Imagine a young couple who built their first home in 2019. They had a couple of kids, stretched their budget, signed what felt like an enormous mortgage and moved in. Seven years later, the family has grown and the house feels smaller. They decide to build again. Then they see the price. Of course they expected it to cost more. Inflation happens. Homes historically increase in value over time, and the cost of labor and materials normally rises with inflation. But what happened after 2019 was anything but normal.
Between 2019 and 2024, general consumer prices rose about 23%. The average price of a new home in the National Association of Home Builders construction survey rose about 37%. COVID-era spending, monetary expansion, supply disruptions and labor shortages all contributed to an unusual inflationary jolt. But if we want to make housing more affordable today, arguing about what happened five years ago does not accomplish much. The better question is what can we actually do now?
The most interesting part of the NAHB data is where the cost increases occurred. Between 2019 and 2024, plumbing, electrical and HVAC installation costs rose nearly 89% per home. That was the largest increase of any major construction category. Much of that reflects materials, but it also reflects a shortage of skilled workers. That is something government can help address. We should be expanding career-technical education, apprenticeships and trade-school capacity. We should also look at licensing reciprocity and unnecessary barriers that make it harder for qualified plumbers, electricians and HVAC technicians to work in Idaho.
Then we get to the costs government controls much more directly. Site work—including permits, impact fees, water and sewer hookups, inspections and engineering—rose about 77% between 2019 and 2024. Those aren't lumber prices set by a global market. Many of them are costs government creates or controls.
Idaho also needs to take another look at House Bill 389. HB 389 was passed in 2021 to restrain property-tax growth. That was a worthy goal, and it did provide real limits on how quickly local property-tax budgets could grow. But there was a tradeoff. By restricting how much revenue local governments could receive from new construction, we increased the pressure to fund roads, sewer systems, parks, fire stations and other growth-related infrastructure another way. One of those ways is impact fees.
Instead of spreading those costs across the tax base over time, more of them can be charged upfront to the person building the new house. That sounds great in theory: let growth pay for growth, right? Until we are part of the growth. Then it’s no fun. We may have reduced one homeowner's annual property-tax bill while quietly adding thousands of dollars to the mortgage of the next homeowner — our children. That doesn't necessarily mean impact fees are wrong. Growth costs money. Someone has to pay for infrastructure. But we should recognize what we are doing.
Tariffs create another government-imposed cost. NAHB estimates recent tariffs add roughly $11,000 to the cost of a typical new home, hitting everything from lumber and fasteners to electrical, plumbing and HVAC equipment. There may be legitimate reasons for tariffs, including protecting American manufacturing, but they are not free.
Builder profit has also increased. NAHB estimates builder pre-tax profit rose from about 9.1% of the sales price in 2019 to 11% in 2024. That doesn't make the increase irrelevant. In a market economy, businesses will generally charge what the market will bear. The long-term answer is more supply, more competition and fewer barriers to building — not government trying to regulate builder profits.
Government cannot control every part of the price of a house. We cannot set lumber prices. Idaho cannot set national mortgage rates. We cannot order a builder to accept a smaller profit. We cannot manufacture thousands of experienced electricians overnight.
But we can look very carefully at the costs government itself puts into the house. We can reconsider fees, permitting, workforce barriers and the way Idaho finances infrastructure so that our effort to protect one homeowner from higher taxes does not simply make the next homeowner's mortgage unaffordable.
Our imaginary couple does not particularly care which level of government, supply chain or economic theory added the next $10,000 to their house. They just know whether they can make the payment. If we are serious about making Idaho a place where our children and grandchildren choose to stay, we also have to make sure they can afford it.