Legislation aimed at reducing housing costs and promoting home construction received bipartisan support in Congress, but it faces a stumbling block from President Donald Trump.
Legislation Details
The 21st Century ROAD to Housing Act, while supported by the White House, was not signed by President Trump. He delayed the signing event, stating he wouldn’t endorse the measure until legislation requiring voter citizenship proof is passed.
This legislative package is the result of months of negotiations, combining various bills to tackle housing affordability issues for renters and potential homeowners in the U.S. It aims to simplify environmental reviews, reduce federal regulations, speed up construction, and limit corporate landlords in buying single-family homes. Though comprehensive, it does not address all hindrances to affordable housing, such as labor shortages, rising insurance costs, and slow wage growth against escalating rents and home prices.
“We need more homes built, and legislation that removes construction barriers is exactly what the market needs right now,” said Daryl Fairweather, chief economist at Redfin.
Why Housing Legislation Passed
Housing affordability has become a significant concern among voters. Rising mortgage rates since 2022 have worsened the slump in the U.S. housing market, with home sales stagnating. Last year’s sales of previously owned homes were at a 30-year low, and while sales picked up in May, they remain below the typical pace.
Ongoing high home prices have left many prospective buyers struggling to afford homes, exacerbated by low levels of new home construction. National home prices have jumped 54% since 2020, rendering median home prices nearly five times the median household income.
Renters face similar challenges. Median monthly rent has declined but remains over 17% higher than pre-pandemic levels.
If the Bill Fails
A significant barrier to homeownership has been the imbalance between supply and demand. Limited availability leads to high prices, exacerbated by periods of low mortgage rates. The bill seeks to increase housing supply, focusing on affordable starter homes, manufactured homes, and standalone rental dwelling constructions.
It introduces funds for converting abandoned infrastructure into housing, and promotes reforms in zoning regulations to allow larger developments. The bill wouldn’t instantly make housing more affordable, but it could increase construction of townhomes, multifamily housing, and accessory dwelling units (ADUs).
“The additional supply will relieve the pressure on home prices, and make it easier for homebuyers to break into the market,” noted Fairweather.
Impact on Renters
The measure expands government rental assistance, affordable housing construction programs, and incentivizes state and local governments to facilitate new home and apartment construction. It proposes increased financing limits for public housing renovations and a recovery program for disaster-stricken communities. It also mandates new protection measures for renters.
“Without federal action, America’s housing shortfall will grow, falling another 2 million units behind in the next five years,” warned San Diego Mayor Todd Gloria.
Consequences of Delay
The federal government’s influence over housing construction and rent prices is limited, as most regulations are set at local and state levels. Even if the bill’s signing is delayed, its immediate impact on local housing prices would be minimal. However, pending projects might face postponement until the bill becomes law.
“The sooner this bill becomes law, the sooner builders and homebuyers will benefit,” stated Danielle Hale, chief economist at Realtor.com.
Future of the Legislation
President Trump’s decision has temporarily held back the bill’s enactment. The bill passed the House and Senate with significant support, indicating a veto-proof majority. Should Trump veto, both chambers would need to vote again to override it.
Speaker Mike Johnson expressed confidence that the President would eventually sign the bill after reviewing its details.
“The president, when we go through the details of the bill, he’s going to understand that it’s a good product,” Johnson stated.