    [House Hearing, 119 Congress]
    [From the U.S. Government Publishing Office]

                      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

                                   __________

    [GRAPHIC NOT AVAILABLE IN TIFF FORMAT]

                Small Business Committee Document Number 119-036
                 Available via the GPO Website: www.govinfo.gov

                                   __________

                    U.S. GOVERNMENT PUBLISHING OFFICE
    63-840                 WASHINGTON : 2026
    =======================================================================

                       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 VELAZQUEZ, 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

                                C O N T E N T S

                               OPENING STATEMENTS

                                                                       Page
    Hon. Roger Williams..............................................     1
    Hon. Nydia Velazquez.............................................     2

                                   WITNESSES

    Mr. Bill Owens, Chairman of the Board, National Association of
      Home Builders, 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
      Collaborative, 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
          Architecture, 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 Collaborative, Washington, DC...................    63
    Questions for the Record:
        None.
    Answers for the Record:
        None.
    Additional Material for the Record:
        None.

       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
    [chairman of the Committee] presiding.
        Present: Representatives Williams, Meuser, Jack, Velazquez,
    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 households
    cannot afford a $300,000 home. And when housing construction
    slows and housing becomes unattainable, communities stagnate,
    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 how homes are built from
    the concept to completion. These innovations offer real
    promise. By reshaping our approach to housing construction,
    these innovations can deliver faster construction timelines,
    lower material costs, reduce waste, and offer greater
    efficiency 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, locally and state and federal
    requirements.
        At a time when many families are struggling to find an
    affordable 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 entrepreneurs 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 barriers, but it is time to stop hamstringing our best
    and our brightest. When small home builders are constrained, It
    affects people far--it affects people far beyond the housing
    market, and other industries 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
    challenges 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 roadblock 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 together 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. Velazquez.
        Ms. VELAZQUEZ. Thank you, Mr. Chairman, for calling this
    timely hearing on one of the most important issues facing our
    economy. Let me also take this opportunity to welcome all the
    witnesses and to thank you for being here.
        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 median 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
    important reforms to federal housing programs and includes
    language I offer on cooperative housing developments and
    oversight of monitors and receivers of public housing
    authorities. This bill is an important first step, but it is
    not the complete answer. I urge the Senate 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
    campaigned 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 construction 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 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 together, 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 construction firm he established in 1982, that is
    recognized for award-winning energy-efficient home designs. Mr.
    Owen has also held numerous leadership roles across the home
    building industry, including Chairman and positions with the
    NAHB Remodelers Council, Home Builders Institute, and the New
    American Home and Remodel 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
    accelerating the underutilized housing industry. Dr. Upnick is
    also a professor of architecture at Northeastern University.
    His research focuses on industrialized housing delivery,
    particularly the regulatory 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.
        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 modular 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 developers, nonprofits, and
    municipalities across Colorado, Hawaii, and the broader western
    region. Since the company's manufacturing facility 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
    Subcommittee 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
    Communication from Florida State University and a Master of
    Divinity from Columbia Theological Seminary. So I look forward
    to your testimony.
        I now recognize the Ranking Member, Velazquez, to briefly
    introduce our last witness appearing before us today.
        Ms. VELAZQUEZ. Thank you, Mr. Chairman.
        Our final witness today is Emily DiVito, senior advisor for
    economic policy at Groundwork Collaborative, where she manages
    the work on the housing crisis. Prior to Groundwork, she was
    the director of finance, corporate regulation, and consumer
    protection at Roosevelt Institute and a policy advisor at the
    U.S. Treasury Department. 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
    appreciate all of you being here today. Now, before recognizing
    the witnesses, I'd like to remind them that their oral
    testimony is restricted 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 testimony. 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, NATIONAL
     ASSOCIATION OF HOME BUILDERS; DR. IVAN RUPNIK, PHD, FOUNDING
        PARTNER, MOD X, PROFESSOR OF ARCHITECTURE, NORTHEASTERN
       UNIVERSITY; MR. ERIC SCHAEFER, CHIEF BUSINESS DEVELOPMENT
    OFFICER, FADING 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 Velazquez, and
    Members of committee, thank you for the opportunity to testify
    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, today's affordability challenge is driven
    by a simple imbalance: the nation is not producing enough
    housing to meet demand. NAHB estimates a structural shortage of
    roughly 1.2 million homes. Vacancy rates remain historically
    low, and the resulting supply-demand 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 housing, 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 capital, and for many small
    builders, that means financing from community 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
    working 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
    obstacle 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. Congress 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 elevated 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 hidden tax on housing production. NAHB research shows that
    regulation accounts for nearly 25 percent of the cost of a new
    single-family home and over 40 percent of multifamily
    development costs. These burdens increase carrying costs and
    financing risk. Permitting 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 bottom line is
    clear: there is a supply problem. Small builders are 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 regulatory 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 Velazquez,
    thank you. Thank you for the opportunity to testify.
        This year I co-authored or published a report from HUD that
    examined why the United States has persistently struggled to
    industrialize 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 design, 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 automotive. Housing does not.
        In 1968, HUD documented exactly this issue and concluded
    that the federal role is to create enabling conditions within
    which companies can innovate to address housing affordability.
    In response, Congress authorized HUD to pilot a form of
    regulatory streamlining 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 concluded 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
    extensively. The second, the more exciting part for me, was the
    establishment of the National Institute of Building Science, or
    NIBS, mandated by Congress to continue the work HUD had piloted
    developing a performance-based fast track for small innovative
    companies 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
    implementation.
        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 operating successfully in Japan for
    more than 50 years. Today more than 28 percent of Japanese
    housing goes through this fast-track 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 housing 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
    production, 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 exercise 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 individual project reviews. In the U.S., the
    strongest endorsement for housing system certification has come
    from small vertically integrated 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 hybrid delivery
    equally because what it certifies is the integrated system, 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 multifamily builder.
        MOD X is working with NIBS and a steering and technical
    committee of 21 people to develop the standard. We hope to be
    completed 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 committee 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 government, 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 Member
    Velazquez, 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 company focused on the Lean process. The U.S.
    faces a crushing housing deficit, and this burden falls on both
    national builders and smaller home builders like Fading West.
    With little or no innovation in the past 50 years in how houses
    are built, Fading West and the modular manufacturing industry
    firmly believe that this committee has a vital role to play in
    helping small home builders innovate, scale, and actively
    participate in resolving our national housing shortage. To
    understand the challenges small home builders face, we must
    look at how far the U.S. lags in manufacturing adoption. 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 systemic
    causes holding back our construction sector.
        First, it is because of a fractured labor pipeline. Forty-
    one percent 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
    manufacturing 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 action, 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 partnership
    blueprint. Under Governor Polis, Colorado has become a modular-
    friendly state through initiatives like Proposition 123, equity
    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
    Wyoming, 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 building 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 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
    transportation policy, it is community policy. The committee
    can empower 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 questions.
        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 Velazquez,
    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 worsened by existing housing shortages and a failure to
    build more homes of all types. Congress is already taking on
    barriers to building, 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. housing system.
        I would like to highlight two particular cost challenges
    for builders 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 interest 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
    housing agencies, the Trump administration is pulling back on
    federal housing funding by proposing the elimination of
    programs like Home Investment Partnerships and Community
    Development 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
    capital 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, government 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
    construction. 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 ultimately 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
    construction 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 demand. 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
    definitely strikes home. I mean, we deal with this every day.
    The, you 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 zoning, with impact fees. And
    again, we understand this isn't all federal 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 interesting 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
    technical expert in off-site construction and building
    innovation, you spent years studying how design, manufacturing,
    regulation interact 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 construction and reduce regulatory barriers
    that slow the development. So offsite and modular construction
    are often viewed as promising solutions to improve efficiency,
    lower costs, and expand housing supply, but they also face
    significant challenges because of codes, permitting, and
    inspections, et cetera. Standardization. So my question 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 reality 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 advocating 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 multiplication of what actually a company has to deal with,
    small or large, is infinitesimal. The investment in
    streamlining code compliance is the single tool that we think
    would benefit both conventional builders and offsite builders.
    And that is something where we've seen AI and other digital
    tools used in this space. And every 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. VELAZQUEZ. Thank you, Mr. Chairman.
        Ms. DiVito, Housing costs are at the root of the
    affordability crisis, 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 persistent 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 construction materials from tariffs. And one of
    the biggest underlying challenges we face today is the high
    cost of capital that makes it incredibly expensive, time-
    consuming, and overall difficult for developers, especially
    small firms, to build affordable housing. And this is why I
    believe that if we want to fix our housing affordability
    crisis, we have to fix our housing financing system.
        Ms. VELAZQUEZ. 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
    research through our econ team has shown a fairly insignificant
    burden when it comes to tariffs. Somewhere around--when we look
    at total building cost, everything that goes into the home,
    we're estimating 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 administration working toward the American
    First environment, that's influencing some of our work, but it
    is fairly minimal.
        Ms. VELAZQUEZ. And you disagree with the member of the
    National Association of Home Builders that tariffs are
    constraining investment?
        Mr. OWENS. I don't think there's any question that they're
    having some impact.
        Ms. VELAZQUEZ. Okay. Wouldn't you agree that these tariffs
    have increased the cost of housing? You're saying no?
        Mr. OWENS. Slightly.
        Ms. VELAZQUEZ. Okay.
        The president has proposed significant cuts to programs at
    HUD. Ms. DiVito, what are some of these cuts? How do they
    impact housing affordability?
        Ms. DIVITO. That's right. The president has been trying to
    eliminate some of the nation's most flexible housing programs,
    including the Home Investment Partnerships Program and
    Community 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 percent. Cutting this funding means that these
    communities and businesses 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. VELAZQUEZ. Do you agree that if the president and
    Members in Congress are serious about addressing housing
    production, that they will be increasing not decreasing HUD's
    housing production programs?
        Ms. DIVITO. Yes, ma'am.
        Ms. VELAZQUEZ. 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 particularly 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
    affordability crisis. Unfortunately, though, I feel strongly
    that fixing zoning alone will not dissipate the underlying
    costs of securing financing, which is one of the major drivers
    of the affordability crisis we see today.
        Ms. VELAZQUEZ. Thank you.
        Mr. Owens, to that end, your testimony mentioned exploring
    SBA financing to help get more access to capital for small
    developers. 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 builders, 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. VELAZQUEZ. 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
    interesting and important discussion and, and hearing here. We
    all agree construction costs, regulatory delays, outdated
    zoning constraints 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 clearly 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 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 anyway. 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 pathways. 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 conversation 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 themselves, 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 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
    Housing 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.
    Chairman.
        Chairman WILLIAMS. The gentleman yields back. I now
    recognize 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 agreeing 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 family, 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 American 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 Germantown, 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 between 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 annually 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 pretend, 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
    interest 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 Louisville, Kentucky, the average cost, that's
    going to put you at $380 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 mortgage, 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 payments, 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 control 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 lumber 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 crisis 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.
        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 renting 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
    provided 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 housing 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 continue to make higher demands on the way
    that construction happens 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 asserted 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 modular 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 federal 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 individual permits versus
    nationwide permitting, if we stayed on the Clean Water Act and
    the compensatory, pardon me, that's a mouthful, 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 builders,
    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 essentially. And it is even more than that around 40
    percent in the multifamily.
        Mr. JACK. Thank you. Could you comment, this week the House
    took action on housing, as you saw, no doubt, a few days ago,
    actually 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
    because 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, removing the 7-year
    forced requirement to sell build-to-rent properties 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 renovation 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
    development. 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
    primary 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.
        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 Velazquez, 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 affordability crisis, and America's affordability crisis
    begins with housing. If you can't afford a roof over your head,
    little else matters. Unfortunately, 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
    unattainable levels for many Americans who are also grappling
    with gas prices of $4.50 per gallon or more across the country
    while inflation surges to the highest level it is reached in
    nearly 3 years. As I've pointed out in this committee before,
    99 percent of Americans 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 Maryland 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 Association 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 housing 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 attainability as a holistic problem, and I
    look forward to discussing what policies can help small
    homebuilders who need support from Congress 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 constrained in recent years. How can the U.S.
    government get more financing in the hands of small builders
    and contractors?
        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 positioned 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 diversity 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 builders, 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 buyers 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
    attention 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 expensive 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 communities. 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 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 affordable homes.
        Ms. DiVito, thank you for your testimony today. Very
    enlightening. 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 perspective, 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
    situation is today, the Trump administration is still finding
    new ways to make it worse, unfortunately. We have learned that
    the administration is preparing to privatize Fannie Mae and
    Freddie Mac, which are critical to keeping the mortgage rate
    stable, the mortgage 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 suffered many hurricanes that have wiped out entire
    communities, preventing them from moving back into their homes
    for months at a time. All of these climate risks just add
    insurance costs onto the cost of a home as increasingly
    insurers grow concerned about potential 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,
    expertise on this. I think we definitely have to look at this
    issue as something that is a multifaceted, and it needs
    multifaceted solutions. 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 Velazquez, for holding this important hearing.
    And thanks to our witnesses for being here and for your
    testimonies.
        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 income paying for a place to live. Both renting and
    buying are increasingly unaffordable, and unfortunately, many
    of the administration's policies are only worsening this
    affordability crisis. The 21st Century Road for Housing Act is
    an important step toward addressing 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 materials to
    continue to increase, and of course, the terror of Trump's mass
    deportation policy is worsening the labor shortage in the
    construction industry.
        Ms. DiVito, during your testimony, you mentioned that over
    half of builders reported rising inflation and the cost of
    building materials are significant problems they faced in 2025.
    You also highlighted 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 persistently 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
    uncertainty 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 environment and especially the fiscal policy
    space. And so uncertainty 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
    District, and I've been hearing from small business owners from
    across my district and the greater Twin Cities metro area about
    the devastating 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 administration create a huge shock to the construction
    labor market that had already been suffering from shortages.
    Immigrant workers comprise a large percentage of, of that
    workforce, especially of the construction trades. And ICE raids
    and threats of deportation are reducing 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 retain 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 extreme weather events, largely driven by climate change
    leading insurers to either increase premiums or exit high-risk
    regions altogether. 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, especially 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 increased 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 community.
        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.
        Ms. GOODLANDER. Thank you, Mr. Chairman, and thank you to
    our witnesses for being here today for this really important
    hearing.
        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 construction.
        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
    provisions 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 construction of new residential housing, has
    created some really, I think, unintended effects and costs and
    made additional barriers to building 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
    effects 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
    happened 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, Arizona, 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 unconstitutional and costly and chaotic tariffs.
        Ms. DIVITO. Yes, thank you. Right, I think the president's
    policies 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. Recently 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 businesses 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
    remarks 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 larger 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 Competes 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 businesses?
        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. Housing markets are highly localized, and these impacts
    can look different from area to area, but small builders
    already at a disadvantage against larger players and the
    underlying economic uncertainty 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.
        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 companies from cutting corners?
        Ms. DIVITO. Thank you. Yes. And just this week, there was
    reporting 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 competition.
        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
    panelists 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 remaining. 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 confirm. How can the Small Business
    Administration do more to insulate 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 housing in communities facing urgent need, including
    supporting recovery 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 traditional construction? More
    broadly, how do you see modular housing helping to address
    challenges today's relating to housing affordability, 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.
    Specifically in Lahaina, we built 85 houses in 2 months. They
    were shipped, and 2 months later people were moving in after
    experiencing complete loss of their homes and community. All of
    the subcontractors 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 lacking 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 housing 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. Department 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-
    effective 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
    construction 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 pipeline for high-demand jobs. So quickly, would you agree
    that opportunities through CTE, like that of the Boulder Valley
    School District, could support the next generation of the
    construction workforce?
        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, hopefully, 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 Velazquez from the great
    state of New York for 5 minutes.
        Ms. VELAZQUEZ. Thank you, Mr. Chairman.
        You know, I am really struck by the fact that here we are
    discussing 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 construction 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
    financing for modular companies and how can the federal
    government 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 construction. You're paying a large portion before the
    home is built. That is a challenge for many banks and, frankly,
    developers to understand. 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 government, 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. VELAZQUEZ. Mr. Rupnik, in your testimony, you mentioned
    a dormant authority passed by Congress decades ago. What is
    preventing 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, 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 constantly looking for new ways to create compliance
    for new societal issues because we will have new societal
    issues. Right now we create 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 testimony, the consolidation in the banking
    industry, the assault on community banks has been a huge
    barrier and cost driver for increasing 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
    opportunity to work on follow-up legislation to maximize the
    effect of Road to Housing. Specifically, I think a bipartisan
    package that focuses on those financing constraints and
    leveraging all of the government'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
    real success in resident-owned communities, which are
    overwhelmingly 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 communities work really well because
    it gives people a stake in the decision-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
    leaving residents with nowhere else to go because moving a
    manufactured home, as you know well, is practically impossible.
    So I wanted to ask about, you know, these--I think
    unfortunately a disturbing 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 corporate 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 unnecessary 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 include 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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