What the 2026 Economic Report of the President Means for Rental Housing

The report describes regulation as a “six-figure bureaucrat tax” that adds more than $100,000 to the cost of a new single-family home. NAA’s Barriers to Apartment Construction Index , which covers 58 metro areas, finds that the most expensive barriers to new apartments come from policy decisions, not market forces. Examples include:

• Community opposition to multifamily projects, known as Not in My Back Yard (NIMBY);
• Slow and unpredictable approval timelines;
• Density restrictions that kill the math on mid-rise and high-rise;
• Inclusionary requirements that lower yields without an offset; and
• Costly impact and connection fees layered on entitlement.

NAA’s Dollar of Rent Tool echoes these findings. Of every dollar of rent a resident pays, the vast majority – 89 cents – is committed to mortgage, taxes, payroll, operations and capital expenditure reserves. Add a six-figure regulatory tax to the front end of a new project and the math gets increasingly tight.

The CEA documents that recent federal green building code mandates added up to $31,000 per new home, citing National Association of Home Builders (NAHB)’s analysis. The report also notes that the share of new homes affordable to a typical family fell from roughly one in two in 2019 to about one in six in 2024.

NAA supported a study conducted by the Massachusetts Institute of Technology (MIT) on the multifamily sector, which shows the same pressure playing out at the building level. MIT researchers interviewed senior leaders at 13 multifamily firms operating across high- and low-regulation markets. The findings provide an operator-level insight into what mandates actually do to multifamily investment and compliance:

• Firms underwriting deals in BPS markets are pricing in expected retrofit costs and walking away from buildings where the math does not pencil. One operator described buying at a “$1 million discount” to cover compliance upgrades on a single asset.
• Across luxury, market-rate and affordable segments, operators reported renters will not pay enough extra rent to recover compliance investment. A luxury operator estimated the upside at “less than a hundred dollars” per unit, never enough to cover the cost. An affordable operator was blunter: “We didn’t pass that cost directly onto them. Our rents are mostly limited by what people can afford.”
• Operators repeatedly described the rules as aspirational rather than realistic, drafted by policymakers without engaging the financial and engineering realities of multifamily. As one put it, “legislators are writing legislation without meeting all the interested parties.”

NAA has consistently advocated that overly aggressive energy efficiency requirements, when imposed without flexibility, can undermine affordability and reduce housing supply, outcomes that directly conflict with national affordability objectives. The CEA now agrees in print, and the operator-level evidence supports it.

The ERP’s best practices appendix on the “bureaucrat tax” goes further than any prior White House document on rental housing. In a win for the industry, the report explicitly calls for state and local governments to eliminate rent control and just-cause eviction laws, an issue NAA and its affiliates have long advocated for. NAA has long voiced that rent control laws make housing shortages worse, hurt existing buildings and mostly help wealthier households. Lawmakers should focus on solutions like voucher-based rental assistance for immediate help and adopt policies that boost housing supply for long-term affordability. NAA also opposes changes to eviction laws, like just-cause eviction, because they make it harder for housing providers to manage properties and do not solve the problems faced by renters who struggle with costs. NAA’s research supports these points and aligns with the ERP’s views:

• Just cause and right-to-counsel laws reduced net operating income for rental housing providers by 4.5 percentage points of gross potential rent. Operating expenses rose 2.8 percentage points, collection losses jumped roughly 37.5% above baseline and concession losses rose roughly 33.3%. Learn more about this study.
• Just cause eviction and right-to-counsel laws raised average rents between 5.9%-6.5%, or roughly $1,224 and $1,092 per unit each year. Learn more about this study.
• 71% of housing providers said rent control significantly affects their development and investment plans, about two-thirds said they would absolutely not invest in markets with strict rent control, and 61% have deferred or expect to defer non-essential maintenance and improvements at rent-regulated properties. Learn more about this study.
• In the 15 largest U.S. metros, doubling rent-controlled units is associated with a 16.2% increase in severely inadequate housing, a 14.7% increase in moderately inadequate units, a 15.9% increase in serious neighborhood crime reports and a 17.3% increase in petty crime reports. Learn more about this study.

The ERP notes that Federal Housing Administration (FHA) has lowered multifamily mortgage insurance premiums to the legal minimum of 25 basis points, starting October 1, 2025. This ends the extra premium builders paid for not meeting previous green energy rules. For a typical FHA-insured project, this reduces the overall cost of capital and makes it easier to finance new construction and preservation.

This change resulted in the following adjustments when viewed in pro forma terms:

• Lower fixed-cost overlay on debt service. Premium savings flow directly to net operating income;
• Higher loan proceeds at the same Debt Service Coverage Ratio (DSCR). Lower premiums often allow underwriters to size up the loan modestly; and
• Better cap rate spread. In a high-rate environment, every basis point matters for whether a deal pencils.

The One Big Beautiful Bill Act (OBBBA), signed July 4, 2025, runs through the report. The CEA frames OBBBA as core to its forward investment projections. Three provisions matter most for rental housing owners and investors:

• Opportunity Zones made permanent: CEA credits the program with at least 300,000 new homes. Set against NAA’s Dollar of Rent Tool, OZ permanence gives equity a longer runway in the markets where supply is hardest to build.
• 100% bonus depreciation made permanent: Restored full expense improves first-year after-tax returns on qualifying property, supports renovations and reinvestment and helps small mom-and-pop owners.
• 20% pass-through deduction made permanent: This directly affects the bulk of NAA’s membership and the small mom-and-pop owners who deliver most of the country’s rental housing. NAA fought for permanence because temporary tax policy makes long-hold rental investment harder to underwrite.

The CEA’s investment projections rely on these tax provisions. The report expects that apartment investors and developers will respond to permanent tax rules with more new projects, additional renovations and longer-term investments. NAA strongly supports the OBBBA’s pro-housing measures, but acknowledges that these projections also depend on  Section 901 not disrupting the built-to-rent (BTR) pipeline.

The CEA presents immigration enforcement as a way to reduce housing demand, and net immigration has dropped sharply. The report does not discuss the supply side, which is where NAA members notice the effects first. NAHB has found that 26.3% of construction workers are foreign-born. Data from rental housing operators gives more insight into this issue:

• John Burns Research and Consulting/NAA 4Q25 survey: 40% of operators nationally, and 67% in Florida, report that recent immigration policies have hurt leasing and occupancy. The same survey shows construction crews thinning in several Sun Belt metros.
• NAA conducted a member survey in April 2026 on HUD’s proposed citizenship and immigration status verification rule. The findings show a clear, costly compliance burden:
  • over half of rental operator respondents are concerned that the 90-day compliance window is insufficient to complete this verification.
  • Fifty-eight percent of NAA member survey respondents said that the rule would increase administrative costs for their organization.Sixty-one percent of survey respondents anticipate increased staff time for intake and verification processes.

NAA continues to engage HUD on the rule’s practical impact and is using these findings in the formal comment letter.

The ERP’s main flaw is its support for an executive order that would ban institutional investors from buying single-family homes. The Senate Banking Committee wrote a version of that idea into Section 901 of the 21st Century ROAD to Housing Act.

As drafted, Section 901 would:

• Force large owners to dispose of newly built BTR homes within seven years to individual buyers;
• Treat purpose-built rental communities the same as scattered-site single-family rental purchases, ignoring the difference between buying existing homes and building new ones; and
• Disrupt how BTR communities are financed, built and managed, because long-term rental ownership is the entire business model.

BTR is one of the fastest-growing segments of rental housing. Shutting it down does not help homeownership. Instead, it removes supply that lower- and middle-income renters need.

Section 901 conflicts with the rest of the ERP. The same report that calls for less regulation, lower mandates and more rental supply would, through Section 901, impose a federal divestiture mandate on the most productive new source of single-family rental supply in the country.

On March 10, 2026, NAA joined 11 industry partners on a coalition letter urging Congress to fix Section 901 by exempting communities of five or more contiguous rental units. Read the latest with NAA's Live Updates.