GOP rep says Washington ‘own worst enemy’ on driving up housing labor costs

Rep. French Hill (R-Ark.), the ranking member of the House Financial Services housing subcommittee, said on Tuesday that the bipartisan infrastructure law and other federal spending packages are helping drive up housing construction costs.

“This is circular logic,” Hill said while speaking at The Hill’s “A New Housing Market: Affordability, Access and Equity” event.

“We’re creating this problem by the way we are passing all this money and trying to do it all in this short period of time, so we are our own worst enemy, I would say, on trying to lower housing construction costs,” he told The Hill’s general manager, Jason Jedlinski.

The national average sales price of houses sold has risen rapidly since the start of the pandemic, clocking in at $525,000 in the second quarter of 2022, compared to $440,600 one year earlier, according to federal data.

Hill on Tuesday tied the increases to sweeping federal spending packages, namely the American Rescue Plan, the bipartisan infrastructure bill and most recently, the Inflation Reduction Act.

The American Rescue Plan and Inflation Reduction Act both passed with only Democratic support, and some have argued the bills are contributing to inflation, a notion the White House and Democrats dispute. Inflation has slightly eased from 40-year highs recorded in recent months.

“Every one of those bills is driving up the cost of labor and materials,” Hill said at the event, which was sponsored by Wells Fargo.

To fight inflation, the Federal Reserve has rapidly raised interest rates to slow the economy, announcing an additional 75-basis-point hike on Wednesday. 

The rate hikes have led to a slowing housing market, including a recent decline in housing starts, which could further exacerbate housing supply shortages.

Rep. Emanuel Cleaver (D-Mo.), who chairs the housing subcommittee, later in the program said President Biden has stressed affordable housing as a priority, referencing a meeting Cleaver attended in the White House with other lawmakers that included housing discussions.

When asked by The Hill’s Steve Clemons if there was an understanding among lawmakers that more needs to be done to assist minorities in particular in securing housing, Cleaver said “no.”

Cleaver referenced the Fair Housing Act, which prohibits discrimination in the sale or rental of housing on the basis of race, color and other factors, saying inequities still persist more than a half-century after the legislation’s implementation.

“You can look at the passage of the Fair Housing Act and look at the decline and how we’ve been really running hard backward as it relates to housing,” Cleaver said.