With the recent shift of power in Congress, construction business owners must prepare for regulatory and economic changes that could impact every facet of the industry. The GOP’s gains in key battleground states have put them in a strong position to influence housing and infrastructure policies that may be pivotal to the future of homebuilding in America.

During a recent meeting, Ken, the NAHB Advocacy Officer, highlighted the robust advocacy efforts underway. NAHB’s advocacy team, led by Chief Lobbyist Lake Colson, Vice President of Federal Government Affairs Scott Meyer, and Vice President for State and Local Government Affairs Carl Eckhart, emphasized the association’s strategic positioning post-election. The success of NAHB’s BUILD-PAC, which boasted a 97% success rate in supporting over 360 candidates, has solidified relationships with key members of Congress, creating a favorable environment to advance housing priorities.

House Ways and Means Committee

Chair: Expected to be chaired by Rep. Jason Smith (R-Mo.), the House Ways and Means Committee plays a crucial role in shaping tax and trade policy. The committee’s impact extends over critical tax laws, including the 2017 Tax Cuts and Jobs Act, which faces expiration in 2025. If Congress does not act to extend or amend these laws, construction firms could experience significant tax increases affecting project costs and investment strategies.

Taxation and Legislative Dynamics

The imminent expiration of tax cuts emphasizes the importance of legislative action. Discussions in this committee are vital as the industry faces potential tax hikes. NAHB’s strategy includes direct engagement with policymakers, emphasizing the need to preserve favorable tax provisions that support the financial health of builders and real estate developers.

Scott Meyer also shed light on the reconciliation process, which Republicans plan to use to navigate legislative hurdles. This mechanism, used effectively by the previous administration, allows bills to bypass the 60-vote Senate threshold. NAHB’s proactive efforts, including testifying multiple times before Congress, aim to preserve key tax incentives and prevent a fiscal cliff scenario.

Trade Policies and Tariff Challenges

The House Ways and Means Committee also oversees trade policies that heavily influence material costs. Changes to tariffs on essential imports like steel and lumber remain a critical concern. NAHB’s advocacy team is actively educating members of Congress on the economic impact of these tariffs and is working to mitigate any negative effects on housing affordability.

Senate Banking, Housing, and Urban Affairs Committee

Chair: Under the leadership of Sen. Tim Scott (R-S.C.), the Senate Banking, Housing, and Urban Affairs Committee is poised to address housing development barriers. Initiatives to streamline permitting and adjust zoning laws are anticipated, potentially unlocking new construction opportunities.

Housing Policy and Regulatory Shifts

The National Flood Insurance Program (NFIP) remains a top focus, with potential policy shifts that could affect builders in flood-prone areas. Carl Eckhart stressed the importance of NAHB’s state and local advocacy efforts, citing victories like Washington State’s reversal of natural gas bans and ballot measures in California that support affordable housing.

Regulatory discussions also center on energy codes and environmental standards. NAHB is pushing for reasonable regulations that do not exacerbate the housing affordability crisis, with a particular focus on HUD and USDA rules impacting construction costs.

House Financial Services Committee

Chair: With Republicans expected to lead, the House Financial Services Committee will work to alleviate regulatory constraints in the housing sector. This committee’s initiatives could play a pivotal role in addressing the housing supply crisis.

Scott Meyer highlighted the Senate’s narrow Republican majority and the strategic advantage it offers in moving bipartisan housing bills forward. Tim Scott’s leadership is expected to generate momentum for pro-housing legislation, with NAHB actively engaged in these policy discussions.

Navigating Opportunities and Risks: Key Takeaways

Construction professionals must remain proactive, anticipating shifts that could influence business operations. Strategic considerations include:

• Regulatory Changes: With a pro-business legislative agenda, deregulation efforts may reduce project costs and accelerate approvals. However, environmental oversight remains a key challenge.
• Tax Policy Impacts: NAHB is preparing for fast-moving tax reform efforts. The 2017 Tax Cuts and Jobs Act’s expiration looms large, and preserving industry-favorable provisions will be a top priority.
• Trade and Tariffs: Trade policies will heavily impact material prices. NAHB’s advocacy will focus on mitigating cost increases from tariffs, ensuring housing remains affordable.
• Workforce Development: NAHB is pushing for expanded job training programs, defending Job Corps funding, and advocating for comprehensive immigration reform to address labor shortages.

Action Items for Construction Leaders

Given the anticipated regulatory and economic shifts, construction leaders should:

1. Evaluate ongoing and upcoming projects to mitigate risks associated with policy changes. NAHB recommends proactive budget assessments and staying informed through NAHB updates.
2. Engage with trade associations like NAHB to leverage advocacy resources. Build relationships with local legislators to influence zoning and development decisions.
3. Diversify supply chain strategies to buffer against tariff-related cost spikes. Consider alternative materials and sourcing options to maintain project affordability.
4. Stay vigilant about local ordinances. Carl Eckhart highlighted the importance of addressing moratoriums and restrictive zoning laws that could stall projects.