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YES, AMERICA HAS A HOUSING EMERGENCY  
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Paul Krugman
September 3, 2025
Paul Krugman Substack
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_ But Trump will make it worse _

Housing advocates demand the city offer truly affordable housing and
units for homeless New Yorkers., Photo: Paul Frangipane/Brooklyn Eagle


 

Something strange may be about to happen. It looks as if Trump
officials will soon declare that we face a national housing emergency
— and they’ll be telling the truth! We do, in fact, face such an
emergency.

Unfortunately, everything Trump is doing that affects housing
availability will make the emergency worse.

Background: Donald Trump loves emergencies. He has been in office less
than 8 months, but has already formally declared 9 national
emergencies, as well as a “crime emergency” in Washington DC.

He’s probably about to use similar claims about an urban crime
emergency to send the National Guard into Chicago — which, as Jeff
Asher
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“has likely had fewer shootings this year than any year since 1965
or 1966.”

As far as I can tell, so far all of Trump’s claims about emergency
have been false excuses for power grabs. There is no national crime
wave demanding military action — America’s big cities are, on
average, safer than they’ve been since the 1960s. There is no
economic emergency to justify the highest tariffs in 90 years —
Trump himself keeps insisting that the U.S. economy is doing great.

And when they get a chance, courts have by and large been declaring
Trump’s power grabs to deal with imaginary emergencies illegal. Two
courts have now ruled that he broke the law by invoking emergency
economic powers to impose tariffs. Another court has ruled
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no right to send the National Guard into Los Angeles.

Given this pattern, the scariest words in the English language right
now may be “Trump officials declare that we are facing a national
emergency.” So I got a sinking feeling when I saw Scott Bessent, the
Treasury secretary, saying
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the administration may soon declare a national housing emergency.

The thing is, Bessent isn’t wrong. We do, in fact, have a housing
emergency. Over the past decade home prices have risen much faster
than the overall cost of living, so the popular perception that
housing has become unaffordable is grounded in reality:

[A graph of a price chart</p> <p>AI-generated content may be
incorrect.]
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Why has this been happening? The home price surge since 2015 looks
very different from the housing bubble of the 2000s. That bubble was
largely driven by speculation, with house prices rising much faster
than rents. The price surge also bypassed sunbelt cities like Atlanta,
Houston and Dallas, where housing supply expanded to meet rising
demand.

This time, however, we’re looking at a truly national phenomenon. As
Edward Glaeser and Joseph Gyourko document in a recent paper
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housing prices have risen rapidly, without eliciting a large increase
in homebuilding, even in cities that avoided the 2000s bubble.

Back in July, looking at the case of Atlanta, I suggested that we
might be looking at the limits of sprawl
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2000s cities like Atlanta could add housing by spreading ever further
out, adding single-family homes at their edges. At this point,
however, they’ve sprawled so far that this doesn’t work anymore.
Another recent academic paper, by Orlando and Redfearn
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argues that sprawl has been

pushing single-family home builders farther away from the amenities
that make these urban areas attractive. Eventually, this progression
reaches a limit in which commuting back to these amenities is too
costly. At this point, the greenfield land is effectively “built
out.”

The obvious answer is to turn inwards — to build more housing by
increasing population density, in particular by building multifamily
housing. As I noted in my Atlanta piece, sunbelt cities still have
extremely low population densities compared with blue-state cities:

[A graph of different states</p> <p>AI-generated content may be
incorrect.]
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Source: Census

So they could add a lot more housing and bring prices down — if
local politics would allow it. Unfortunately, it generally won’t.
Glaeser and Gyourko conclude their paper on a despairing note,
suggesting that all our major cities, in red states as well as blue,
have become places where existing homeowners have become effective at
stopping new construction.

Which brings me back to Bessent saying that we have a housing
emergency. What will he do about it?

Another man, in another administration, might go YIMBY — “yes in
my backyard” — and try to tackle the political obstacles to
housing construction. But take a look at Mandate for Leadership
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the manifesto issued by the Heritage Foundation’s Project 2025.
It’s all for deregulation when it comes to things like pollution
controls. But when it comes to housing, it goes full NIMBY:

Congress should prioritize any and all legislative support for the
single-family home … American homeowners and citizens know best what
is in the interest of their neighborhoods and communities. Localities
rather than the federal government must have the final say in zoning
laws and regulations, and a conservative Administration should oppose
any efforts to weaken single-family zoning.

So no, the Trump administration won’t do anything to expand housing
supply, which is the only way to make housing more affordable.

In fact, Trump’s non-housing policies will discourage home
construction. Nothing says “make housing cheaper” like imposing
a 35 percent tariff
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imports of Canadian lumber and deporting many of the immigrant
workers crucial to the U.S. construction industry
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So what are we to make of Bessent’s remarks about housing? If
we’re lucky, they’ll turn out to be empty rhetoric, an attempt to
pretend to be doing something ahead of the midterms.

But during last year’s campaign JD Vance falsely blamed immigrants
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the housing crisis. So even though this emergency, unlike Trump’s
other emergencies, is real, it may become an excuse for another power
grab.

_Paul Krugman is a professor at CUNY Grad Center, Nobel laureate and
former columnist, NY Times. Also, according to Donald Trump, a
“Deranged BUM.”_

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