Bipartisan legislation aimed at expanding the US housing supply and improving affordability is now law — but experts say home buyers and sellers shouldn’t expect immediate relief.
The 21st Century ROAD to Housing Act became law by default on Saturday after President Donald Trump did not sign it or vote on it by the deadline. The law includes a number of housing measures aimed at encouraging housing construction, increasing access to financing and limiting purchases by large institutional investors.
This legislation “will help increase the nation’s housing supply by reducing regulatory barriers and encouraging local governments to change zoning and land use policies that limit housing,” said Bill Owens, chairman of the National Association of Home Builders, in a statement after the Congressional repeal measure on June 23.
Housing affordability continues to plague buyers
The new law comes as housing remains difficult. Home prices are near record highs and 30-year mortgage rates continue to hover above 6.5%.
The median price of an existing home in the US reached $440,600 in June, up 49.2% from June 2020, according to data from the National Association of Realtors. There is also a housing shortage of about four million, according to Realtor.com.
“This bill directly targets some of the biggest drivers of housing costs: land use restrictions, permitting delays, financing barriers and regulatory barriers,” said Selma Hepp, chief economist at Cotality, a housing data company.
“Unfortunately, buyers shouldn’t expect immediate relief,” Hepp said, adding that “housing improvements take time and many gains may happen gradually rather than overnight.”
Restrictions on buying real estate for institutional investors
David Paul Morris | Bloomberg | Getty Images
Among the many technical and policy changes in this new law, a few provisions are likely to be most important to consumers.
A key provision would prevent large institutional investors who own at least 350 single-family homes from purchasing additional single-family homes, subject to several exceptions. Those exceptions include certain build-to-rent and renovate-to-rent projects, as well as programs that help renters build credit and eventually buy homes.
Supporters say the move could help reduce competition from large corporate buyers in other housing markets, particularly in parts of the Sun Belt where institutional investors have been accused of contributing to high home prices. Economists, however, say the buying task for institutional investors remains light even in many of those markets.
Broad definition of ‘built home’
Other provisions are intended to reduce barriers to manufactured housing and encourage wider use of factory-built housing, which is often among the least expensive pathways to home ownership.
Specifically, the bill expands the agency’s definition of “manufactured home” to include homes constructed without a permanent steel chassis, the steel frame underneath manufactured and mobile homes that allow for easy movement by tow truck. However, few homes move after placement, according to the Lincoln Institute of Land Policy.
Among other benefits, the chassis requirement could lower the cost of a manufactured home by $5,000 to $10,000, potentially making homeownership affordable for more families, according to the Niskanen Center, a nonpartisan think tank.
The Pilot program aims to make microcredit accessible
The law also creates a four-year pilot program to expand access to small loans — those under $100,000 — that some lenders avoid because of compliance costs. Supporters say improving access to microloans can help buyers in low-income markets and those buying affordable homes.
The pilot program includes paying lenders a subsidy to set up those small loans and providing borrower incentives for lower down payments and closing costs.
Overall, the law could help housing supply “more at the edges, and certainly not overnight,” said John Walkup, founder of UrbanDigs, a New York City real estate price intelligence platform.
Housing supply is ultimately a local problem, Walkup said.
“It’s a complex equation that factors in construction costs, labor availability, land prices, infrastructure constraints, local zoning laws, and community opposition that determine how much housing will be built,” he said. “Legislation can help create incentives and remove barriers, but it cannot alone solve the housing shortage that has been building for years.”
Trump had canceled a June 24 signing ceremony for the bipartisan bill hours before the event, saying he would not sign it until Congress passed the SAVE America Act, a Republican-backed ballot measure that would require proof of US citizenship to register to vote. This move caught lawmakers from both parties and the enactment of this law was delayed.
House Speaker Mike Johnson, R-La., sent the housing bill to the White House on June 29, leaving an hour for the president to take action. After 10 calendar days – excluding Sundays – because Trump did not vote for the bill or sign it, the measure became law without his signature.
