Facing persistent inflationary pressures, the Federal Reserve unanimously decided at its September policy meeting to raise the federal funds rate to a target range of 3.75% to 4%.
In its post-meeting statement, the Federal Open Market Committee (FOMC) noted that “uncertainty remains elevated” due to “geopolitical developments” stemming from the war in Iran and widespread trade issues.
However, the FOMC slightly upgraded growth projections and stated that “economic activity is expanding at a solid pace.” Fed Chair Kevin Warsh had noted that the demand for capital has increased, leading to higher market interest rates.
The Fed’s decision is in response to inflation rising to a 3.4% year-over-year rate, well above its goal of 2%. The FOMC stated the rate hike will eventually help “deliver price stability.”
How the Federal Funds Rate Impacts Housing
While the central bank’s federal funds rate does not have a direct effect on mortgage rates, the rate hike does increase the cost of financing for builder acquisition, development and construction (AD&C) loans.
Higher borrowing costs make it more difficult to finance new construction, ultimately reducing the purchasing power of prospective buyers via higher construction costs.
Notably, the committee’s statement did not mention any changes to its plans regarding balance-sheet policy and asset reduction. This was positive news for home builders and mortgage rates, as an accelerated sell-off of mortgage-backed securities would push mortgage rates higher.
What Is the Outlook for Inflation and Interest Rates?
In his post-FOMC meeting recap, NAHB Chief Economist Robert Dietz wrote, “If higher energy prices begin to affect broader price-setting behavior and inflation expectations, waiting for conclusive evidence could leave the central bank with more work to do later.
“Additional constraints on oil products are a key concern whereby interest rates could move even higher,” Dietz noted.
NAHB is forecasting 2.1% real economic growth for 2026, and slightly more (2.4%) in 2027. And tempered labor market conditions are expected to keep the unemployment rate at or near 4.1% through the end of the year and well into 2027.
“[The current] outlook suggests an additional rate hike in December, with either flat conditions in 2027 or a combination of an additional hike and then an offsetting cut that year,” Dietz wrote. “These projections are conditional outlooks, rather than commitments.”
PRESIDENT'S MESSAGE
Season of Opportunity Starts Now
LYDIA MLOUHI
2026 EPAB PRESIDENT
As we look ahead to the Texas Association of Builders (TAB) Fall Meetings, November 10–12 in Plano, I want to encourage every EPAB member to recognize the value of being part of this important statewide gathering. TAB meetings are more than another industry event—they are where builders and associates from across Texas come together to discuss the issues, opportunities and challenges that directly affect our businesses.
Why should you attend?
Because what happens at the state level can eventually affect what happens in your business. From government relations and building codes to workforce development and housing policy, staying informed gives us the opportunity to understand what is coming, participate in the conversation and make sure El Paso’s perspective is represented.
There are also some exciting opportunities this fall. On November 10, the “Chip Dence PAR-TEE with a Purpose” at Topgolf will bring members together for an evening benefiting the Texas Builders Foundation. On November 11, the “Excellence in Leadership Dinner” will celebrate outstanding industry leadership while featuring the HOMEPAC Silent Auction, which supports advocacy efforts across Texas. And on November 12, EPAB will participate in the Area 5 Caucus, bringing together HBAs from El Paso and West Texas to discuss issues affecting our region.
I am also proud to announce that EPAB will be swearing in two new Texas Directors: Sal Masoud of Coronado Building Co. and Carlos Villalobos of Pointe Homes.
Texas Directors serve as EPAB’s connection to TAB, representing our local association and helping bring El Paso’s priorities into statewide discussions. They participate in TAB committees, councils and board activities, helping shape advocacy, education and initiatives that impact the residential construction industry across Texas.
I hope our members will make an effort to attend, participate and stay informed. Our industry is strongest when El Paso has a seat at the table—and that seat belongs to all of us.
Please let us know if you are planning to attend, call (915) 778-5387 or email Ceci at ceci@elpasobuilders.com
EXECUTIVE MESSAGE
EDGAR GARCIA
2026 ACTING EXECUTIVE OFFICER
For homebuilders and industry professionals, decisions made in Austin can have a direct impact on the cost of doing business, the ability to build homes, and the future of our industry. That’s why the Texas Association of Builders’ HomePAC exists—to provide a way for members of the building industry to participate in the state-level political process.
Here are three key reasons HomePAC matters to your business:
1. Protect the Business Environment
Legislation and regulations can affect everything from construction costs and development requirements to permitting and housing affordability. HomePAC supports TAB’s efforts to keep the concerns of the residential construction industry represented when these issues are being considered.
2. Help Keep Housing at the Table
Builders are on the front lines of the housing affordability challenge. Policies affecting land, development, building codes, fees and regulations can ultimately influence what it costs to build—and what consumers pay for a home. HomePAC provides another avenue for the industry’s perspective to be part of those conversations.
3. Strengthen the Industry’s Collective Voice
One builder or one business can be easy to overlook. An organized industry representing thousands of businesses carries a different level of visibility. Supporting HomePAC is one way members can participate in TAB’s broader advocacy efforts on issues affecting residential construction across Texas.
Making It Easy to Participate
EPAB is making participation simple with our Harvest for Success BBQ Plate Fundraiser on October 22.
For just $25 per plate, you can pre-order a delicious lunch featuring brisket, sausage, beans, potato salad and a roll. And don’t forget your office! Order multiple plates for your team, coworkers or employees and make lunch easy while supporting the fundraiser.
Pre-order your plates and make your lunch count on October 22!
Call 915-778-5387 or email:
ceci@elpasobuilders.com
Bill Seeks Tariff Relief for Building Materials
NAHB worked with Rep. Nanette Barragán (D-Calif.) on legislation aimed at lowering housing costs by establishing a tariff exemption process for building materials.
The Housing Tariff Exclusion Act (H.R. 10416) would automatically exempt many home building materials from President Trump’s current and future tariffs and give importers a process to seek exemptions for additional materials.
“This bill would help relieve tariff-driven cost pressures on building materials, provide businesses with greater certainty and support broader efforts to improve housing affordability,” said NAHB Chairman Bill Owens.
With the nation facing a shortage of roughly 1.2 million homes, NAHB continues to urge the administration to exempt building materials from tariffs, which raise construction costs, disrupt supply chains and make it more difficult for builders to price homes.
Key provisions of the Housing Tariff Exclusion Act include:
• Establishing a Commerce Department process for U.S. businesses to request tariff exclusions for home construction goods.
• Requiring fast-track exemptions for commonly used home building products within 15 days of application.
• Providing objective review of other home building products when tariffs would increase U.S. construction costs.
• Covering all tariffs except anti-dumping, countervailing and safeguard tariffs.
• Allowing businesses to seek reimbursement for tariffs paid before an exclusion is granted.
A companion bill introduced by Sens. Jacky Rosen (D-Nev.) and Chris Coons (D-Del.) is pending in the Senate.
NAHB Responds to Immigration Enforcement
As the housing industry faces a severe labor shortage, NAHB members report that increased immigration enforcement and jobsite raids are heightening worker fears and further straining the construction labor pool.
In some markets, stepped up immigration enforcement has discouraged legally authorized workers from reporting to jobsites, delaying home construction and raising costs as the nation confronts a housing shortage of about 1.2 million units.
Immigrant workers are vital to meeting the nation’s housing needs, accounting for more than one-quarter of the construction workforce. The domestic labor pipeline alone cannot meet national or industry demand.
Government data indicate that construction is short about 300,000 workers. A landmark Home Builders Institute study released in June 2025 found that the skilled labor shortage delays construction, drives up labor costs and raises home prices. On average, shortages add two months to construction timelines, reduce annual housing production by 19,000 homes and cost builders and consumers $10 billion each year.
NAHB is Acting on Multiple Fronts
NAHB believes a lasting solution requires a multifaceted approach:
• Securing the border without sacrificing American business interests to overly aggressive or unlawful enforcement,
• Creating legal pathways for certain workers to remain in the U.S., and
• Strengthening efforts to attract more Americans to rewarding careers in the skilled trades.
NAHB has been in contact with senior officials at the Department of Homeland Security and Immigration and Customs Enforcement (ICE) to voice concerns about inconsistent and overly aggressive law enforcement tactics targeting residential construction workers.
On Sept. 16, 2026, NAHB filed an amicus brief in the Fifth Circuit immigration case Sosnova Rodriquez v. Ortega, arguing that everyone in the United States deserves fair and consistent due process. NAHB said indefinite detention without the opportunity to seek bond separates people from their families, communities and workplaces. Oral arguments were held September 24, and a decision could come in the coming weeks or months.
The government’s new mandatory detention policy also has significant consequences for employers, workers and consumers. NAHB’s brief states that the policy has removed workers from the labor force, forced project cancellations, reduced revenue, eliminated jobs for U.S.-born workers and sharply decreased the number of homes available for sale.
On Capitol Hill, NAHB is urging Congress to pass the DIGNITY Act (H.R. 4393), which would strengthen border security and create an earned path to permanent work authorization for certain undocumented workers who meet clear, rigorous requirements.
Promoting Careers in the Skilled Trades
NAHB pairs its immigration reform efforts with a strong push to attract more Americans to meaningful careers in the skilled trades. At the local, state and federal levels, NAHB is urging policymakers to expand apprenticeships and trade education. We are also calling on Congress to pass the CONSTRUCTS Act (H.R. 1055/S. 189), bipartisan legislation to prepare young adults for rewarding careers in the construction trades.
Both NAHB and HBI are committed to addressing this critical issue through collaborative programs, education initiatives and advocacy efforts. The organizations aim to boost the skilled labor workforce and equip the next generation of construction professionals with the skills needed to meet growing demand.
As HBI graduates enter the workforce, they help fill critical labor gaps—strengthening the residential construction industry and contributing to lower housing costs across the country.
NAHB also supports the following solutions:
Preserve legal pathways that allow immigrants to enter and work in the United States, including the H-2B temporary guest worker program, which helps fill construction jobs when qualified domestic workers are unavailable.
Clarify that employers are responsible for verifying only the identity and work authorization of their direct employees—not workers employed by subcontractors.
When ICE Comes Calling
NAHB’s legal team prepared When ICE Comes Calling, a guide outlining best practices for business owners during an ICE raid. It is also available in Spanish.
