as I’d like to because it has
been changing. All I would caution is that from our research from
20 years, it is really code compliance, not the regulations them-
selves, that have been a burden in the U.S. Also in Pennsylvania,
which has a very strong modular sector. What I don’t see is specific
tools for really understanding first and then assessing those. And
that’s where I think we really need to understand before we even
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allocate funding, really understand the hidden costs of our code
compliance regime.
Mr. MEUSER. Okay, thank you.
Mr. Schaefer, any feedback you can provide on the on our Hous-
ing Act?
Mr. SCHAEFER. Yeah, certainly the innovation for modular is
the huge plus that we see in cutting the red tape which is big for
us. If entitlements take 12 to 18 months before you can even build
a house, a lot of times in affordable housing projects, by the time
you get to the entitled stage, it doesn’t pencil anymore. So we can’t
even do the project.
Mr. MEUSER. Thank you very much. I yield back, Mr. Chair-
man.
Chairman WILLIAMS. The gentleman yields back. I now recog-
nize Mr. McGarvey from the great state of Kentucky for 5 minutes.
Thank you, Mr. Chairman.
Mr. MCGARVEY. Mr. Owens, in your testimony, you opened up
and said there were a shortage of 1.2 million homes in this country.
I think that number could be low. But regardless, we’re all agree-
ing that we are millions of homes short in this country. And I think
this is really important, because one of the things we talk about
here in the Small Business Committee is the American dream. The
American dream, you can work hard, you can provide for your fam-
ily, you can leave the world a little better than you found it, and
you can put your kids in a better spot than you were in. And I
think owning a home is a foundational cornerstone of this Amer-
ican dream. We still know that owning a home is a generational
wealth a home builder, it is an asset you can pass on.
But when we’re talking about building homes, I want to talk
about what people are going through right now when they want to
buy a home, because it is far from easy. So I wanted to run the
numbers a little bit for you. I am from Louisville, Kentucky, and
I was looking at my town, Louisville, Kentucky, and I wanted to
find a home that was $250,000. Why? I wanted to make the math
easier for me. So I got on Zillow and found immediately 4 homes
listed for $250,000, one in Shively, one in Okolona, one in German-
town, one just east of J-Town. All have 2 bathrooms. One of them
has 2 bedrooms, the other 3 have 3 bedrooms. 3 of them are be-
tween 1,200 and 1,400 square feet. One of them was 2,100 square
feet, right there in Louisville, Kentucky. $250,000. Okay, so the
area median income for Louisville, Kentucky is about $89,000 an-
nually for a 4-person household. After taxes, that’s about $65,500.
So that shakes out about $5,500 per month that you’re bringing
home after taxes. If you want to buy a $250,000 home, let’s pre-
tend, and I say pretend because 50 percent of Americans don’t have
access to $500 cash. Let’s pretend that you can put $50,000 down
on this home. That’s 20 percent. I told you I’d keep the math easy,
20 percent.
Now, you’re going to look at a $200,000 mortgage. Current inter-
est rate, 6.16 percent fixed on a 30-year mortgage. That’s going to
cost you $1,400 a month. That is $16,800 per year. Now your 65.5
is down to $48,700. Okay, let’s say you’re a young family of 4, you
got 2 kids. Childcare. We all know what this looks like. In Louis-
ville, Kentucky, the average cost, that’s going to put you at $380
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per week, $1,500 per month, $18,000 per year. Now, that is down
to $30,700 that you are bringing home after you’ve got your mort-
gage, after you’ve got your childcare. Bear with me. We know what
grocery prices are doing right now. Just walk through the grocery,
walk through a Kroger in Louisville.
So I am going to go conservative. I am going to say for a family
of 4, you’re spending $250 per week for all 4 of you. That’s $13,000
a year. Now you’re down to $17,700. But guess what? We haven’t
talked about taking care of these kids yet. Health care, especially
with what Trump did to the Affordable Care Act, is now $1,800 per
month on average in Louisville, Kentucky. That’s $21,600 per year.
Guess what? You are now minus $3,900. That’s your family of 4 in
a $250,000 home. You are $3,900 underwater. And what have we
not talked about? We haven’t talked about your utilities. You
haven’t talked about your water, your cell phone bill, your car pay-
ments, your insurance, your gas, which you can just drive—is $4.40
when I left Louisville on Bardstown Road this week. You’re $3,900.
And guess what? We haven’t even talked about what the actual
payment on the home is. In the above scenario, we had a 30-year
mortgage. By the end of it, you will have paid $250,000 in interest
on that $200,000 loan. So we got to get the affordability under con-
trol here. And one of the ideas has been floated, Ms. DiVito, is the
idea of a 50-year mortgage. And I want to talk about what impact
that has on affordability and what you think about what that
would do for families.
Ms. DIVITO. Thank you for the question. Yeah, the 50-year
mortgage, I think, is a misguided attempt to make it seem like it
is providing relief for homebuyers without fixing the underlying
problem. On a 50-year repayment plan, families would end up
spending significantly more on interest over the lifetime of their
loan and build equity much slower than other families. I don’t
think that Americans want their debt to last longer. They just
want their housing to be more affordable.
Mr. MCGARVEY. Yeah, so you’re going to pay significantly more
over the cost of 50 years, and even if you’re able to buy something
a little bit cheaper up front, we’re still looking at this math. You’re
still in a $250,000 $500,000 home, you’re still in the red. And guess
what? Even if you think you can buy it for a little bit cheaper up
front, look at what the tariff policies are doing right now. You’re
looking at building and material prices up 3.5 percent year over
year.
Mr. Owens, have you seen this in your business, that the cost of
lumber and materials right now is rising?
Mr. OWENS. We have to a certain extent, but it is more in the
metals, I think. As of recent, we’ve seen some stability in the lum-
ber prices. Certainly from the, you know, the peak there during
COVID Yeah.
Mr. MCGARVEY. And this, this rise in cost is making it harder
to build homes. It is making it harder to find the American dream
on every level. And I think we have to address the affordability cri-
sis and start talking about this. Mr. Chairman, I yield back.
Chairman WILLIAMS. Yields back.
I now recognize Mr. Cisneros from the great state of California
for 5 minutes. Thank you.
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Mr. CISNEROS. Thank you, Mr. Chairman. I want to thank you,
the Ranking Member, for bringing us together for this important
hearing on housing. You know, I represent a district in Southern
California in the San Gabriel Valley, and I don’t even know where
you can find a house for $250,000 anywhere there. It is just not
possible, right? And the rising cost just continues to add, right?
And look, I look at it in a very simple way when kind of looking
at economics, and it is supply and demand, right? We need a lot
more supply in order to help bring down the cost of housing. And
it is not just single-family homes people could afford, but also rent-
ing rentals, right?
And then even as my I think of my grandmother years ago as
she started to age, she moved into senior citizen housing that pro-
vided opportunities for more people to kind of move in there as
well. And look, my district is not that far away from where the
Eden fires were last year, which only adds to the shortage of hous-
ing there. And so, and now those people are going to need to build,
and it is going to cost them even more as insurance companies con-
tinue to make higher demands on the way that construction hap-
pens and what they can do. And look, there’s been a lot of great
innovations there, I think, to kind of help and prevent fires or to
help the homes become more stable during those times. But it
comes at a cost as well, right? Not only at a cost to the owners of
these homes who are going to have to rebuild, but also it is going
to be rising insurance costs as well. So we definitely need to help,
I believe, our home builders kind of do more. As you say, free up
capital so that they can build more.
So, Ms. DiVito, I am going to ask you something about that kind
of intrigued me in your opening statement there, is Fannie Mae
and Freddie Mac providing construction loans to companies. What
do we need to do in order to make that happen?
Ms. DIVITO. Thank you for the question. That’s right, I think
the government-sponsored entities Fannie Mae and Freddie Mac
should be expanded to allow the, the securitization of construction
loans. This will functionally spread risk for investors and free up
capital. I think that could be an important way to make sure that
already existing private capital out there makes its way to small
and emerging homebuilders.
Mr. CISNEROS. Okay. So would that take—I guess it would
take legislation from us in order to make that happen?
Ms. DIVITO. Oh, yes. I apologize.
Mr. CISNEROS. Okay. No. All right. I would love to work with
you on that and see how we can kind of move forward and really
kind of find a way to make that happen.
Ms. DIVITO. Fantastic.
Mr. CISNEROS. Great.
Mr. Owens, you’re from Ohio and you’re from that area, and I
don’t really know what the workforce what it is like over there, but
I know what it is in California around homebuilders. And it is an
immigrant workforce, right? A lot of people immigrate here to the
United States and they get into this industry and they’ve become
a very valuable resource to our construction companies out there
that are building homes. But unfortunately, the president has as-
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serted that these mass deportations are going to help free up jobs,
actually, when I think it is actually done the opposite.
But what are you hearing from your home builders or the people
in your association out west? What impact has these ICE raids and
Border Patrol raids had on the workforce there out west, like in
California and in other areas across the country?
Mr. OWENS. Thank you for the question. You know, the labor
shortage existed way before we had the immigration crackdown.
We lost, I think, about 1.5 million construction-related jobs during
the great recession. So I think it is very localized, how you pointed
it out. We see that a little bit. I build in Arizona as well, and we’ve
seen this being a little bit more localized, but it has disrupted some
of local operations, but we don’t see that headwind, if you will, as
a severe constraint right now in housing supply.
Mr. CISNEROS. Well, I feel like I am hearing different from
some of the home builders I talked to out west, but it definitely is
having an impact. Look, I am with you. I, again, I think we need
to figure out ways so we can increase housing, whether it is mod-
ular housing. And I don’t know how that would kind of really work.
Like you said, there are a lot of restrictions, and California does
have restrictions, especially around earthquakes and things like
that. But would love to meet more with all of you to kind of find
out you know, how we can make this work, right? How we can
have more access to capital and how we can, you know, make
things more available so that we can increase that supply number
to help bring down the cost. But with that, I yield back. Thank you.
Chairman WILLIAMS. The gentleman yields back.
I now recognize Mr. Jack from the great state of Georgia for 5
minutes.
Mr. JACK. Thank you very much, Mr. Chairman. And if I could,
I will start with Mr. Owens. Thank you for your testimony today.
Could you walk this committee through the cumulative impact fed-
eral regulations, whether environmental, permitting, labor rules,
energy codes, or financial reporting requirements, have had on the
final cost of a home for an average American family trying to buy
their first house?
Mr. OWENS. Thank you for the question. As I mentioned earlier,
I think it is, it is, it is just, it is an aggregation of a lot of different
cost impacts that come in. We could talk from the federal point of
view, I think, about the wetlands permitting process. Perhaps
when we look at permitting reform, that might be a possibility too
that would give us some, some, some relief. When we looked at in-
dividual permits versus nationwide permitting, if we stayed on the
Clean Water Act and the compensatory, pardon me, that’s a mouth-
ful, the compensatory mitigation reform that might be helpful for
us.
I think again, when we go back in and we look at some of the
OSHA regulations that are applied at the federal level, when we
look at the heat compliance standard, the reporting, the electronic
reporting requirement, again, we represent the smallest core of the,
of the home builders. We don’t represent the nation’s largest home
builders. That, you know, our builders are very much rooted in this
small business environment. And that’s where we look at some of
these costs that might be able to be absorbed by the larger build-
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ers, particularly in the land development end of things. These are
things that are almost prohibitive for many of our smaller builders
to do any land development at all right now.
Mr. JACK. Your testimony indicated that you estimate, I believe,
is it 25 percent of the cost of a home is due to regulations? You
want to comment on that a little further?
Mr. OWENS. Sure. I think if my numbers are correct, I think
through the land development phase it is about 10 percent, and I
think we’re a little bit north or more than 13 percent of the cost
actually during, during construction. That make up that, that 25
percent cost of regulation and fees above sticks and bricks essen-
tially. And it is even more than that around 40 percent in the mul-
tifamily.
Mr. JACK. Thank you. Could you comment, this week the House
took action on housing, as you saw, no doubt, a few days ago, actu-
ally just yesterday, if I am not mistaken. Could you comment on
how that’s going to help Americans achieve that American dream,
buying their first home and helping their families grow?
Mr. OWENS. Yeah, I very much appreciate that question be-
cause that’s something that the effort that Congress has made, I
think, is going to go a long way to really supporting what we feel
is, you know, completely underserved housing inventory right now.
I think one thing, although a little bit controversial, but in the end,
again, because we don’t represent institutionalized investment, re-
moving the 7-year forced requirement to sell build-to-rent prop-
erties was something that is very, very important to us because
that’s about 10 percent of the overall addition to the inventory on
an annual basis at this point. I think also, too, that the Road to
Housing, the House version, increased stronger land use reforms,
enhances multifamily finance tools, creates some new, new renova-
tion programs, and I think one of the most important things that
really helps the small builder contingent out there is it provides
some regulatory relief for the community banks to get a little bit
more flexibility where we typically go for, for our money to build
these homes.
Mr. JACK. We often talk in this committee about workforce de-
velopment. I am honored to Chair the Subcommittee on Workforce
Development, thanks to our Chairman’s appointment of myself in
that capacity, and would welcome in these closing 50 seconds you
talking about what more Congress can do to help ensure we’ve got
a pipeline of skilled employees and folks coming out of trade
schools to help build these homes.
Mr. OWENS. I’ll be brief. Maybe we can circle back to it. The
CONSTRUCTS Act certainly supports career tech schools as a pri-
mary alternative to traditional 4-year. We absolutely need your
help on a program that started back in the mid-’60s, the DOL Job
Corps program that’s administered through the Employment and
DOL’s Employment and Training Administration, and probably a
couple other ideas.
Mr. JACK. Thank you.
Well, Mr. Chairman, I appreciate you convening this hearing
today. It was timely given everything else that happened in the
House this week. And with that, I yield back, sir.
Chairman WILLIAMS. The gentleman yields back.
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I now recognize Mr. Olszewski from the great state of Maryland,
for 5 minutes.
Mr. OLSZEWSKI. Thanks so much, Chairman Williams. Thank
you also to Ranking Member Velázquez, to my colleagues on the
Small Business Committee, and to Thank you to our witnesses for
being here today.
I believe that we all know that tackling the housing crisis in
America is a top priority for Members of Congress across the aisle
and across this committee. To be clear, America is facing an afford-
ability crisis, and America’s affordability crisis begins with housing.
If you can’t afford a roof over your head, little else matters. Unfor-
tunately, this is a crisis that is exacerbated by President Trump’s
stunning ability to so easily turn his back on a promise that he
made to lower costs for Americans on day one. President Trump
said it himself, quote, ‘‘I don’t want to drive pricing of—I don’t
want to drive housing prices down,’’ and quote, ‘‘I don’t think about
Americans’ financial situation,’’ when referring to impacts from the
still unauthorized war with Iran.
Trump’s war of choice has also increased mortgage rates to unat-
tainable levels for many Americans who are also grappling with
gas prices of $4.50 per gallon or more across the country while in-
flation surges to the highest level it is reached in nearly 3 years.
As I’ve pointed out in this committee before, 99 percent of Ameri-
cans are paying more out of pocket, in some cases much more than
they were under Trump before Trump 2.0. I think my colleague Mr.
McGarvey did a good job of going through some specifics. I don’t
know how anyone can call this a win for America.
Unlike the president, lowering costs for my constituents and the
American people is my number one priority. When it comes to
housing, more than half of Maryland families who rent their homes
are cost burdened, which means they spend more than 30 percent
or more of their income on rent and utilities. The share of Mary-
land households able to afford the median-priced home is also less
than half. Alongside these unattainable realities to simply live in
a home, the overall cost to build out our housing supply across the
country has reached historic highs. The costs of material and labor
have increased significantly. I want to thank the National Associa-
tion of Home Builders for pointing out the impact of the tariffs,
which have alone are projected to cost, raise the cost of imported
construction materials by billions of dollars.
And before I turn to questions, I’ll just conclude by saying this,
we must view housing as a workforce issue. Without enough hous-
ing to accommodate job growth, housing prices increase, which
pushes out current residents and deters prospective residents, only
serving to slow economic growth. We must work to address attain-
ability as a holistic problem, and I look forward to discussing what
policies can help small homebuilders who need support from Con-
gress at this time.
Ms. DiVito, I’ll start with you. For much of our history, small
builders were able to obtain loans from local financial institutions
for homebuilding, but that access to capital has become more con-
strained in recent years. How can the U.S. government get more
financing in the hands of small builders and contractors?
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Ms. DIVITO. Thank you for the question. That’s right. Getting
more financing into the hands of small builders is vitally important
to relieving the crisis. I think the federal government is well posi-
tioned to expedite that effort. We discussed, I think, allowing the
government-sponsored entities to buy and sell construction loans.
There are some existing programs within the Federal Home Loan
Bank System that I think could be better utilized. And then finally,
filling the gap in financing for needed projects that the private
market is reluctant to fill or for which the private market would
charge exorbitant, exorbitant returns are, I think, all required
tools.
Mr. OLSZEWSKI. Thank you.
And Mr. Owens, I know that builders can occasionally gain a
higher profit by building on a building with more square footage
or adding more square footage, which can price out younger first-
time homebuyers looking for a starter home. What do you think
can be done to encourage the building of smaller, more affordable
starter homes and multifamily units to help have a spread of a di-
versity of housing options?
Mr. OWENS. Again, being proud to represent the nation’s small
volume builders. I think that we follow the market. One thing that
we have learned, and there’s such little spec inventory, if at all,
from our builder contingent. We’ve become a lot more custom build-
ers, infill builders. We, you know, I think what we can do is to just
simply say we’re going to follow whatever makes sense for our buy-
ers because we’re basically building one at a time. And saying that,
there is a sensitivity to these overall costs. The worst thing we can
do is build something that people can’t afford. We pay a lot of at-
tention now, too, to the operating costs of a home. What is it once
that house is built to your—I am sorry, an earlier point of how ex-
pensive it is to actually maintain that house and to have the
monthly utility costs factored into that.
So I think it is incumbent upon us, again, we’re, we’re trying to
be and always have been part of the fabric of these smaller commu-
nities. We’re in every community in America versus the larger of
the nation’s builders that, that pretty much handpick and select
their market. So we have to be very responsive to not only what
the costs are but also to provide the proper product that people can
afford.
Mr. OLSZEWSKI. Appreciate those responses.
Thank you, Mr. Chairman, for having this hearing. With that, I
yield back.
Chairman WILLIAMS. The gentleman yields back.
I now recognize Ms. McIver from the great state of New Jersey
for 5 minutes.
Ms. MCIVER. Thank you so much, Chairman, and thank you to
our Ranking Member for holding this hearing today. And thank
you to each one of our witnesses for being here today.
America’s housing crisis is getting worse by the day. Thirty years
ago, the average age of a first-time homebuyer was 28 years old.
Today, that age is 40. Homeownership is quickly becoming a far-
off dream for our younger generation. Reenters are being hit hard
as well. Half of them are spending so much on rent that they have
little left for anything else. Families across the country are being
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pushed out of stable, affordable homes, all while the construction
of new homes is dwindling. What the nation needs now are more
initiatives like those taken in my district in New Jersey’s 10th,
where we had nearly 200 new affordable housing units built last
year, helping families keep a roof over their heads.
The Trump administration’s economic policies have only made
these problems worse. Inflation has spiked to the highest level in
4 years, driving up costs all around the country. Today, gas is high,
grocery prices are high, health insurance is high, prescription
prices are high, utility bills are high. The list goes on and on.
These price increases leave millions of hardworking Americans
with nothing left over for savings after paying bills, ensuring the
dream of homeownership remains even further out of reach. If we
are serious about closing America’s housing gap, we need policies
that actually lower these insane costs and expand the supply of af-
fordable homes.
Ms. DiVito, thank you for your testimony today. Very enlight-
ening. And you talked a little bit about this today. Home buying
is at its lowest level since the mid-1990s, while nearly half of the
renters spend a third of their paycheck on rent. From your perspec-
tive, can you elaborate on what are the biggest drivers behind the
worsening of the housing affordability crisis families face today?
Ms. DIVITO. Thank you. Yes, in addition to the acute pricing
challenges that this committee has covered and is well aware of I
think the trend of wealthier homebuyers purchasing larger and
larger homes, and therefore especially large home builders being
incentivized to build them is a big problem. Today it is increasingly
challenging for young working-class families to find, but certainly
to afford a home.
Ms. MCIVER. Yeah, especially when you’re being beat out by
cash prices. That is a big deal. Despite how dire the housing situa-
tion is today, the Trump administration is still finding new ways
to make it worse, unfortunately. We have learned that the adminis-
tration is preparing to privatize Fannie Mae and Freddie Mac,
which are critical to keeping the mortgage rate stable, the mort-
gage market stable. How would this privatization affect first-time
or low-income homebuyers?
Ms. DIVITO. So since the great financial crisis, Fannie and
Freddie have been under government conservatorship. And their
sort of operating model and overarching priorities have shifted
from just serving shareholders or considering shareholder interests
and returning profits to public interest. With the privatization, that
could shift. And capital could be restricted, become more expensive,
and shareholders would certainly benefit with some pretty sizable
windfalls.
Ms. MCIVER. Yeah. Another thing too that I am hearing a lot
of homeowners talk about is around insurance costs, right? That
has been a big, you know, rising cost as well. How are increasing
insurance premiums and climate-related risk affecting affordable
housing projects and smaller home builders?
Ms. DIVITO. Yes, thank you. I mean, climate change is getting
significantly worse by the year. I am from Florida and we have suf-
fered many hurricanes that have wiped out entire communities,
preventing them from moving back into their homes for months at
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a time. All of these climate risks just add insurance costs onto the
cost of a home as increasingly insurers grow concerned about po-
tential payouts and then certainly actually have to pay out more
and more as catastrophe hits U.S. communities.
Ms. MCIVER. Yeah. Well, thank you so much for that.
You know, I appreciate everybody’s comment and, you know, ex-
pertise on this. I think we definitely have to look at this issue as
something that is a multifaceted, and it needs multifaceted solu-
tions. It is not a one-all fix-all. And lastly, I think it is crazy too
when you speak to a lot of young people these days who are paying
$3,500 for studios but unable to get approved for a mortgage for
a home. It is just incredibly crazy. And we need to really take a
real strong look at this country and where we’re headed and where
we are currently at right now.
With that, I yield back, Mr. Chairman. Thank you.
Chairman WILLIAMS. The gentlelady yields back.
I now recognize Dr. Morrison from the great state of Minnesota
for 5 minutes.
Ms. MORRISON. Thank you so much, Chairman Williams and
Ranking Member Velázquez, for holding this important hearing.
And thanks to our witnesses for being here and for your testi-
monies.
I think we all agree that the cost of housing is too high due to
shortage of housing supply. We’ve seen housing prices skyrocket
and families are being forced to spend more and more of their in-
come paying for a place to live. Both renting and buying are in-
creasingly unaffordable, and unfortunately, many of the adminis-
tration’s policies are only worsening this affordability crisis. The
21st Century Road for Housing Act is an important step toward ad-
dressing our affordable housing program, but the administration’s
policies continue to create serious headwinds. The Trump tariff
policies and rising inflation are causing the cost of building mate-
rials to continue to increase, and of course, the terror of Trump’s
mass deportation policy is worsening the labor shortage in the con-
struction industry.
Ms. DiVito, during your testimony, you mentioned that over half
of builders reported rising inflation and the cost of building mate-
rials are significant problems they faced in 2025. You also high-
lighted that small builders are disproportionately impacted by the
high price of building materials. Could you elaborate on why the
tariffs imposed by the Trump administration hurt small builders
more than large builders and put them at a greater disadvantage?
Ms. DIVITO. Thank you. Yeah, that’s right. Even before the war
in Iran and some of the tariffs went into effect, inflation was per-
sistently above the Fed’s 2 percent target. These broad pricing
pressures make homebuilding significantly more expensive. Small
builders often don’t have the same kind of resources or margins to
shift supply chains or stock supplies to defray these costs and end
up either absorbing them or reducing production.
Ms. MORRISON. So how do small builders navigate the uncer-
tainty around these tariff—these ever-changing tariff policies?
Ms. DIVITO. I think we’re seeing that it is very challenging to.
There is a lot of uncertainty in obviously the economic policy envi-
ronment and especially the fiscal policy space. And so uncertainty
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about interest rates is driving mortgage rates up and the cost of
capital becomes more and more expensive. There have been many
vacillations of tariff policies for particular goods, which just creates
more disruption and more concern about being able to consistently
plan for the future.
Ms. MORRISON. Thank you.
You know, I have the honor of representing Minnesota’s 3rd Dis-
trict, and I’ve been hearing from small business owners from across
my district and the greater Twin Cities metro area about the dev-
astating impacts of Operation Metro Surge on their businesses,
with businesses across the Twin Cities losing over $610 million in
revenue because of it. Foot traffic was down, staff were afraid to
go to work, and some businesses were forced to close. We have an
ongoing labor shortage that we’ve discussed some this morning in
the construction industry, with contractors reporting that the
shortage of skilled labor is one of their top issues and a leading
cause of delays.
Ms. DiVito, I am returning to you on this one. How have ICE
raids worsened our existing construction labor shortage, and what
are the implications for housing affordability?
Ms. DIVITO. That’s right. The ICE raids and mass deportation
efforts that the president has made a priority for his administra-
tion create a huge shock to the construction labor market that had
already been suffering from shortages. Immigrant workers com-
prise a large percentage of, of that workforce, especially of the con-
struction trades. And ICE raids and threats of deportation are re-
ducing their ability to show up. It is having a chilling effect. Many
folks are scared to go to work. And then, of course, some are being
specifically targeted for deportation. So builders, especially small
builders, have reported many incidents of disrupted work, which
just adds time delays and a, and a general inability to find and re-
tain construction workers.
Ms. MORRISON. Thank you. And then lastly, you know, the
housing insurance industry is facing substantial pressures. You’re
from Florida. From the escalating frequency and severity of ex-
treme weather events, largely driven by climate change leading in-
surers to either increase premiums or exit high-risk regions alto-
gether. How does the, this impact housing costs for Americans and
the development of new housing?
Ms. DIVITO. Yeah, exactly. So, you know, insurers have every
right to be concerned about the future of increasing costs, espe-
cially as climate change gets worse, in particular in specific states
like Florida. So all of that just adds on to ultimate consumer costs
as insurers obviously try to hedge against the potential for in-
creased claims and consumers have a harder and harder time, I
think, actually getting the help they need when a mass event like
a fire in Hawaii or a hurricane in Florida damages their commu-
nity.
Ms. MORRISON. Thank you for that context.
And I see that my time has elapsed, so I yield back. Thank you,
Mr. Chair.
Chairman WILLIAMS. The gentlelady yields back.
I now recognize Ms. Goodlander from the great state of New
Hampshire for 5 minutes.
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Ms. GOODLANDER. Thank you, Mr. Chairman, and thank you
to our witnesses for being here today for this really important hear-
ing.
I am going to jump right into it because, Mr. Owens, I am very
grateful for the five-L framework. I think this is very, very useful.
My grandfather raised us with a six-P framework; prior planning
prevents piss-poor performance. But I am a big fan of the five Ls.
And I want to jump right in and on what you’ve designated your
fifth L, the cost of laws and regulation. And I really look forward
to reading the study from 2021. It was eye-opening for me. When
you think about it right now, 65 percent of American households
are priced out of a median-priced home in this country. And as you
point out in your testimony, a $1,000 increase in home prices would
price out another 156,405 households. So this is a genuine crisis.
We’ve got to lower costs by increasing supply and by lowering the
cost of building. And what you’ve pointed to, you know, as of 2021,
more than $93,000 attributable to the cost of development and con-
struction.
I want to ask you about something that I am not sure has come
up in this hearing yet, but the Build America, Buy America provi-
sions that were included in the Infrastructure Investment and Jobs
Act, I am very supportive of the underlying goals. In practice, what
I’ve seen on the ground in New Hampshire is that the way that
they’ve been implemented, particularly as it relates to the construc-
tion of new residential housing, has created some really, I think,
unintended effects and costs and made additional barriers to build-
ing quickly.
So I wanted to start with you, Mr. Ohms. Can you talk about
some of the challenges that your Members have faced with respect
to the Build America, Buy America, or BABA compliance?
Mr. OWENS. I wish I could. Yeah, I haven’t seen any direct ef-
fects in, in my own business. We’ve seen delays being one of the
bigger, you know, mainly on when we look at some of what hap-
pened with the lumber market, the domestic lumber market over
the years where mills closed. We had less mills out there doing the
OSB, and then when the when the reinvestment or the ask was,
you know, the Build America, Buy America came back into play,
it was one of those things. I lived that every day in Flagstaff, Ari-
zona, where we’ve had our trees to be harvested marked for the
whole 10 years I’ve been out there. And we just can’t get enough
workforce in quickly enough, let alone to get those logs to a mill
versus even getting the mill back up to speed and producing OSB
at maybe a more affordable rate than we’re paying now. So that’s
really the only thing that I could comment on at this point.
Ms. GOODLANDER. Well, I’ll submit questions for the record.
I’d be interested to hear from all of our witnesses on that front.
Just to go to the material cost, lumber, as you’ve put it. The costs
of—the costs of material costs. You point out in your testimony
that In April 2026, we’ve seen costs on the rise in 2026.
Ms. DiVito, you, you pointed to some pretty eye-popping numbers
when, when we think about just the cost of tariffs on small home
builders. Can you speak to that? Because this, of course, is directly
in the lane of the United States Congress to end these unconstitu-
tional and costly and chaotic tariffs.
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Ms. DIVITO. Yes, thank you. Right, I think the president’s poli-
cies are, are putting additional pressures on, certainly on families
struggling with rising prices, but also on businesses, especially
small businesses with tariffs on core construction materials. Re-
cently 62 percent of small builders reported that building material
prices are a significant problem that they face, and that’s compared
to just 25 percent of some of the largest builders. So small busi-
nesses are particularly prone, I think, to some of the suffering
around tariffs on construction materials.
Ms. GOODLANDER. Mr. Schaefer, can you speak to this in your
own experience?
Mr. SCHAEFER. Yes. For us, tariffs, the impact has been about
3 to 5 percent is what we’ve experienced. We’re building 200 to 300
homes a year, so we’re in the middle. We can buy in bulk. We’re
not a big builder, but we’re not building one or two homes. So the
impact has not been dramatic, but about 3 to 5 percent.
Ms. GOODLANDER. Well, on thin margins and in the midst of
a crisis, every cost increase has a massive impact. I want to thank
you all. This is such an important hearing. With that I yield back.
Chairman WILLIAMS. The gentlelady yields back.
I now recognize Ms. Scholten from the great state of Michigan
for 5 minutes.
Ms. SCHOLTEN. Thank you so much, Mr. Chairman. Came up
here a little bit sooner than I thought, so I am just pulling my re-
marks up here. I am grateful for the opportunity to connect with
our witnesses today.
And Ms. DiVito, thank you so much for your work and your help
in my office.
I apologize. Let me just pull these up one quick second. It is
okay, they’re not in here. Okay, perfect. Okay, there we go. Sorry
about that.
There is clearly a need across the country for diversified supply
of affordable housing, and our small businesses should have a larg-
er role in addressing that challenge. Do we want to pause? Okay.
All right. In addressing that challenge, we know that the industry
consolidation is an increasing trend across the economy, which puts
small businesses at a disadvantage. My bill, the Main Street Com-
petes Act, just passed out of this committee yesterday. Thank you
for the committee’s support on that. And would prompt the federal
government to examine our antitrust laws to find ways for our
small to compete in every market.
Ms. DiVito, my first question is for you. How does increasing
builder consolidation create an unfair playing field for small busi-
nesses?
Ms. DIVITO. Thank you. And that’s right. I mean, of course,
there are still many, many small builders in the U.S., but we have
seen more industry consolidation over the last several years. Hous-
ing markets are highly localized, and these impacts can look dif-
ferent from area to area, but small builders already at a disadvan-
tage against larger players and the underlying economic uncer-
tainty and pricing pressures are putting a lot of them on the brink.
Consolidation is bad for home builders trying to compete, but it’s
also bad for home buyers and communities. So I, I commend you
for attempting to stop this trend.
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Ms. SCHOLTEN. Absolutely. In West Michigan, I consistently
hear from constituents not only about the cost of housing, but also
the quality of existing housing supply. According to an analysis by
Housing Next, there’s approximately 1,454 renter households and
1,095 owner households in Ottawa County, in my district, that live
in substandard housing conditions. This means that they are living
in spaces with issues like overcrowding or lacking basic features
like plumbing or kitchens.
Ms. DiVito, sticking with you here, your testimony highlights
how some of the largest construction companies are facing legal
troubles for building low-quality housing. Are there accountability
measures that Congress should consider to discourage these compa-
nies from cutting corners?
Ms. DIVITO. Thank you. Yes. And just this week, there was re-
porting that some of the largest homebuilders are increasing their
legal costs due to litigation against sub-quality building. Ensuring
strong federal enforcement, I think, is crucial. But Congress can
also just help promote competition in the homebuilding industry to
prevent some of the bad practices that we tend to see when larger
builders have a larger share of the market without any competi-
tion.
Ms. SCHOLTEN. And what do you think in terms of enforcement
and follow-up? Where are some of the gaps that you see in making
sure that those are consistently enforced?
Ms. DIVITO. That’s a good question. I am not as familiar with
what actually happens when the home comes online, but I think
making sure that there is clear and consistent federal oversight,
state and local requirements. We’ve talked a lot about streamlining
some of those codes, which does not need to mean compromising on
health and safety standards.
Ms. SCHOLTEN. Yeah. I invite you and any of our other panel-
ists into the conversation too, just about where we could be helpful
there. And you feel free to follow up and submit them for the
record after as well. One last one in the last few seconds remain-
ing. We know that the President’s tariff policies have created real
instability. We’ve been—this is a theme of the morning. We’ve
talked about it a lot. For many small businesses, particularly those
in the construction industry who rely on critically imported housing
materials.
Ms. DiVito, again, you mentioned how small firms often do not
have the resources to navigate these erratic tariff policies. Can con-
firm. How can the Small Business Administration do more to insu-
late small businesses from the worst of these impacts?
Ms. DIVITO. Thank you. We can certainly provide, I think, more
small business resources by returning investment to the agency
after it lost significant workforce last year. But ultimately, I believe
we need to address the root cause of these acute pricing pressures,
which is the tariffs.
Ms. SCHOLTEN. Thank you. I yield back.
Chairman WILLIAMS. The gentlelady yields back, and I now
move as Chairman to—for one more final question from my side,
and recognize myself for 5 minutes.
Mr. Schaefer as a leader at the Fading West Development you’ve
been at the forefront of using modular construction to deliver hous-
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ing in communities facing urgent need, including supporting recov-
ery efforts for disaster-impacted residents in Lahaina, Hawaii, as
well as providing workforce housing in mountain towns like
Breckenridge. So my question is, from your experience deploying
modular housing in these very different contexts, could you explain
the key advantages of modular construction compared to tradi-
tional construction? More broadly, how do you see modular housing
helping to address challenges today’s relating to housing afford-
ability, speed of delivery, and overall supply constraints in high-
need communities?
Mr. SCHAEFER. Yes, thank you for the question. It’s speed to
market. It takes us 10 days to build a house in the factory. Specifi-
cally in Lahaina, we built 85 houses in 2 months. They were
shipped, and 2 months later people were moving in after experi-
encing complete loss of their homes and community. All of the sub-
contractors are in a factory. We are built as a manufacturing
group, so we see ourselves as 18 stations. It’s more set up like a
car factory, so very high standard of building, high quality, and
architecturally interesting homes. And what this allows us to do
then is build cheaper and faster. The repetitive motion of doing a
3-bedroom, 2-bath house over and over again, means you can speed
it up. And that’s really what the affordable housing market is lack-
ing right now. What manufacturing does then is it makes them
cheaper and faster, which allows us to move folks in very quickly.
Mr. OWENS. Good.
In my time remaining, Dr. Rupnik, in your testimony you wrote
about the need to standardize terminology for industrialized hous-
ing and how it impacts small builders. So the question would be,
could you elaborate on the benefits of standardized terminology and
why it is important to tackle it first?
Mr. RUPNIK. We have found through analyzing all of the great
work that all the federal agencies do in supporting housing, not
just at HUD but at the Department of Transportation, U.S. Depart-
ment of Agriculture, that even when we talk about Industrialized,
factory-built, modular, manufactured. The agencies themselves do
not use consistent terminology, which makes it very difficult for
that very well-intended funding to reach small businesses. And
that signals to finance and insurance that they don’t know what
the heck we’re talking about. It is very difficult to understand
many of the barriers that we’re talking about finance and some of
the opportunities where this is a less risky process for insurance.
We are still not consistent in what they are.
And so the United Kingdom, for example, has been very cost-ef-
fective in the use of public funds by just saying we’re going to pick
a term and we’re going to stick with it, both for their equivalent
of subsidies and awards, but also their way of signaling to finance
and insurance that we are talking about a particular process.
Chairman WILLIAMS. Okay. Mr. Schaefer, in the time I have
left in your testimony, you mentioned that 41 percent of the con-
struction workforce will retire over the next 5 years. In February,
the committee heard the testimony from witnesses who spoke
about the role career and technical education strengthen the pipe-
line for high-demand jobs. So quickly, would you agree that oppor-
tunities through CTE, like that of the Boulder Valley School Dis-
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trict, could support the next generation of the construction work-
force?
Mr. SCHAEFER. Absolutely. Thank you for the question. Yes,
working with trade schools, working with high schools, working in
all university settings is going to be a big part of this because there
will not be enough workers. We are already in that position. The
good thing about modular is it’s a controlled environment. You can
cross-train. You can be a part of our workforce with very little
training so we can train you while you are working. And it, hope-
fully, will allow for many more jobs for our workforce.
Chairman WILLIAMS. Okay, thank you very much. My time is
up.
I now recognize Ranking Member Velázquez from the great state
of New York for 5 minutes.
Ms. VELÁZQUEZ. Thank you, Mr. Chairman.
You know, I am really struck by the fact that here we are dis-
cussing what can we do in Congress to facilitate increasing the
housing supply. I really truly believe that immigration is part of
the equation. I don’t think that we will offend the administration
by saying that a lot of the workers that are legally here do not
show up to work because of the fear of being arrested and sent to
a detention center and to any foreign country where they do not
belong. Then there is a study that the New York Times wrote an
article about in terms of who represents the workforce in the con-
struction industry. A lot of Latinos, immigrants. A lot of them, and
they are not showing up.
Mr. Schaefer, can you talk to us about the main barriers to fi-
nancing for modular companies and how can the federal govern-
ment fill the gaps?
Mr. SCHAEFER. Thank you for your question. The challenge
with modular on the financing side is that you have to pay for the
house before it is built. It only takes 10 days to build in the factory,
but it is the opposite of how typical payments are done in construc-
tion. You’re paying a large portion before the home is built. That
is a challenge for many banks and, frankly, developers to under-
stand. I think personally, that has been one of the problems why
modular has not caught on more in our country. It’s going to be
education of banks, the federal government, and the state govern-
ment, to allow for financing to happen, whether it is a bridge loan,
whatever the case may be, to get the financing done so that we can
build them. So that has been our biggest challenge.
Ms. VELÁZQUEZ. Mr. Rupnik, in your testimony, you mentioned
a dormant authority passed by Congress decades ago. What is pre-
venting this authority from being used right now?
Mr. RUPNIK. The knowledge that it existed. So we very much
thank HUD and the PD&R Department for funding us to look at
what is out there and what we can use. And we discovered that
National Institute of Building Sciences is really designed to help
both local and state governments as well as industry to really
streamline the regulations. Again, streamline compliance. I want to
be specific about that. It is not the regulations themselves, it’s how
we meet those regulations. Those are very different things. We’re
working with mostly states, many of the states here, and we’re
working with industry right now. But going back to the question,
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the work and the standardization of award criteria that’s brought
up, is that for the federal government, what we would love to see
is helping states and industry by adopting a single certification
process for housing products, not for factories.
And then what other countries have done is to point as many
federal programs as possible, simplifying compliance by saying, if
you’re certified as a housing product, you qualify for X, Y, and Z,
whatever that is. That will bring standardization. It will increase
competency. It’ll make your lives easier because we’re not con-
stantly looking for new ways to create compliance for new societal
issues because we will have new societal issues. Right now we cre-
ate new compliance for new issues, which is where the real cost
comes from, not from the societal goals that we should have. Aging
in place, you know, natural resilience. We want those things, but
every time we add one of those, that’s where it is a federal, state,
local, and industry piece. And the National Institute of Building
Sciences has been set up for that, and we’re trying to resuscitate
that. And it was really federally funded research that discovered
that needle in a haystack that has allowed us to think through
that.
Mr. OWENS. Thank you. I yield back.
Chairman WILLIAMS. The lady yields back. I now recognize Ms.
Goodlander from the great state of New Hampshire for 5 minutes.
.
Ms. GOODLANDER. Thank you. I appreciate it.
I wanted to just come back to financing constraints and the cost
of capital and just ask, you know, as I—before I came to Congress,
I worked in the Antitrust Division at the Justice Department, and
one of the things we see, and many of you pointed out in your testi-
mony, the consolidation in the banking industry, the assault on
community banks has been a huge barrier and cost driver for in-
creasing the supply. The 21st Century Road to Housing Act had
some good provisions to strengthen the hand and provide relief to
our community banks, but I wanted to ask our witnesses if you
have other ideas, anything that we left on the table that we could
do to support our community banks. Did we get it all right? That
would be a remarkable feat in the history of this Congress. Well,
I’ll I would—if Mr. Owens, unless you have something——
Mr. OWENS. If I may, please. A little bit out of my wheelhouse
here, but we’ll—staff will be happy to get back to you on that. I
think we’ve consulted with you as well as the Senate, as much as
probably any other entity to get this right. We truly appreciate all
your efforts to carry this forward, but I think that’s something
that’s more of a heavy lift for, for our staff to get back to you.
Ms. GOODLANDER. Great.
Ms. DiVito?
Ms. DIVITO. Thank you. Yes, I think there’s a really good oppor-
tunity to work on follow-up legislation to maximize the effect of
Road to Housing. Specifically, I think a bipartisan package that fo-
cuses on those financing constraints and leveraging all of the gov-
ernment’s potential to resolve some of them.
Ms. GOODLANDER. Thank you.
I wanted to just come I want to go back for a moment to the
homebuyer. And in New Hampshire, we have pioneered and seen
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real success in resident-owned communities, which are overwhelm-
ingly communities with manufactured homes. This is truly one of
the last remaining affordable paths to homeownership, and really
look forward to working with you all in making—building on the
progress that we made in the bill passed yesterday. But what I am
seeing on the ground in New Hampshire, resident-owned commu-
nities work really well because it gives people a stake in the deci-
sion-making and the stability of their communities. But what we
are also seeing is a trend of big corporate investors who are buying
up manufactured home communities. What they’re doing is, they’re
raising the rents, they are adding junk fees, and they’re often leav-
ing residents with nowhere else to go because moving a manufac-
tured home, as you know well, is practically impossible. So I want-
ed to ask about, you know, these—I think unfortunately a dis-
turbing trend in rising abusive practices by corporate owners of
these communities, and the ways in which they’re jacking up costs.
So I wanted to begin with you, Ms. DiVito. Do you think that
there are measures Congress could take, including prohibiting cor-
porate ownership of these types of communities?
Ms. DIVITO. Thank you. Yes, I think Congress should very much
build on, I think, some of the negotiations in the Road to Housing
package to make sure that institutional investors in particular and
some of the biggest large, large builders are not able to just extract
from communities by hiking up rates and rents and tacking on un-
necessary fees.
Ms. GOODLANDER. Mr. Schaefer, could you just speak to what
you’ve seen in your own experience and what you think Congress
might be able to do to support resident-owned communities that
are stable and affordable?
Mr. SCHAEFER. Yeah, thank you. The things that I highlighted
were the public-private philanthropic partnerships, and we have
seen those be the most successful. When we talk about the word
‘‘affordable and housing,’’ it really shouldn’t even be used in the
same sentence because there’s no such thing as affordable housing.
If you’re already paying $100,000 before you even start building,
it’s almost impossible. So most of the projects we’re involved in in-
clude either state funding to bridge that gap or federal funding.
Local communities are in such dire need that they’re waiving tap
fees, and they’re making the entitlement process quicker so that
the cost of the overall house is cheaper to hit that 80 to 120 AMI,
which is the area we work in. Thank you.
Ms. GOODLANDER. Thank you.
Well, thank you all. And with that, I yield back.
Chairman WILLIAMS. The gentlelady yields back.
And I’d like to thank our witnesses today for their testimony, for
being here and for appearing. Without objection, Members have
five legislative days to submit additional materials and written
questions from the witness to the Chair, which will be forwarded
to the witnesses. I’d ask the witnesses to please prompt—or please
respond promptly. And if there’s no further business or objection,
the committee is adjourned.
[Whereupon, at 11:51 a.m., the committee was adjourned.]
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APPENDIX
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Æ
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- 17ef4e90e538b597ffc84747b65ea494c1797bb11ac0284a5f36a76a15e4eea3
- Our copy
- CHRG-119hhrg63840.pdf
- Original
- www.govinfo.gov