FILE - NH houses, homes, neighborhood

The Bramber Green neighborhood is seen in Greenland, New Hampshire.

(The Center Square) – New Hampshire's housing shortage has been compounded by local building restrictions that are preventing new construction projects from moving forward, according to a new study.

The study, released this week by the Josiah Bartlett Center for Public Policy, said New Hampshire is one of the most restrictive states in the country for residential development which has contributed to a shortage of housing that has major implications for the state's economy.

"By suppressing building, land-use regulations drive up the price of housing as demand rises," the report's authors wrote. "Removing or relaxing these regulations would allow prices to rise more gradually."

Municipal land-use regulation in New Hampshire has become an “arms race" whereby communities have tightened their housing restrictions in response to neighboring communities taking similar actions, the study found.

"When one town tightens, others are also provoked to tighten so that they don’t get a disproportionate share of new housing construction," the report's authors explained. "As a result, all towns end up with less construction and stricter regulations than they really want."

The group suggested that residential building regulations are responsible for growing socioeconomic segregation and slowing population growth in the state.

"As housing becomes more expensive, fewer people are moving to New Hampshire, especially to those towns that are most expensive," the report's authors wrote. "Those who stay are disproportionately wealthy and college-educated, while middle- and lower-income families leave because they cannot find affordable housing."

The study ranks New Hampshire municipalities by the "inelasticity" of their housing supply, such as restrictive building and land-use regulations and the ability to build new housing in response to rising demand. The top five towns are New Castle, Rye, Portsmouth, Newington and New London, according to the report.

Last year, New Hampshire Housing Finance Authority estimated that the state would need to build at least 20,000 more housing units to meet current demand.

In a letter included with the panel's report, Gov. Chris Sununu called the state's housing shortage a "significant challenge" that needs to be addressed.

Sununu said creating more affordable housing will help boost the state's economy by providing more job opportunities and workforce housing options.

The New Hampshire Council on Housing Stability, a panel created by Sununu, is pushing for the construction of at least 13,500 new residential units in the state within three years.

The report's authors suggested several steps that should be taken by the state to ease regulations, such as revising zoning ordinances to allow homes to be built on smaller lot sizes, with smaller frontages, and with smaller setbacks or lifting building permit caps.

Multifamily housing options, such as duplexes and triplexes, should be allowed in more locations, they said.

"To get out of the arms race and make decent homes affordable to Granite Staters of all ages and walks of life, policymakers and citizens have to understand how local land use regulations affect the supply and price of housing," the report's authors wrote. "Better policies will come from a better understanding of the downstream effects of these regulations."