OPINION: The U.S. needs more housing. Americans don’t want to build it.

You won’t find this term in any serious economics textbook, but the only clinical way to describe the U.S. housing market is bananas. Affordability is at record lows, and mortgage rates are the highest since 2000. And yet, home prices continue to rise and the number of days a house sits on the market before it is sold is down by a third compared with this time before the pandemic, both suggesting strong underlying demand.

Everyone knows what the real problem is with housing: a lack of supply. But what’s less well understood is why there’s a persistent lack of supply in both housing for sale and for rent. In a market economy, high prices are supposed to lead to an increase in supply. And at least on the multifamily side, government data show developers have started construction on around one million units, surpassing the previous record set in the early 1970s.

But starts aren’t the issue; it’s completions that we need to worry about. A combination of bureaucratic red tape and a shortage of workers is preventing all that supply in the pipeline from reaching the market and, theoretically, helping to contain prices and rents. So, although the number of homes under construction has been near record highs for more than a year, the number completed each month lags far behind.

That’s in part because the ratio of apartment units to single-family homes under construction has reached highs not seen since the 1970s. Historically, there were usually more single-family homes under construction at any given time than apartments. But since May 2022, the relationship has flipped, with more apartment units construction than single-family homes.

It takes more than twice as long to build an apartment building as a single-family home, or 20 months versus nine months. But that’s just some of the explanation. A decade ago, it took only 12 months for the average multifamily project to come to market. That time to completion has extended since then due to onerous regulation and increasing supply constraints.

The Biden administration has made an effort to reduce the red tape. Its Housing Supply Action plan offers local governments grants of as much as $10 million in exchange for removing regulatory barriers to home construction. However, even the White House doesn’t expect much demand. It set aside only $85 million to fund those grants. The majority of building restrictions are due to local rules, reflecting the wishes of residents most adamant about preventing new construction and which are hard to reverse.

In years past, supply constraints were also usually tied to issues in obtaining the necessary materials, but for the last three years the bigger problem has been a shortage of labor. In hot construction markets such as Texas and Minnesota, wages for construction workers rose more than 10% between 2022 and 2023, and yet shortages persist.

A key factor seems to be the difficulty the construction industry is having attracting American workers. According to the National Association of Home Builders, or NAHB, the U.S. had 9.4 million such construction workers in 2006 and an average of 1.2 million homes under construction. In 2021, the last year for which there is data, the NAHB estimates that there were 8.6 million such workers and an average of 1.4 million units under construction.

Industry executives cite factors such as competition for workers from companies such as Amazon.com Inc. and a perception among young Americans that construction work is too physically demanding. A 2017 survey showed that 21% of adults aged 18 to 25 said that it would take a salary exceeding $100,000 per year to get them to consider a construction job, and 48% said no amount of money would be enough.

More generally, the construction industry seems to be suffering from the same problems that have afflicted most of American industry since 2021. The huge excess of job openings over job seekers, combined with healthy savings, has given workers the opportunity to pass on work that they consider dangerous, difficult or too menial.

The obvious solution is to increase the number of foreign-born workers. The industry estimates that a record 2.8 million such workers were employed in residential construction in 2021. But with the Biden administration’s migration policy under fire, there is little prospect of any substantive immigration reform that would lead to getting these people employed. Yes, the White House has a few levers that it can pull, but they are unlikely to make a big enough impact.

Housing costs, whether it be price, rents or mortgage payments, are out of control. The natural free market response to the crisis — increasing supply — has been bogged down by regulation and a lack of workers. The current political reality in America makes any near-term solution, or major relief in housing costs, a pipe dream.

Karl W. Smith is a Bloomberg Opinion columnist. Previously, he was vice president for federal policy at the Tax Foundation and assistant professor of economics at the University of North Carolina.

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