For nearly a century, the federal government has been trying to fix America’s housing affordability crisis. The tools have changed, the program names have changed, and the price tags have grown, but the premise has stayed the same since the New Deal. The 21st Century ROAD (Renewing Opportunity in the American Dream) to Housing Act, which became law this month without the president’s signature after passing both chambers of Congress, represents a genuine effort to strip away outdated federal rules and give local governments more room to build. Several of its provisions achieve this goal. But for a bill of this size and ambition, too much of it follows a familiar pattern of expanding federal reach into a problem that has always been, and will always be, solved at the local level.
The housing crisis is real and well-documented. The national housing shortage has reached an estimated 3.7 million units, and new housing construction is projected to slow from the current rate of 1.4 million units per year to just 1.1 million units per year between 2025 and 2035.
That slowdown comes even before accounting for the existing shortfall. The gap between what the country needs and what gets built has been growing for years. The demand for housing is not in question. People need somewhere to live, and that need does not go away when construction slows down. The real question is why so little of that demand is actually being met with new supply.
The shortfall in available housing units is not the result of a failure of federal housing policy alone, although that has certainly played a role. Research tracing this pattern across several states shows that local housing markets that adopted growth management laws and land use mandates saw affordability decline, and the effect compounded over time, with the steepest price increases in jurisdictions that had lived under these frameworks the longest. The problem plays out differently in different markets, but the underlying dynamic is the same: when local governments make it harder and more expensive to build, supply falls behind demand and costs rise. The 21st Century ROAD to Housing Act responds to this fundamentally local problem with a fundamentally federal solution, and that mismatch runs through nearly every section of the bill.
The bill earns credit by removing barriers rather than adding programs. The most significant example is Section 301, which eliminates the chassis requirement for manufactured housing. That single regulatory change has the potential to open an entire tier of housing production that has been artificially suppressed. Countries where factory-built construction is the norm rather than the exception show what’s possible at scale. Japan and Sweden together produce hundreds of thousands of factory-built homes annually, and research puts the resulting savings at a steady 10% to 20% below traditional construction costs. Removing the chassis requirement moves the United States closer to making those conditions possible here.
The community banking provisions added by the U.S. House are also a genuine improvement. Smaller institutions held 57% of one-to-four-family residential construction loans in 2024, and easing their regulatory burden removes friction from the very part of the lending market that finances most new home construction. Beyond those provisions, the bill becomes harder to defend.
The legislation assigns the U.S. Department of Housing and Urban Development (HUD) at least 35 new programs, regulations, studies, and oversight responsibilities at a time when HUD already has more work than it can handle. Adding more slow-moving federal bureaucratic processes is not likely to help grow housing supply. Moreover, two of the bill’s pilot programs, the Whole Home Repairs initiative and the Innovation Fund, cannot be implemented at all without separate congressional appropriations that are not guaranteed. Congress has handed a depleted agency a longer to-do list.
The problem runs deeper than implementation capacity. Section 204 adds affordable housing construction as an eligible activity under the Community Development Block Grant program (CDBG). The HOME Investment Partnerships Program, described by HUD as the largest federal block grant to state and local governments designed exclusively to create affordable housing for low-income households, already finances affordable housing construction at approximately $1.25 billion per year for both owner-occupied and rental housing. Adding the same authority to CDBGs does not bring new resources or new approaches to the table or address the fact that the average HUD-funded “affordable” housing unit costs $584,000 to build. The five-year, $30 million Whole Home Repairs pilot runs into the same wall. Home repair is already an eligible activity under multiple existing HUD programs. Pilot programs that cover ground already covered by permanent programs tend to do one of two things: quietly expire or generate enough political support to become permanent themselves. Neither outcome adds housing or reduces housing costs.
The bill’s environmental review provisions tell only part of the story. Streamlining the review process for HUD-assisted projects is a welcome step, but those projects represent a small fraction of the housing that gets built in this country. Most new housing construction happens in the private market, where developers continue to navigate lengthy and costly review processes that the bill does not address. Extending regulatory relief only to federally assisted projects leaves the larger private market exactly where it started.
The institutional investor provision deserves attention because it reflects a broader misdiagnosis of the problem. The bill bars investors who own 350 or more single-family homes from purchasing additional properties. Large institutional investors own fewer than 3% of single-family homes in the United States. The cap does nothing to expand supply and sets a precedent for Congress to exclude any category of investor from any segment of the housing market at any time, for any reason.
The history here also matters. When the mortgage market collapsed in 2008, millions of homes sat vacant and deteriorating across the country. Neighborhoods faced sustained abandonment. Institutional capital stepped in, purchased those properties, maintained them, and kept them occupied, mostly as rentals. The investors who helped stabilize those markets after the financial crisis are now the target of a federal purchasing restriction, while the zoning rules that prevent new housing from being built in the first place remain untouched.
This bill also fits a longer pattern in federal housing policy worth examining. The Federal Housing Administration, created in 1934, institutionalized redlining by declining to insure loans in Black or racially mixed neighborhoods, a federal policy decision with consequences that shaped American cities for generations. The 1949 Housing Act, passed with bipartisan support, authorized 800,000 units of public housing through slum clearance and urban renewal that disproportionately demolished viable Black neighborhoods in Detroit, Atlanta, St. Louis, and elsewhere. Those units quickly fell into what a 1992 federal report described as severe distress and required ongoing federal bailouts.
The 1992 Federal Housing Enterprises Financial Safety and Soundness Act, passed by a 77-vote margin in the Senate, imposed affordable housing mandates on Fannie Mae and Freddie Mac, requiring both to securitize mortgages for buyers with borderline credit scores. When housing prices fell, those buyers went underwater, and the resulting defaults cascaded into a bond crisis.
The housing voucher program, created as a market-oriented alternative to public housing, still struggles to move people toward independence. Federal rules cap a household’s rent contribution at 30% of income, which functions as an effective 30% marginal tax on any additional earnings, a design that dulls the incentive to work more or seek higher-paying jobs. The result, according to a 2025 analysis of HUD data, is that most non-elderly, non-disabled participants remain in subsidized housing for more than 10 years. The tool itself, a portable subsidy that works with the private market rather than against it, remains sound. But even the best-designed market-based alternative can undercut its own goal of being a bridge to self-sufficiency if the implementation isn’t right.
The 21st Century ROAD to Housing Act adds to this architecture of failed federal housing policies rather than rethinking it. States and localities that have made real progress on housing have done so by making it easier to build. California’s accessory dwelling unit (ADU) reforms, which produced over 139,000 permitted units and nearly 80,000 completed units between 2018 and 2024, resulted from the removal of local barriers to construction. Montana’s 2023 reform package legalized duplexes statewide, expanded ADU rights, and opened commercial zones to multifamily housing; changes the Montana Supreme Court allowed to take effect in 2024 and fully upheld against constitutional challenge in 2026. Idaho followed in 2025 with its own package, including a new law capping minimum lot sizes at 1,500 square feet for starter home subdivisions in larger cities. Both states passed their reforms too recently to have full outcome data yet, but the direction is the same as what California, Houston, and Austin have already shown. That kind of reform happens in city halls and state legislatures. A 381-page federal bill can complement it at the margins, but it cannot substitute for it.
Congress deserves real credit for the manufactured housing reform and the community banking provisions. Those provisions reflect the kind of barrier-removal approach that moves the needle on supply. If lawmakers want to build on that momentum, the path forward is clear. Extend environmental review relief to all private developers rather than limit it to HUD-assisted projects. Support state-level preemption of exclusionary local zoning. Reconsider programs that have spent decades failing to deliver on their original promises. The ROAD Act takes some meaningful steps in the right direction. Sustaining that direction will require doing more of what works in this bill and less of everything else.