President Trump has referred to as on the large house builders to construct extra properties in a brand new social media put up.
It’s no secret that housing affordability is horrible in the meanwhile, and one of many causes is an absence of accessible for-sale provide.
As everyone knows from economics 101, or just each day life, the better the provision of one thing, the decrease the worth.
So if the builders determined to construct extra properties, we’d arguably see asking costs fall, thereby enhancing affordability.
The issue is the house builders are already sitting on a provide glut and so they’re for-profit firms.
Trump Accuses Huge Dwelling Builders of Sitting on Empty Tons
Whereas Trumps’ Reality Social put up above may be well-intentioned (who doesn’t need a cheaper home to purchase), it’s not essentially possible.
In his put up, he in contrast the large house builders to OPEC, claiming the latter “stored Oil costs excessive.”
He added that “it wasn’t proper for them to do this,” and stated it was now “being performed once more.”
Nevertheless, this obvious cartel is being dedicated “by the Huge Homebuilders of our Nation” this time round, who he goes on to say are his mates.
The President identified that “they’re sitting on 2 Million empty heaps,” which he claimed is a file, whereas concurrently asking for Fannie Mae and Freddie Mac to get them constructing extra.
It’s unclear what that plan to get them going may be, however you’d assume some kind of financing deal to make homeownership extra enticing if it includes the GSEs.
Some kind of incentive for first-time house consumers to place the American Dream again inside attain.
Whereas it sounds good on the floor, it’s laborious guilty the house builders for the present provide shortfall.
They’re already sitting on too many properties within the communities the place they’ve constructed, which explains why they’re providing file incentives to their clients.
If they’ve to supply main incentives, together with large mortgage price buydowns, to maneuver stock, it makes little sense to construct extra.
Exacerbating that is the price of provides to construct properties due to tariffs, one thing the Trump administration carried out.
And maybe the price of labor, which has presumably been disrupted attributable to sweeping raids of unlawful immigrants.
Poor Housing Affordability Has Already Led to a Provide Glut of Newly-Constructed Houses
Now let’s contemplate new house provide, which elevated to 490,000 models as of the tip of August 2025, per the Census Bureau.
Whereas it was 1.4% beneath the July 2025 estimate of 497,000, it was 4% above the August 2024 estimate of 471,000.
And the one motive it’s not a lot greater is due to a shock sizzling new house gross sales print final month.
That shock print additionally pushed the provision of recent properties on the market all the way down to 7.4 months, which was beneath the 9.0 months in July and the August 2024 estimate of 8.2 months.
Nevertheless, previous to this sudden flip decrease it was approaching 10 months of provide, which solely occurred in September 2022 when mortgage charges greater than doubled.
And in 2008, when the mortgage disaster led to one of many worst housing downturns in historical past.
What’s extra, economists don’t even appear to consider the August new properties report knowledge, which is topic to large revisions.
It additionally appeared to battle deeply with house builder sentiment, which has been fairly poor, and business chatter that has pointed to weak purchaser exercise.
Simply contemplate a current quote from Lennar’s Co-CEO Stuart Miller throughout their third quarter 2025 earnings launch.
He stated, “We consider that now is an effective time to reasonable our quantity and permit the market to catch up.”
In the course of the quarter, the corporate delivered 21,584 properties and recorded 23,004 new orders, however not with out main concessions.
“Reaching these outcomes required further incentives, leading to a lowered common gross sales worth of $383,000, and our gross margin drifted all the way down to 17.5%, whereas our SG&A bills got here in at 8.2%, reflecting the smooth market situations.”
Then there’s D.R. Horton, the nation’s high house builder, whose Government Chairman David Auld stated, “New house demand continues to be impacted by ongoing affordability constraints and cautious client sentiment.”
“We anticipate our gross sales incentives to stay elevated and improve additional throughout the fourth quarter,
the extent to which can rely on the power of demand throughout the the rest of summer time, adjustments in mortgage rates of interest and different market situations.”
Purchaser Demand Is Weak and New Houses Aren’t Positioned within the Proper Locations
In different phrases, the nation’s two largest house builders are saying the identical factor. Purchaser demand is weak attributable to an absence of affordability.
And the one technique to transfer properties proper now could be to supply enormous incentives to clients.
One main technique these days has been the mortgage price buydowns, which each builders make use of through their captive mortgage lenders, Lennar Mortgage and DHI Mortgage, respectively.
Asking them to construct much more properties and take a haircut on pricing simply didn’t make sense.
Additionally, the locations the place they’ve land and construct aren’t essentially the place we want extra new properties.
Sadly, house builders typically solely construct within the outskirts of main metros, the place there’s already ample provide.
Constructing much more properties in faraway locations received’t clear up this housing disaster.
We’d like extra current house provide in locations the place households really wish to dwell. However a lot of it’s off the market attributable to issues like mortgage price lock-in.
Maybe incentivizing current householders to promote is a greater technique than persevering with to construct the place folks don’t wish to purchase.
Learn on: Ought to I purchase a brand new house or a used house?
Earlier than creating this website, I labored as an account govt for a wholesale mortgage lender in Los Angeles. My hands-on expertise within the early 2000s impressed me to start writing about mortgages 19 years in the past to assist potential (and current) house consumers higher navigate the house mortgage course of. Comply with me on X for warm takes.