"The 21st Century ROAD to Housing Act, a bipartisan piece of legislation that became law at midnight on Friday, is both the largest housing effort in a generation and unlikely to do much to blunt the high cost of rent and ownership in America anytime soon," wrote The New York Times over the weekend.
The Times contrasted it with the 1965 housing act, which provided $7.5 billion in federal funding to boost construction and improve housing affordability. That would be a huge sum today.
The Act's Limitations
As calculated by ChatGPT, as a share of government spending, the new law would have to provide between $180 billion and $230 billion to match the old one. The Senate committee responsible for the 2026 law says it will be "deficit-neutral."
Still, some laws can do a lot of good without massive spending. And this one could help millions shave a little off their housing costs, while benefiting some groups more substantially. It's just unlikely to make significant differences to the overall housing market.
Perhaps the new law's biggest limitation is that the majority of decisions about housing are taken at state, city, or county levels. It's mostly local politicians who decide on zoning, development, and environmental policies, so federal legislation can have only a limited impact.
"Individually, [the act's] disparate components represent mostly technical or narrowly tailored reforms; none of these alone will likely change the game for housing supply and affordability across the country," said the Terner Center for Housing Innovation at the University of California, Berkeley on Saturday.
"Much more work remains, especially as it pertains to improving outcomes for recipients of federal housing support and returning to an evidence-based approach to addressing homelessness," continued the Center. "However, as a whole, the various provisions of the ROAD Act comprise the most significant housing reform package Congress has passed in a generation, setting the stage for even bigger reforms in the future."
Where the New Law Scores
The Terner Center listed some of the ways the new act will make a real difference to certain groups.
For example, its reforms include an easing of the rules laid down by the National Environmental Policy Act (NEPA). These sometimes delayed (and thus made more costly) construction projects as developers were forced to wait for assessments and impact reports. The new act provides greater exemptions for infill developments that build between existing structures.
Another provision scraps the longstanding requirement for a steel chassis under every manufactured home (once called a mobile home or trailer), which should reduce costs. This builds on another recent reform that permits multi-story manufactured homes.
Meanwhile, the law helps the financing of manufactured homes by amending Federal Housing Administration rules for home improvement loans when one of these is used as an accessory dwelling unit (ADU). ADUs are additional residential structures built in an existing home's yard, which can be used to house family members or simply rented out.
Perhaps more important are changes to federal funding for certain types of development projects. "Section 203 increases the Public Welfare Investment Cap from 15 percent to 20 percent of overall capital, enhancing banks’ capacity for private investment in affordable housing," says the Terner Center. "Furthermore, Section 204 reforms the Community Development Block Grant (CDBG) program to allow for new construction; cities can now allocate up to 20 percent of their CDBG funds toward new housing development, an activity previously prohibited."
These funding changes don't provide new money. Instead, they change the rules governing the allocation of existing budgets.
Other Provisions in the Act
Senate Banking Committee Republicans list some of the 21st Century ROAD to Housing Act's main reforms (we quote):
- Streamlining the Lead and Healthy Homes program to work better for communities, especially rural ones, focused on preservation
- Testing blight remediation as a housing solution in communities like Gary, Indiana
- Directing federal housing dollars toward communities that prioritize affordability, in a budget-neutral way
- Re-examining homelessness programs to ensure they work effectively for communities on the front lines
Of course, the act, which runs to nearly 400 pages, contains many other provisions which could have varying levels of impact on the housing market.
Will These Changes Be Effective?
We think that the 21st Century ROAD to Housing Act will provide real advantages, but mostly to those whom it directly benefits. However, if it makes a noticeable difference to general housing affordability, it would certainly provide welcome relief for many Americans currently struggling with today's high costs.
