America is facing its worst housing crisis since the end of World War II. In a rare moment of bipartisan consensus, Congress has stepped up. Senate Banking Chair Tim Scott (R–SC) and Ranking Member Elizabeth Warren (D–MA), and House Financial Services Chair French Hill (R-AR) and Ranking Member Maxine Waters (D–CA), shepherded large, multisection packages through their respective chambers with overwhelming margins.
But the most recent bill does not do as much for housing supply as it could. The latest Senate package, the 21st Century ROAD to Housing Act (ROAD), incorporated a few provisions from the House’s Housing for the 21st Century Act (HF21). Counterproductively, it also introduced Section 901, a new provision that includes restrictions on large institutional investors building new single-family housing supply for rent. Merely including it has already seized up new housing investment, and politicians on both sides of the aisle, including the President, have indicated their opposition.
The House’s first priority should be to amend Section 901. Beyond that, to maximize the construction of new homes and address the scale of the housing shortage, any final housing package should include critical housing supply provisions from each of the original House and Senate bills.
Congress should add rather than subtract, while correcting the Senate’s counterproductive Section 901. We propose a targeted to-do list for amending ROAD to guarantee it delivers the affordable homes that Americans need.
1. Amend Section 901
Section 901 requires investors to dispose of any new single-family homes they build or finance within seven years. Based on our analysis, this provision will reduce housing supply, running counter to the rest of the bill’s positive effects on housing affordability.
President Trump’s executive order on large investors restricted investors from buying up existing homes while protecting new homes for rent. Lawmakers should, at the very least, make Section 901 consistent with this approach, rather than discourage investors from building new homes. A targeted fix to the provision would protect new housing supply.
2. Preserve key provisions from the original Senate package
Three key provisions from the Senate package would especially affect the housing shortage:
- The Build Now Act would reform the Community Development Block Grant (CDBG) program to reward high-cost jurisdictions that increase their housing production. The bipartisan bill, championed by Senators John Kennedy (R-LA) and Elizabeth Warren (D-MA), gives growing communities a bonus to pay for the infrastructure needed to support that growth. The bonus comes at no additional cost to taxpayers: it reallocates a modest amount from other high-cost jurisdictions that have restricted their own growth. The Build Now Act would apply only to jurisdictions with the most expensive housing, leaving the majority of the country untouched.
- The Innovation Fund would support housing growth by incentivizing communities to tackle the 25–40% of housing costs attributable to onerous land use regulations. Communities would need to cut regulatory barriers to housing to be eligible for the Innovation Fund’s grants, which would offset the infrastructure costs of new housing. While new housing construction ultimately supports the local tax base, it can impose upfront demands on roads, sewers, schools, and other services. The Innovation Fund ensures that communities that want to grow are encouraged to do so.
- The Build More Housing Near Transit Act reforms Capital Investment Grants, the competitive grant program that funds major public transit investments. This provision gives priority to applications from state and local governments that adopt pro-housing policies — such as by-right permitting and smaller lot sizes — for land near their proposed new transit routes. Transit investments can support nearby population growth, but they only make sense if that growth is allowed to happen. Build More Housing Near Transit would prevent funding wasteful projects and improve the cost-effectiveness of federal transit funding. This provision is not in the final Senate bill, but was included in the earlier package, and should be brought back.
3. Integrate provisions from the House package
The House’s HF21 package also includes several bills that would help support new homes:
- The HOME Reform Act proposes updates to the HOME Investment Partnerships Program, which provides formula funding to states and localities to support affordable housing. Last reauthorized in 1992, the program is ripe for reform. The bill would exempt certain projects from excessive federal permitting requirements, lower compliance costs for builders of affordable housing, and speed up construction timelines as a result. Projects eligible for permitting relief include residential infill construction, property acquisition, rehabilitation of existing buildings, and new construction of up to 15 units. While the Senate package included its own HOME provision, the House’s approach is more comprehensive and should be the one adopted in a combined bill.
- The Point-Access Housing Guidelines Act would direct the creation of a model single-stair building code. Most states and cities still mandate redundant stairways for even small buildings, despite evidence that localities without this requirement have the same safety record for modern buildings. These outdated regulations significantly raise the cost of construction, making it harder to build family-sized homes and undermining affordability. Many cities and states are reforming their building codes to lower construction costs, and this bill would avoid duplicative efforts. It would also encourage the International Code Council — the independent body that writes the model codes that most states adopt — to adopt these reforms that create affordability for families.
- The Housing Supply Frameworks Act would provide voluntary guidelines, best practices and technical assistance to reform state and local housing regulations — reducing parking requirements, increasing allowed building sizes, and expanding by-right permitting, among other key changes. These guidelines would update the 1920s-era federal model codes that laid the foundation for the regulations blocking housing construction today.
- The Community Development Amendments, Section 202 of the House bill, unlocks new uses for CDBG funds to construct new affordable housing. Under current law, grantees may spend these formula-based grants on a range of eligible activities that support affordable housing, including land acquisition, infrastructure, and housing rehabilitation, but cannot use them to build new homes. The same section also includes the Identifying Regulatory Barriers to Housing Supply Act, which would require state and local recipients of federal funds to report on their progress removing regulatory barriers that block housing. It includes a checklist of evidence-based pro-housing reforms to make it easier to build lower-cost homes, better understand local constraints, and support local efforts to boost supply.
Congress’s bill should maximize homebuilding
Overwhelming bipartisan majorities in Congress have already signed on to two versions of the largest housing bill in decades. The country can’t afford the lowest common denominator: the final housing bill should include the best of both.
