Encouraging home ownership keeps home prices stable or growing which increasing the amount of new homes being built.

No, demand to live in a place drives house prices. Stable housing will drive its own demand with no need for a tax incentive.

Also, why are we incentivizing homeownership? It's already lucrative enough on its own. We don't need the MID for people to want to buy houses. Furthermore, from a money perspective, it's not necessarily better than renting (although it has many social benefits).

As Kanolie's paper shows, people aren't being incentivized to buy because of the MID, they're just buying a bigger house than they otherwise would, on top of being regressive.

If you're worried about its impact on current owners, then grandfather clause the repeal so that mortgages continue to benefit at an amount that reduces to 0 over a few years. If you're concerned about the tax increase in the middle class, then shift the MID to some other progressive middle class targetted tax break.