New Federal Housing Law Aims to Expand Home Construction

A New Federal ROAD to Housing Act became law on July 11 in a bipartisan congressional effort to expand the available supply of “attainable” housing in the country. The legislation became law when President Trump declined to sign it. (Trump said he had refused to sign it because of Congress not passing a separate voting bill, but he did not veto the housing bill.)

The law limits or pushes for removal of state and local barriers to construction. It contains measures that provide financial incentives to states and municipal areas that are intended to expand housing supply.

FHA financing for multi-family developments is to be adjusted to account for inflation since prior regulations were put in place 20 years ago.

Manufactured housing regulations will be adjusted to remove a requirement for a permanent (steel-based) chassis. This measure had been put in place when manufactured housing was dominated by mobile homes, not ones that were in place for decades. Removing the requirement is intended to make manufactured housing more affordable.

The law also directs a study by the Department of Housing and Urban Development of the replacement and maintenance costs of manufactured houses compared to “onsite” constructed houses.

The law also intends to strengthen community banks with a variety of measures that will strengthen their ability to provide mortgage financing.

The law is long and complex as it weaves its provisions to work with existing statutes and state laws. Many of its changes contain guidelines for new rules to be put in place by mid-year of 2027.

"The 21st Century ROAD to Housing Act will help expand the nation’s housing supply by reducing regulatory barriers and encouraging local governments to reform zoning and land-use policies that have limited home building."

The National Association of Homebuilders suggested that these five provisions summarize the most important provisions of the law:

Top 5 Provisions

Land-Use and Zoning: The bill targets restrictive zoning and land-use policies that have limited residential construction. It directs the Department of Housing and Urban Development to work with stakeholders, including home builders and developers, to identify best practices and give state and local governments options to increase housing production. It also rewards communities that adopt policies that expand supply and support housing growth.

Aging Housing Stock: This provision authorizes a pilot program to provide grants and forgivable loans for home repairs and health-hazard mitigation in aging housing.

Multifamily Financing: FHA-insured multifamily loan limits have not changed in over 20 years and no longer reflect market conditions. Raising those limits and indexing them to inflation will better align financing with construction costs and support new apartment development.

Environmental Reviews: This provision streamlines the National Environmental Policy Act review process for small and infill housing projects, helping them move to construction faster.

Community Banks: NAHB members rely on community banks to finance residential construction, but fewer of these lenders remain on Main Street. Multiple provisions are aimed at strengthening community banks and expanding access to housing credit.