On Oct. 22, President Donald Trump issued an executive order to restore “The American dream of homeownership … as a vital pillar of our great Nation.” The president has the right goal, but is missing the mark on policy.
The executive order is a grab bag of small-ball initiatives, most of which aim to reduce mortgage financing and transaction costs, largely for refinance loans rather than home purchases. These do little to address the actual problem: homes are too expensive.
Only one provision relates to the cost of building new homes. He has established a task force on manufactured housing innovation. Other similar federal efforts have been tried before and failed. Operation Breakthrough (1969 to the mid-1970s) was a Department of Housing and Urban Development demonstration program that tested innovative factory-built housing materials and methods.
Being personally acquainted with Operation Breakthrough in the mid-1970s, I can attest that it was a complete failure. How about the National Homeownership Strategy announced by President Bill Clinton in 1995 that became a central cause of the great financial crisis? Fannie Mae and Freddie Mac have yet to exit from their resulting 2008 conservatorships. Government solutions are rife with complexity, corruption, and costliness that prevent them from serving the public.
The federal government doesn’t need a study to come up with innovative solutions to the housing crisis. States already have a solution sitting on the shelf: greenlighting starter homes. Building new, affordable homes for homeownership is not a technological problem: we can build new single-family homes in Tulsa, Oklahoma, for $230,000 — a starter price for any middle-class American. The larger problem is that cities have prohibited starter homes from being built through onerous land-use regulations. Principal among these are minimum lot sizes and unnecessary aesthetic requirements, which make it nearly impossible to build affordable starter homes.
The American Enterprise Institute’s Housing Center’s Starter Home Explorer finds that if states had given the green light to starter homes by allowing smaller lot sizes, 8.84 million homes would have been built over 2015-2024, nearly double the number actually built, all on about the same amount of land. Importantly, the number of starter homes built would have grown to over 3 million, more than a fourfold increase.
And the benefits extend beyond just the families who buy new starter homes. For every 100 new starter homes built, another 45 naturally affordable homes get freed up by these buyers (split roughly between previously owned and rented homes).
Starter homes are popular. Eighty-three percent of Americans support state legislation that would greenlight starter homes for first-time buyers, young families, and local workers, according to a recent AEI survey.
And the political winds on this issue are turning. In 2025, Texas passed landmark legislation legalizing starter homes on smaller lots in the state’s larger cities. After just nine months, that bill led to over 4,000 smaller lots in the pipeline. This year, Idaho, Kansas, and Maine passed starter home legislation. Broad state action would put us back on the path to plentiful starter homes (think Levittown, New York) and free up existing naturally affordable homes.
THE NEXT BIG HOUSING BILL: BUILDING MORE NEAR TRAIN AND BUS STOPS
The timing is right. The late Rep. Barney Frank, a Massachusetts Democrat, was famous for saying, “You can’t replace something with nothing.” Similarly, you cannot replace nothing with nothing (socialism and communism have never worked).
If Trump wants to spark real change in the housing market, he should take the bully pulpit on the road. States and their legislatures hold the power to greenlight starter homes.
Edward Pinto is a co-director, and Arthur Gailes is a research fellow at the American Enterprise Institute Housing Center.
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[ H/T Washington Examiner ]
