Congressional negotiators announced last week that they had reached bipartisan agreement on a housing bill, the “21st Century Road to Housing Act.” The legislation has now passed both houses, though President Trump’s position on it is unclear.
The bill responds to the widespread belief that action on housing is critical to addressing the electorate’s “affordability” concerns. It is a rare instance of constructive legislating, in which politicians from both major parties took a break from their usual hostile posturing and got something done.
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The bill’s accomplishments are meaningful, though modest, and in some cases misguided. The most contentious provision “prohibits large institutional investors from purchasing certain single-family homes to promote homeownership opportunities for American families, not corporations.” This is a watered-down version of earlier proposals, which specified that large-scale investor purchases of existing homes or construction of build-to-rent housing would only be permitted subject to a requirement for the sale of such holdings within seven years. Vigorous lobbying by the real-estate industry weakened these strictures.
The restrictions included in earlier drafts are in fact so diminished that it’s unclear whether the practices of institutional investors will be hindered much at all. If not, so be it, since the ostensible goal of this section of the bill makes little sense, anyway. Research indicates that shifting homes from rental to ownership—to the extent that the bill accomplishes this—would make rentals somewhat more expensive, while making ownership somewhat less expensive. The effects are small and could be negated by changes in supply from new construction.
The justification for trying to manipulate the housing market in this way is that owning houses is somehow better for Americans than renting them. That is in fact the rationale for much of federal housing policy, which, through tax breaks and heavily subsidized mortgages, pumps up home prices. In the many American communities where additional housing supply is constrained by restrictive zoning, federal policy helps make existing homeowners wealthy. Given that homeowner subsidies are considered politically untouchable, restrictions on home purchases by institutional investors are a make-believe solution to housing affordability. Unfortunately, these restrictions disadvantage the large proportion of households that lack the resources for a down payment, or the credit score to qualify for a mortgage. Commentators both left and right have correctly pointed out that a focus on lifting regulatory barriers to new construction is far more helpful.
The more laudable parts of the legislation address some of those barriers. The bill eliminates the current federal requirement that manufactured housing have a permanent chassis. The chassis allows the home to be transported, but in many cases manufactured homes are placed on a permanent foundation and are not intended to be moved again. Elimination of the chassis saves $5,000–10,000 in construction costs. The bill also gives HUD the responsibility to set national energy efficiency standards for manufactured homes and updates lending standards for manufactured housing mortgages insured by the Federal Housing Administration (FHA).
The bill does not appropriate more funding for publicly assisted housing but includes several provisions that could make more funding available. It raises the “public welfare investment cap” applicable to banks from 15 to 20 percent of capital and surplus, facilitating additional investments in Low Income Housing Tax Credit developments. The tax credit is the principal vehicle for federal assistance for new low-income housing.
In addition, the bill raises the national cap on the Rental Assistance Demonstration Program by 100,000 units. RAD, which helps preserve conventional public housing by converting its subsidy to a long-term rental subsidy contract under private management, is a key component of the New York City Housing Authority’s strategy to address its capital needs backlog.
Further, the bill includes multiple fixes to the Home Investment Partnerships Program, including exemption of some projects from federal environmental review. The bill also cuts back environmental reviews for small and “infill” residential developments, as well as conversion of office buildings to residences.
Beyond its accomplishments, the bill is a reminder of a bygone era when Congress passed legislation that improved Americans’ lives. Some big housing issues at the federal level are not addressed in this legislation, however. Neither Congress nor the Trump administration has shown any inclination to debate a resolution to the temporary receivership of the federal mortgage giants, Fannie Mae and Freddie Mac. That debate is related to another key question: whether the U.S economy can ever escape the distorting effects of making single-family homes the primary vehicle for household saving and generational wealth creation.
As Congress finished work on its housing bill, the Harvard Joint Center for Housing Studies released its 2026 State of the Nation’s Housing report. The report finds that in 2025, the median sales price for a single-family home was 4.7 times the median household income, just slightly lower than the all-time high of 5.0 in 2022. “By comparison, this ratio was 4.1 in 2019 and averaged 3.2 throughout the 1990s.” Not coincidentally, the national homeownership rate peaked at 65.9 percent of households in 2023 and has since fallen to 65.2 percent. That drop is concentrated among households in the younger adult age ranges.
The feeling that homeownership is out of reach—unless, of course, one’s parents can mobilize existing housing wealth on one’s behalf—is likely an important determinant of the nation’s sour political mood. Congress did well, on the whole, in crafting the 21st Century Road to Housing Act, even if it punted on the biggest issues.